As you plan for the year ahead; here’s a little Sourcing Auld Lang Syne.

December 28th, 2010

Understanding the meaning behind this old Scottish poem/song can provide a framework from which to build your Sourcing strategy for the New Year.

?“Auld Lang Syne? is a Scottish poem written by Robert Burns in 1788 and then set to the tune of a traditional folk song. Roughly translated auld lang syne literally means old long since but can be paraphrased into statements such as long long ago, the olden days, for old time?s sake or the good old days.

However, pining to much for the old days can have a negative effect on your planning for the days, weeks and years ahead. I?m sure as this author has, many of you have heard sourcing individuals say things such as ?we?ve always done things this way? or ?that won?t work for us?. In today?s world with all of its economic and global pressures, this is particularly dangerous way of thinking for sourcing professionals. The good news is that we still have some time before the New Year and we should use it reflectively to build our resolutions for the upcoming year that should then drive our sourcing business goals.

Although a number of strategies can be used for this thinking for both individuals and groups. The most important thing is to capture the data in its most raw form and then refine it from there. This may occur in group open discussions and white board sessions with a moderator or in private free thinking session where you personally write down all of your own random thoughts. The important thing is to write them down. Statistically people who write down their goals have over an 80% higher success rate of achieving them. Research tells us that of those people that do make New Years Resolutions only 75% make it past the first week of the year and the numbers drop dramatically from there.

We will be discussing our thoughts on e-sourcing and e-procurement resolutions for the New Year over the next few days in order to provide our readers with a base from which to draw for their own refinement.

Best of luck with your goals and we? look forward to and appreciate your comments.

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What are your e-procurement goals for the 2011?

December 27th, 2010

As your organization develops their procurement goals and or resolutions for 2011, use the following list as a source of inspiration.

1. Lower costs.
2. Drive improved quality.
3. Insure that products are guaranteed safe.
4. Build and maintain high quality product specifications.
5. Find a source of unlimited new sources of supply.
6. Aggregate your purchases.
7. Look at ways to use new technology.
8. Take advantage of software as a service applications to avoid large license fees.
9. Make procurement education and training a priority.
10. Review all of your existing suppliers.
11. Collaborate with other businesses to increase savings.

Remember that simple goals written down are the most achievable.

We look forward to and appreciate your comments.

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Merry Christmas to all of you.

December 25th, 2010

We wish all of our customers, readers, users, employees and other stake holders a wonderful Christmas and holiday season.

On the twelfth day of Christmas our e-procurement service provider gave to us, a sustainable e-procurement process and improved corporate net earnings.

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Do you want your sourcing to be more environmentally friendly in 2011?

December 24th, 2010

If so, here are nine steps you can follow to safer and more eco-friendly procurement practices.

1. Be pro-active in driving not for resale and for resale product safety within your company, and also supporting eco-standards in the procurement process.
2. Pay it forward with all of your trading partners by sharing what you are doing, and asking what they do to support yours or similar initiatives.
3. Educate your employees and trading partners about common safety standards and guidelines such as the SQF Certificate www.sqfi.com  and the Global Food Safety Initiative www.ciesnet.com.
4. Educate your employees and trading partners about common eco-standards such as Green- Energy National Standard www.green-e.org or EcoLogo www.ecologo.org. 
5. Point associates and trading partners to free educational websites such as www.safesourcing.com to use their free SafeSourcing Wiki or the Sourcebook professional social network for procurement professionals.
6. Only use trading partners that follow your lead.
7. Train your team to understand and use all available tools that insure supply chain safety such the free daily safety in sourcing blog at www.safesourcing.com  or the low cost SafeSourceIt Supplier Database and Reverse Auction Tools.
8. Impose a system of measures and controls to monitor performance against clearly defined goals.
9. Start at the top and engage all levels of your company.

We  look forward to  and appreciate ayour comments.

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The holidays are a great time to refocus your companies green sourcing efforts

December 23rd, 2010

When companies focus on supporting a Green Supply Chain the measurement of their success is pretty simple. People, profit and planet or Triple Bottom Line.

