Supplier management may be your most important issue during a time of economic recovery.

May 12th, 2010

Finding new sources of supply has always been an issue. It may even be more important if your current suppliers can not provide what you need because they were forced to down size during the recent economic tragedy.

In the Monday May 10th issue of USA TODAY the Money Section carried an article titled “Suppliers can?t meet demand” by Paul Davidson. The article went on to discuss that the economic rebound has been so robust that manufacturers are struggling so much with demand that it is causing huge bottlenecks in the supply chain. The article also went on to discuss that companies are reluctant to hire to meet the demand because they are not totally convinced that the current rebound will last.

The retail supply chain is something that this author has posted on dozens of times from the importance of a robust retail supply chain to how to manage your relationships with current and new sources of supply. A significant part of that is to have secondary and tertiary sources of supply that you can rely upon. By example, during the most recent H1N1 flu outbreak, Safesourcing was able to provide multiple sources of surgical mask suppliers to one of our customers that had not been able to find them elsewhere for sales in their stores. They did not know of these suppliers. They are also a very large company. Although this particular issue was caused by panic buying, it is still a supply and demand problem and correlates very well to the USA TODAY article. The message here is, don?t wait until a time of panic or increased prosperity to work and plan for spikes in the supply chain that may cause your customers pain.

Following are five Safesourcing blog posts from 2008 that should provide some good base reading on this subject.

1.?Is critical thinking in supplier selection a key to quality auctions? You bet!
2.?Supplier Open Communication. A key to high quality e-procurement events.
3.?Supplier-selection-this-may-be-the-most-important-decision-you-make
4.?What is retail supply base management?
5.?What is the benefit of a large retail supplier database and how do companies use the data to support growing their spend with reverse auctions?

The SafeSourceIt? Retail Supplier Database contains over 380,000 vetted suppliers.

We look forward to and appreciate your comments

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Very few retail companies have contract management software.

May 11th, 2010

Surprisingly this includes from the very largest to very smallest of companies, both of which are extremely exposed to risk.

So just what is Contract Management or Contract Lifecycle Management? Are they the same?

According to Wikipedia Contract management or contract administration is the management of contracts made with customers, vendors, partners, or employees.

Contract management can include negotiating terms and conditions and ensuring compliance with those terms and conditions. Beyond these base functions contract management can also include documenting and agreeing on any changes that may occur during the implementation or execution of a contract.

We can think of contract management as a summary of the process of with which companies use a systematic approach to manage contracts through the process of creating, executing and analyzing contracts for the purpose of maximizing the financial and operational performance of contracts so as to mitigate risk.

A frequent buzz word in the industry today is that of Contract Lifecycle Management Solutions. This really means the same thing from a systems perspective that should include automating much of the following.
1.?Authoring
2.?Negotiating
3.?Tracking
4.?Alerting
5.?Awareness management
6.?Baseline moderation
7.?Commitment moderations
8.?Communication moderation
9.?Contract visibility
10.?Document management
11.?Change management
12.?Issue alerts
13.?Service level agreement moderation
14.?Total Transaction compliance

Ask you solution provider how they can help you in this area and how to integrate CLM with your e-procurement suite.

We look forward to and appreciate your comments.

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SafeSourcing Blog begins its third year!

May 10th, 2010

During the last two years the SafeSourcing Blog has posted over 700 hundred times and 300,000 words and is read regularly all over the world.

When we placed our first post on May 8th of 2008 our goal was to make the blog a piece of an educational website (www.safesourcing.com) for procurement professionals where they could meet, discuss and research and find information on topics of importance to procurement professionals and knowledge workers. We also wanted to call attention to the sourcing of safe products and environmentally sound procurement practices.

The traffic our blog enjoys supports the fact that procurement professionals find our post to be a useful part of their procurement tool belt. Since inception our post has been visited by professionals from eighty nine (89) countries. We are regularly visited by other procurement solution providers and from the best blogs in our space.

Our goal going forward is to continue to focus on the retail vertical and pass on useful information as our learning continues so that others may benefit.

Please tell others about us if you find our information useful. We certainly thank you for and appreciate your patronage.

Comments Welcome.

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Safesourcing Inc. completes a successful year two.

May 7th, 2010

New ideas, new products, new customers and industry leading savings result in significant growth during the toughest economy in 70 years.

It hardly seems possible that we launched our company two years ago. At the time there were indicators for those paying attention of trouble in the global economy but know one had any idea just how bad it was going to get. In hindsight what a time to launch a company. When customers and business partners asked me why, my response was if you are doing what you believe in and the results you promise are true, then there really is no bad time to launch a business.

