This is part II of yesterday’s post neither a leader nor a follower be.

August 11th, 2010

Here are some more thoughts on the lack of industry thought leadership relative to not replacing BPA by industry leaders.

As a refresher, this author used the following example of less than stellar industry leadership during yesterdays post. I was reading an article recently Titled “Firms aim to fight BPA ban” by Lyndsey Layton of the Washington Post. A quote from the article that follows speaks volumes to the lack of leadership in solving this problem. “Frustrated industry executives huddled for hours Thursday trying to figure out how to tamp down public concerns over the chemical bisphenol A, or BPA”. You have to be kidding me.

So, let’s dig a little deeper into this article and suggest how industry leaders should be looking at this as an opportunity and how they can help buyers from all companies  source products that are safer and have a better impact on the environment instead of continuing to follow the same practices they have been since the 1950’s.

The firms we are talking about are manufacturers of canned beverages and foods. This includes well known industry giants. A sampling of the creative strategy  they came up with was based on the believe that they needed to have a legislative approach (lobbying) and a grass roots outreach to mothers and students between the age of 21 and 35 from someone in the age group. They also considered using fear tactics or telling consumers you will have to pay a higher price for these products. I won’t go on. Simply stated this is poor leadership based on a traditional business model with very little thought as to anything other than business as usual. At the end of the day, the product is not safe and needs to be replaced or outlawed.

Last year, scientists from the US National Toxicology Programme said that effects on reproductive development from BPA in packaging cannot be ruled out and a study released last year by UK scientists linked the chemical to diabetes and heart disease.
This is in addition to the 100 other studies that have found the chemical to be an endocrine disrupter or damaging to behavioural and neural development.

Michael Brown, President of chemical consulting firm StrategyMark said, alternatives such as acrylic, polyester, and polypropylene are worthwhile exploring in a number of applications such as non-packaging water sports bottles, baby bottles, water dispensing bottles, appliance containers (e.g. food processors), etc.

Of course it makes sense, but even a consulting firm that supports this industry won’t come right out and say this is a required and mandatory action.

Tomorrow in Part III of this post we’ll take a look at how another country dealt with the same issue.

We look forward to and appreciate your comments.

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Let’s revisit an updated post from last year titled “Neither a leader nor a follower be”.

August 10th, 2010

This is a play on another famous quote, does it sound like the leadership of any companies that you may know or work with? Blah. Blah. Same Same.

With BPA back  in the news and chief executives leaving  the biggest companies in the world let’s take a look at what we would all like to see or not see from our leaders.

Middle of the road does not work. The same old same old does not work. The pace with which change occurs today requires companies to be able to turn on a dime. For that leadership is required. Not leadership that only looks at the bottom line. We require leadership that creates and innovates to both your benefit and that of the global community.

The leadership this author is speaking about is visionary actionable leadership. Not reactionary leadership. We need leadership that looks at the sate of their company and its products as well as the needs of the community at large and in offering their solution to the collective problems faced by these entities, does it better, faster, cheaper and for the general good. This is more about walking the walk before any one else does because it is the right thing to do. If these represent the guiding principles of a company, the money part will follow. This is not something that can be learned or taught in business school.

According to Wikipedia, leadership has been described as the “process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task”.

A second definition which I like better and is more inclusive of followers comes from Alan Keith of Genentech who said “Leadership is ultimately about creating a way for people to contribute to making something extraordinary happen.

As an example of less than stellar industry leadership, let’s look at a recent news article on a subject this author has posted about on a number of occasions “BPA”. I was reading an article recently Titled “Firms aim to fight BPA ban” by Lyndsey Layton of the Washington Post. A quote from the article that follows speaks volumes to the lack of leadership in solving this problem. “Frustrated industry executives huddled for hours Thursday trying to figure out how to tamp down public concerns over the chemical bisphenol A, or BPA”. You have to be kidding me.

In tomorrows post let’s dig a little deeper into this article and suggest how industry leaders should be looking at this specific opportunity that has now grown beyond can linings and plastic bottles; and how they can help buyers from all companies source products that are safer and have a better impact on the environment instead of continuing to follow the same practices they have been since the 1950’s.

We look forward to and appreciate your comments.

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Retailers should run more RFI’s, particularly for new products or services they have not sourced before.

August 9th, 2010

A Request for Information (RFI) is primarily used to gather information to help companies make a decision on what steps to take next.