What does it mean to go Green?  And we do not mean Grinch Green. I was rereading an Aberdeen white paper Building a Green Supply Chain from last year and believe they may in a concise format have the best glossary of definitions as to the meaning of and impact on what it means to be Green. Their short but effective green glossary defines the following terms.

1. Corporate Social Responsibility (CSR) posits that companies have a responsibility to be social and environmental stewards and that having a positive impact on society and the planet is as important as profit.
2. Green refers to practices, processes and products that have a minimal impact on the health of the ecosystem. The emphasis is on non hazardous recyclable, reusable, and energy efficient products and processes.
3. Sustainability ensures the ability to meet present needs and profits, today, without compromising the ability to meet them tomorrow.
4. Triple Bottom Line (TBL) determines that business has positive impacts on the three P’s: people, profit and planet and is a standard framework for CSR agendas.

It might be interesting to ask your CEO if he or she agree with these definitions. Many probably do. The next question would be are you as a company measuring any of them and their impact on your companies performance. The answers would be a good indicator of  your company’s commitment to being Green and not just caught up in green wash and web slogans.

We look forward to and appreciate you comments.

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My supplier tells me the cost of paper is going up; what should I do?

December 22nd, 2010

How often do buyers hear this from suppliers as we come to the end of a quarter or the end of the business year?

The question this begs, is the statement true? The answer is more complicated than just saying the cost of pulp is going up or down because there area variety of pulps and the same pulp is not used for making copy or print quality paper as is made for making paper grocery bags or paper wraps. The type of pulp used for making copy or print quality paper is hardwood pulp. Hardwood fibers are suited for producing smooth papers for printing and writing. They also can achieve good stiffness and bulking ability, but this depends on the tree species and refining conditions.

The trick with the above scenario is that depending on the tracts lumber companies are harvesting there may or may not be a robust availability or supply of hardwood pulp at any given time. And as such we enter the entire supply versus demand equation.

So is it possible to conduct your own research to qualify the statements of your supplier? It is depending on how far you want to go in doing what commodity traders do every day of the week in order to time their investment with market movement.

CME Group is a good site that would allow you to follow futures on a variety of products. The following link will take you to the hardwood pulp futures market which at the moment is trending down.

Let information be your friend, and if you don’t have time call your e-procurement solutions provider.

We look forward to and appreciate your comments.

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Corporate Social Responsibility and the procurement process

December 21st, 2010

Beyond food and product safety, this author has posted dozens of blogs in the last several years relative to Social Responsibility in the supply chain and reinforcing it in the procurement process.

The following is taken directly from a great website “The CPO Agenda” and specifically from an old article  titled “How the Stars Shine Brighter”.

The entire article is a great read as to the positive impact that best in class procurement companies can have on their company’s results even during these tough economic times. The specific information I found interesting was a sub section that relates directly to yesterdays post on supplier score cards and is titled.

Sustainability and corporate responsibility.

These have emerged as significant issues for the procurement function and are now factored into most companies’ corporate goals. However, there is still a long way to go until these goals are formally embedded into procurement strategies. Finding the right balance between economic viability, environmental awareness and social well-being is a significant challenge, but a competitive advantage can be gained by companies that locate intersection points for all three.
 
For Wal-Mart, sustainability has broad economic and social components, including healthcare, economic opportunity and the quality of life of the people who make the products it stocks. The company’s commitment to sustainability centers on three aggressive goals: to be supplied 100 per cent by renewable energy, to create zero waste, and to sell products that sustain natural resources and the environment. The key focus areas for its sustainability efforts include paper, packaging, textiles, jeweler, electronics and chemical-based products – categories selected based on a combination of consumption and the volume of product sold.
 
Wal-Mart helps its suppliers to develop goals and set expectations, assist with knowledge around sustainability practices, and evaluate and manage results. Suppliers are expected to “do right” by workers and the environment, examine the entire product lifecycle in order to develop sustainable merchandise and significantly increase energy efficiency throughout the supply chain, especially in the area of logistics and shipping.
 
Key scorecard metrics include greenhouse gas emissions produced during manufacturing, the product-to-packaging ratio, packing cube utilization, recycled material usage, renewable energy use at supplier facilities and raw material recovery rates. The involvement and commitment of the world’s largest retailer toward sustainability practices throughout the supply chain will accelerate the rate at which many companies come to adopt sustainability-focused practices.

