Today’s post is by Ronald D. Southard, CEO at SafeSourcing Inc.

What is the structure of your buying organization?

Evolution to a category management structure began in the 1980’s. Many companies today have still not completely evolved to this structure. So, what are some of the elements of a category management structure and what do they do. Here are some definitions from the SafeSourcing Wiki which is free for anyone to use.

1. CategoryManagement is a retailing concept in which the total range of products sold by a retailer is broken down into discrete groups of similar or related products; these groups are known as product Examples of grocery categories may be tinned fish, washing detergent, toothpastes, etc. Each category is then run like a “mini business” (Business Unit) in its own right, with its own set of turnover and/or profitability targets and strategies.
2. A categorymanager (CM) analyzes product brands and mix, inventory levels, movement, shelf space allocation, promotions, buying, and profitability of a merchandise category. They manage the marketing for a range of related products in a way designed to increase sales of all of the products, as opposed to a brand manager who markets an entire brand of goods.
3. Within a category, a category captain is the manufacturer‘s representative responsible for analyzing the productmovement, assortment, inventory management, promotion, buying, and profitability for a specific geographic area or an entire chain. They will be expected to have the closest and most regular contact with the retail In order to do the job effectively, the supplier may be granted access to a greater wealth of data-sharing.

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Today’s post are the ramblings of a frustrated CEO, Ronald D. Southard, at SafeSourcing Inc

Do you know your company’s numbers? Is your plan the same as your company’s plan?

Often when I meet with procurement knowledge workers regardless of company structure, so buyers, category managers, purchasing department manager etc. and ask these two questions, the answer I get is often baffling. I have heard all manner of responses that center around the following. My numbers are based on my categories and do not really have anything to do with the companies’ total numbers which our department does not have a view of. So, I forget about asking questions about Gross Margin, and Net Earnings because this team lead is focused on his/her personal and or department numbers and their own pay plan.

I guess if I assume that every category manager is set up with their own P&L (they should be) and they all beat their plan that theoretically the companies cost of goods should go down and gross margins go up. However, that’s not happening corporately as projects never happen in a straight line. Award of Business and time to contract are often disconnected by months. As a result, all the best efforts of the procurement team may result in team bonuses even though company results do not improve as much as they should do timing that erodes the contract value in year over year results. Let us just stick with this example and not even get into expense management which does not impact gross margin. Capital Plans are another issue all together but equally requiring the focus of Procurement knowledge workers. More on that crime at another time.

At SafeSourcing we know how to mitigate these issues and assist in the alignment that is focused on reducing costs and improving earnings for all company stakeholders.

SafeSourcing is a Procure to Pay SaaS based provider of a number of e-Procurement solutions and associated with our best practices focused white glove services that are part of our SaaS offered SafeSourceIt™ eSourcing suite. These include but are not limited to SafeContract™, SafePO™, SafeDocument™ and our SafeSourceIt™ Global Supplier Database that includes over 557,000 vendor/suppliers. To learn more, please contact a SafeSourcing customer services associate.

Today’s post is by Ronald D. Southard, CEO at SafeSourcing Inc

You should be asking smaller suppliers if the qualify as a Second Tier Sourcing Option.

Companies should let their customers know if they are a minority owned, partially owned, woman owned or veteran owned business. Many companies plans call for supporting these types of businesses so why not let them know. SafeSourcing is a veteran owned business.

Second Tier Sourcing is a procurement policy that is used by various Fortune 500 corporations. This is a practice of rewarding suppliers for attempting to achieve minority-owned business spending goals of their customer(s).

The program was created by the Chrysler Corporation in 1993 and now extends throughout the Fortune 500. In 2005, Toyota set a goal of 10% for their suppliers and holds an annual matchmaking event to help their suppliers achieve those goals.

SafeSourcing is an eprocurement company that operates across multiple industries. As such we have specific experience in almost any commodity, service or capital related spend including software and development costs. Our SafeSourceIt™ Global Supplier Database is an often-used to assist companies in finding vendors that are Second Tier, please contact a SafeSourcing customer services associate.