According to Wikipedia and others a Request for Information (RFI) is a standard business process whose purpose is to collect written information about the capabilities of various suppliers. Normally it follows a format that can be used for comparative purposes.

So a Request for Information (RFI) is primarily used to gather information to help companies make a decision on what steps to take next. RFI’s are therefore most often the first stage in the procurement process particularly with new sources of supply. They are used in combination with: Requests for Proposal (RFP) and Requests for Quote (RFQ).  In addition to gathering basic company capabilities and information, an RFI is often used as a solicitation sent to a broad base of potential suppliers for the purpose of preparing a supplier’s thought process in preparing for a Request for Proposal (RFP) and a or a Request for Quote (RFQ).

Much of the data required for an RFI is generally available and can be found on company websites, U.S. Security and Exchange Commission (SEC) filings for publicly traded companies in their Edgar system, industry guides from companies like Trade Dimensions, or from sources like Dun and Bradstreet.

The challenge for most companies is that they do not have the necessary resources to complete this research. Therefore providers of supplier data should be able to make this data available in templates that companies can begin with. Simple data should always be available in any database as to Company Name, Annual Sales, Product category expertise, contact information, e-procurement experience and product specifications. This data should be easily exportable to a variety of formats such as MSFT Excel.

A simple request of your e-procurement supplier should get you well on your way to completed RFI’s that lead to quality RFP’s and RFQ’s without spending a lot of your valuable time on basic research. If they do not, we’d be glad to hear from you.

As an example, we recently completed and RFI for a customer where 18 suppliers were invited to participate and after evaluation and scoring only 8 were invited to the final RFQ. Much of the data was already available in our SafesoureIt™ supplier database and only required verification from suppliers. The entire process took less than two weeks.
We look forward to and appreciate  your comments.

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I’m heading back to Cape Cod for a week. Maybe I should not be eating the fish.

August 6th, 2010

Maybe I need to ask my server or fish monger where it came from before I eat it. Or better yet buy it from the docks where I know it will be fresh and locally sourced.

Do you ever wonder where the sea and lake food that you eat comes from and whether or not it is safe to eat? Are the seafood buyers at your local grocery or restaurant concerned for you?

Almost three years ago during my first post I promised that The SafeSourcing Blog would call attention to and comment on safety concerns within the global supply chain that may impact your customers, employees, families and other stake holders. I’m sure like me; many of you have been impacted by safety inconsistencies in our supply chain. Personally I have had issues like this impact me, members of my family and my pets.

I recently was watching a little snippet from YouTube attributed to ABC News about the origin and quality or lack there of regarding seafood we consume. As a kid growing up on the east coast near Cape Cod I kind of always assumed that all fish was fresh fish from our Atlantic, Pacific and Gulf waters. Well today, more than 80% of our seafood comes from foreign countries such as Thailand, Indonesia, China and Costa Rica to name a few. Of this, only 1% is tested by the FDA and most of it fails inspection because it includes chemicals, poisons, antibiotics and other additives and is even in some cases farmed in unsanitary conditions. The primary reason for the import to locally fished discrepancy is as you might suspect; price.

This author would hope that all seafood and lake food buyers for our restaurant and grocery chains would ask their suppliers a few of simple questions.
 
1. Where is the seafood you are selling us coming from?
2. Where will the incoming shipments be tested before you deliver it to us?
3. Is it safe for our consumers to eat this fish?

If the answer is not to your liking and documented, don’t buy it. Your consumers will thank you.

We look forward to and appreciate your comments.

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What the? BPA is found in cash register receipts.

August 4th, 2010

This author has posted on Bisphenol A or BPA on a number of occasions as it relates to the use and safety concerns of this chemical building block like product in canned food liners and baby bottles.

My first post relative to BPA was on November 8th of 2008 as part of a two part post and my last was on July 10th of 2010. As you might imagine there has not been much progress by the FDA in eliminating the use of this chemical building block from our products in the United States.

As a refresher the SafeSourcing Wiki defines Bisphenol A (BPA) as a chemical building block that is used primarily to make polycarbonate plastic and epoxy resins. Polycarbonate plastic is a lightweight, high-performance plastic that possesses a unique balance of toughness, optical clarity, high heat resistance, and excellent electrical resistance. Because of these attributes, polycarbonate is used in a wide variety of common products including digital media (e.g., CDs, DVDs), electrical and electronic equipment, automobiles, sports safety equipment, reusable food and drink containers. For many years, polycarbonate plastic has been the material of choice for baby bottles and many reusable water bottles as well as many other products. Bisphenol is the subject of much debate as to its safety as to its safety in food containers particularly baby bottles.