As always, we appreciate and look forward to your comments.

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On the twelve days of e-procurement Christmas.

December 20th, 2010

This author knows we have all heard the song “The twelve days of Christmas” many times. With that tune playing over and over in your head try substituting the e-procurement lyrics below.

procurement process.

  1.  On the second day of Christmas our e-procurement service provider gave to us, more suppliers to source our goods from.
  2.  On the third day of Christmas our e-procurement service provider gave to us, pricing that works for smallest categories.
  3. On the fourth day of Christmas our e-procurement service provider gave to us, consistent and customized product specifications.
  4. On the fifth day of Christmas our e-procurement service supplier gave to us, more time for other priorities.
  5. On the sixth day of Christmas our e-procurement service provider gave to us, improved quality in our products.
  6. On the seventh day of Christmas our e-procurement service supplier gave to us, better supplier education.
  7. On the eighth day of Christmas our e-procurement service provider gave to us, a simple award of business process.
  8. On the ninth day of Christmas our e-procurement service provider gave to us, support for a better carbon footprint.
  9. On the tenth day of Christmas our e-procurement service supplier gave to us, total category e-procurement.
  10. On the eleventh day of Christmas our e-procurement service provider gave to us, safer products for our customers and planet.
  11. On the twelfth day of Christmas our e-procurement service provider gave to us, a sustainable e-procurement process and improved corporate net earnings.

Now, ask yourself if all of these goals are accomplished on your company’s behalf by your present e-procurement service provider.

We look forward to and appreciate your comments. Happy Holidays.

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Traceability also requires sensibility if you want a safe supply chain.

December 16th, 2010

When the FDA talks about traceability and refers to one back one forward, what are they referring to? Does it make our supply chain safer?

The definition of traceability according to Wikipedia refers to the completeness of the information about every step in a process chain. Traceability is the ability to verify the history, location, or application of an item by means of documented recorded identification.

When the FDA uses this term what they are referring to is the capability of bidirectional traceability or tracing products one step back one step forward. This means identifying the immediate supplier of the product and identifying the immediate recipient of the product, which is not the final retailer.
 
However the process also requires some level of common sense. I’m a man of faith, but blind faith really gets us no where when we are talking about food product traceability. GS1 has created a certification for traceability in cooperation with a number of organizations such as FMI, CIES, BASF and FSQA.

So from a common sense perspective one would believe that all products we consume are safe, that all produce and grain products are traced back to the seed level. Unfortunately this is not the case.

Let’s just examine milk products or byproducts. In a recent blog this author discussed the fact that what is happening in China where 13,000 babies are still hospitalized and over 53,000 babies affected could happen here. Just today we hear that in fact Chinese candy in the United States contains melamine. What other products contain this or other carcinogens that should not be consumed and how can retailers control the introduction of such ingredients in the products they buy for resale.

We look forward to your comments.

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There are a few simple keys to understanding competitive bidding when using e-negotiation tools.

December 15th, 2010

Competitive bidding is the process of inviting and obtaining bids from competing suppliers in response to documented specifications, by which an award is made to the best overall bid.

There are several important elements that require clear understanding by both the host company as well as the invited suppliers to ensure that bidding is fair when using e-negotiation tools.

What constitutes the best overall bid is a bid that meets or exceeds the specifications in areas such as price, safety, environmental best practices quality and other areas as outlined in the product specification. The process contemplates giving potential bidders a reasonable opportunity to bid, and requires that all bidders be placed on an equal playing field. Ideally each supplier must bid on the same documented specifications, terms, and conditions for all the items.

However breaking out individual line items that a specialty supplier can provide bids for can help to reduce the opportunity for suppliers to manage the overall gross margin of their bids and drive higher savings. The purpose of competitive bidding is to stimulate competition, prevent favoritism, and secure the best goods and services at the lowest possible price, for the benefit of the host company while making the job easier for buyers and category managers. Competitive bidding cannot occur where specifications, terms, or conditions prevent or unduly restrict competition, favor a particular supplier, or increase the cost of goods or services without providing a corresponding tangible benefit for the host Retailer.

As always, we look forward to and appreciate your comments.

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