Our promise has been the same from day one, to reduce the cost of goods and services regardless of a company?s size or the size of the category being sourced. And, while doing so improve quality, safety and environmental focus. Today, two years later our customers will attest to the fact that we have held true to that promise.

Following is a short list of accomplishments that we are very proud of.

1.?Over 700 educational blog posts relative to e-procurement issues of importance.
2.?Over 1500 useful procurement related wiki terms and definitions.
3.?Added an average of more than one new customer for every month in business.
4.?Grew our supplier data base to greater than 380,000 retail suppliers
5.?Sourced 100?s of categories from commodities to finished goods and services.
6.?Sourced categories as small as $5K with savings > 30%.
7.?Sourced categories as high as $80M.
8.?Never held an e-negotiation event that did not result in savings.
9.?Conducted every process in e-procurement including RFI, RFP and RFQ.
10.?Installed our product in Asia in a multi lingual implementation.
11.?Averaged over 24% savings over two years.
12.?Developed a unique process for sourcing small spends for the retail mid market.
13.?Grew our database to over a terabyte of data.
14.?Helped companies source with environmental and social consciousness
15.?Today released SafeContract? a fully featured hosted Contract Management System.

To our customers thank you for your support. We endeavor to earn your business every day. To our business partners thank you for your guidance during a tough economic period. To the retail industry our goal is to be your best vehicle for reducing costs and improving earnings with an increased focus on corporate social responsibility.

Thank You.

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As a follow up yesterdays post, the next question was; what is the benefit of a large retail supplier database?

May 6th, 2010

If used properly a large retail supplier database like SafeSourceIt? provides Retailers with readily accessible data that supports growing their spend with reverse auctions?

Retailers should have continuing success when running prior e-procurement events over again, one area of commonality that has historically made this difficult is a lack of new suppliers.

There is a proper way to insure the sustainability of your reverse auctions going forward.? Since you have already conducted or should have conducted your detailed discovery and analysis a robust retail supplier database will allow you to do the following.

1.?Conduct a detailed supplier discovery
a.?Rank suppliers
i.?Size
ii.?Experience
iii.?References
iv.?Environmental certifications
v.?Safety Certifications
2.?Develop a three year supplier game plan
a.?Develop a three year time line? for all categories
b.?Identify suppliers for each event over the three years
c.?Develop a three year rotation schedule for the selected suppliers.
3.?Role Play internally? each year for a test category
a.?Ask the following questions
i.?Who will you invite and why
ii.?Keep in mind the unique benefits of distributors and manufacturers
iii.?Discuss award the business strategies
iv.?Review alternate scenarios
v.?Review impact on non awarded suppliers
vi.?Determine which suppliers will be invited back
vii.?Determine what new suppliers from your database search will be invited next year

If you only have the same list you originally used to conduct your historical events, don?t expect savings the 2nd and 3rd time around if market conditions are similar. Or, you could call Safesourcing.

We look forward to and appreciate your comments.

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A Retailer partner asked me today how we built our retail supplier database SafeSourceIt™.

May 5th, 2010

The reason they asked is because they can not believe where we keep coming up with the data we have on fresh new sources of supply that they have not heard of.

The first part of the answer is that you have to be a student of the database industry to understand what may be available to you without having to do a lot of work. At the end of the day a database is a list albeit a sophisticated list with lots of tables and joins and other database features that allow for the combination and use of data.

As an example, when looking to build a retail supplier database there is certain information you require in order for the data to be believable. UDDI (Yu-di) is an open industry initiative, sponsored by the Organization for the Advancement of Structured Information Standards (OASIS), enabling businesses to publish service listings and discover each other and define how the services or software applications interact over the Internet. These service listings can take a number of different forms such as business registrations, for UDDI they are in the following formats.

1. White Pages — address, contact, and known identifiers;
2. Yellow Pages — industrial categorizations based on standard taxonomies;
3. Green Pages — technical information about services exposed by the business.

Combining these data which is readily available from a variety of sources provides a great start. From there the challenge to add other attributes that are important to you such as certifications, sic codes, detailed company descriptions, sales figures, products carried, experience, ratings etc.

This author has always believed that reinventing the wheel is  a misguided way to accomplish development initiatives and with all of the open source available on the market today and the cost of IT talent as high as it is we have to explore these alternatives to core development if time to market is a critical success factor.

So there you have it, my thinking and process for building our database. The next question is how we keep it fresh an updated. And that my friends are a trade secret.

We look forward to and appreciate your comments.