Now according to The Environmental Working Group two-fifths of the paper receipts tested by a major laboratory commissioned by Environmental Working Group were on heat-activated paper that was between 0.8 to nearly 3 percent pure BPA by weight.

This is a potentially larger issue than even the baby bottle issue as virtually anyone that buys a product at any store in this country touches a receipt.

For your education below are the links to several of my prior posts.

1. Part I of II. Reexamining BPA Bispenol A in North America
2. What procurement professionals need to know about purchasing products that contain Bisphenol A or BPA
3. We-need-to-avoid-bisphenol-a-or-bpa-and-retailers-need-to-avoid-offering-products-that-contain-it/

We hope you find this information is useful. Please do your part and buy product that do not contain BPA.

We look forward to and appreciate your comments.

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Retail buyers need to think individually and act collectively in their e-negotiations.

August 3rd, 2010

The art of negotiation is just that an art. In order to be successful at it one requires the skill to convince all parties in the negotiation that each has something to gain.

This is as true for e-negotiation events as it is for personal negotiations. The question is how the tools you are using allow you the flexibility to do so.

I was reading an article in the USA TODAY on Friday July 30th by Jillian Berman titled “Negotiate your way to savings”. ?The lead in was Cable TV, cell phone bills are ripe for cutting. This author would add the following; so is everything else.

So what is a negotiation? According to Wikipedia, negotiation is a dialogue intended to resolve disputes, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various interests. It is the primary method of alternative dispute resolution.

In terms of our discussion and the article we are talking about pricing and services. The article goes on to suggest what they call tenacious bargainers tips. Two of the tips are; don?t be afraid to complain and negotiate away extra fees up front.

Retail buyers need to do the same and the ability to think individually and act collectively when they develop the specifications and rules of their e-negotiation events. What would you ask for if you were buying this product or service for yourself and then be just as aggressive when it comes to your department and company?

We look forward to and appreciate your comments

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Retailers you don’t know what else you can get that is extra from a reverse auctions unless you ask!

August 2nd, 2010

My wife came home with an interesting story form a lunch date the other day and it has become the inspiration for this SafeSourcing blog post.

My wife went to lunch at a restaurant she has never been to before with 7 of her friends the other day. One of her friends called in advance and asked to speak with the executive chef. She told him she was coming for lunch with 7 of her friends and wanted to have the chef prepare a sampling of their best appetizers for the group and would like the restaurant to comp the expense for the group. Are you kidding me that is incredibly ballsy? Here’s the kicker, the restaurant did it. In addition the chef came to the table and explained the selection and what would go well with it for lunch. He also bought each attendee a glass of wine. Most of you are smart enough to figure out the benefit to the restaurant. I can guarantee you we will go there for dinner.

Here’s the tie in.

I always suggest to retailers that there is more to be gained from reverse auctions and other e-procurement events than just price concessions. With that said, cost still tends to be the primary driver or motivation for most retailers. The question always comes back to me; like what? My answer is that you have to use your imagination. Take a look at your product. Ask yourself what more would you like?

1. A better price?
2. An extended warranty for free?
3. Free shipping?
4. An onsite account manager?
5. Premium club membership?
6. One free night for every three nights stayed in a hotel chain?
7. One car grade upgrade from your standard contract for free?
8. 100 free meals for every $10K spent at a specific restaurant chain?
9. Free installation services
10. A donation to your frequent shopper program gifts catalog.

This really becomes a brainstorming or whiteboard event. Once you come up with an idea relative to a certain product, just ask for it in your specification. You’ll never know if you don’t ask.

We look forward to and appreciate your comments.

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Retailers you don?t know what else you can get that is extra from a reverse auctions unless you ask!

August 2nd, 2010

My wife came home with an interesting story form a lunch date the other day and it has become the inspiration for this SafeSourcing blog post.

My wife went to lunch at a restaurant she has never been to before with 7 of her friends the other day. One of her friends called in advance and asked to speak with the executive chef. She told him she was coming for lunch with 7 of her friends and wanted to have the chef prepare a sampling of their best appetizers for the group and would like the restaurant to comp the expense for the group. Are you kidding me that is incredibly ballsy? Here?s the kicker, the restaurant did it. In addition the chef came to the table and explained the selection and what would go well with it for lunch. He also bought each attendee a glass of wine. Most of you are smart enough to figure out the benefit to the restaurant. I can guarantee you we will go there for dinner.

Here?s the tie in.

I always suggest to retailers that there is more to be gained from reverse auctions and other e-procurement events than just price concessions. With that said, cost still tends to be the primary driver or motivation for most retailers. The question always comes back to me; like what? My answer is that you have to use your imagination. Take a look at your product. Ask yourself what more would you like?

1.?A better price?
2.?An extended warranty for free?
3.?Free shipping?
4.?An onsite account manager?
5.?Premium club membership?
6.?One free night for every three nights stayed in a hotel chain?
7.?One car grade upgrade from your standard contract for free?
8.?100 free meals for every $10K spent at a specific restaurant chain?
9.?Free installation services
10.?A donation to your frequent shopper program gifts catalog.

This really becomes a brainstorming or whiteboard event. Once you come up with an idea relative to a certain product, just ask for it in your specification. You?ll never know if you don?t ask.

We look forward to and appreciate your comments.

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Are retailers still using reserve price reverse auctions any more?

July 30th, 2010

In a reserve price reverse auction, the buyer establishes a ?reserve price?, the maximum amount the buyer will pay for the goods or services being auctioned.

A reserve is also sometimes called the desired price, or a ?qualification price?.? Careful thought is required on the part of the retailer in determining their reserve price. Quite often retailers just rely on their existing or current price from their last contract. If careful thought is not given, this may in fact create an unreasonable expectation that results in less participation from prospective suppliers, particularly if the market has changed dramatically in an upward direction since the last award of business. You have to be very careful that once a reserve is met that suppliers will stop bidding because you have already indicated your desire price point.

In a reserve revere auction if the bidding does not reach the ?reserve price?, the buyer is not obligated to award the business based on the results of the reverse auction. This can also add risk to the participation level of suppliers. However once the reserve price is met, the buyer is obligated to award the business to a participating supplier or group suppliers based on previously published auction rules. Most reverse auctions today include terms and conditions that protect the retailer from awarding the business whether the reserve is met or not. This author would caution that if you are just trying to collect prices to analyze market conditions, tell the suppliers up front. If you set a reserve plan to award the business.

Additional pricing considerations can be given to adding other price points or qualifiers in a reserve price reverse auction such as entering a market price. In the case of fuel, this may be from a price index such as OPIS, Platt or Gulf Coast. This information can be visible or blind to the supplier, but let?s the retailer compare a suppliers mark up strategies. This also offers a nice opportunity to calculate cost avoidance during an up market.

We don?t see reserve auctions to often anymore, but understanding the different types of formats and tools available to you and assessing them in your event setup for their potential impact can add to the quality of the data collected and the event itself.

We look forward to and appreciate your comments

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To Unbundle or not to Unbundle that is the retail e-procurement question of the day.

July 29th, 2010

Normally when we speak about unbundling most procurement professionals think we are only discussing the separation of software from hardware in the procurement process.

It is primarily because of this reason that most procurement companies are not able to drive the type of savings that their customers deserve.

At Safe Sourcing we discuss unbundling all of the time. We discuss it regardless of category or product. As a result, our low quote savings average nearly thirty percent across all categories while other companies struggle to achieve half of these savings.

For the sake of protecting our value add, I will not give you specifics on products, but think of all of the elements that go into a product becoming a product. This process will surely uncover those value added costs associated with acronyms like customer relationship management or CRM which are used as an excuse to hide margin dollars.

If your e-procurement event is one line item, your solution provider is not doing their job. If your event is two line items your solution provider is probably not doing their job. How many products are you aware of that you buy either for reuse or for resale that are made up of one component?

There is a lawsuit going on in Europe as we speak where a major manufacturer is being challenged to unbundle a particular product family. If you are interested, you can Google the subject.

In the meantime, hold a white board session internally and list any product that you buy for reuse or resale and see how many line items you can come up with that make up the product. Now think about how you might use that information in a negotiation online or otherwise. If you can?t figure it out, give us a call at 1-866-623-9006.

We look forward to and appreciate you comments.

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