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A Retailer partner asked me today how we built our retail supplier database SafeSourceIt?.

May 5th, 2010

The reason they asked is because they can not believe where we keep coming up with the data we have on fresh new sources of supply that they have not heard of.

The first part of the answer is that you have to be a student of the database industry to understand what may be available to you without having to do a lot of work. At the end of the day a database is a list albeit a sophisticated list with lots of tables and joins and other database features that allow for the combination and use of data.

As an example, when looking to build a retail supplier database there is certain information you require in order for the data to be believable. UDDI (Yu-di) is an open industry initiative, sponsored by the Organization for the Advancement of Structured Information Standards (OASIS), enabling businesses to publish service listings and discover each other and define how the services or software applications interact over the Internet. These service listings can take a number of different forms such as business registrations, for UDDI they are in the following formats.

1.?White Pages ? address, contact, and known identifiers;
2.?Yellow Pages ? industrial categorizations based on standard taxonomies;
3.?Green Pages ? technical information about services exposed by the business.

Combining these data which is readily available from a variety of sources provides a great start. From there the challenge to add other attributes that are important to you such as certifications, sic codes, detailed company descriptions, sales figures, products carried, experience, ratings etc.

This author has always believed that reinventing the wheel is? a misguided way to accomplish development initiatives and with all of the open source available on the market today and the cost of IT talent as high as it is we have to explore these alternatives to core development if time to market is a critical success factor.

So there you have it, my thinking and process for building our database. The next question is how we keep it fresh an updated. And that my friends are a trade secret.

We look forward to and appreciate your comments.

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Why is e-negotiation not the most important initiative of all retail companies?

May 3rd, 2010

The answer is because we continually just seem to get in our own way because we always feel as though we have more important things to do and create to many degrees of separation form the original directive...

I have been in many meetings numbers of retail companies where charts that reflect savings from recent e-negotiation events of other retailers with similar formats are reviewed. As real as these results are, it is still difficult for most retailers to pull the trigger in order to give a new process a try. We just seem to get in our own way because we always have more important things to do.

We just have the ability to make things to difficult for ourselves.? Relative to e-negotiation, let?s assume that the CEO directs that he or she would like the cost of goods reduced. The project is then assigned to the Senior Vice President of Supply Chain or Chief Logistics Officer or Chief Procurement Officer or other senior executive. This is further assigned to the Vice President of Purchasing who in turn assigns it to the director of supply purchases. The director convenes a meeting of the buyers or category managers responsible for a variety of supply categories. In degrees of separation this is about 5 or 6 degrees from the person initiating the project. And now the excuses (delays) begin.

1.?We can?t damage our relationship with our incumbent suppliers.
2.?We get the best price in the industry right now.
3.?These guys don?t know what they are talking about.
4.?Don?t we have a tool that does this in our ERP system?
5.?We?ll sacrifice quality.
6.?We don?t have time for this.
7.?I?ll get back to you.
8.?Let?s create a cross functional team.
9.?I?m not going to be first.

If we go back to the CEO and explain what the situation is, one is likely to get a reply that says to the team JUST DO IT! Unfortunately that needs to be followed by; DO IT NOW!

From start to finish, an e-negotiation event such as a reverse auction should take no more than two weeks to run. This includes the entire process including an RFI if required from the day a retailer says go to the actual award of business. There are several requirements necessary to accomplish this that will eliminate the worry and mitigate the risk.

1.?A robust supplier database with safety and environmental focus.
2.?A robust event template library.
3.?An intuitive or intelligent tool for building an event quickly.
4.?An automated reporting tool to provide immediate event detail for review.

If you are really interested in improving your bottom line now, you are less than two weeks away from immediate measureable results.

We appreciate and look forward to your comments.

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Why some retail companies are not successful with e-negotiation programs or actually most programs they implement.

April 30th, 2010

The most important element missing from these programs is the recognition that effective e-negotiation like all successful programs requires strong support from the highest level of executive management.

Most companies understand that lowering their cost of goods and services provides the greatest potential benefit or impact to their bottom line. However they face significant roadblocks in doing. At this point, one might ask why some retail companies succeed while others continue to implement program after program with no ongoing measurable benefit. As mentioned in the excerpt above, the first among these is the recognition that effective e-negotiation initiatives like any other successful program requires strong support from executive management. This is important because Retail as an industry lags well behind other industries in utilization rates of e-negotiation tools. So at a minimum in order to get off on the right foot, this means the CEO, CFO, CLO or CPO sponsorship is critical and mostly the first two. Once this directive has been issued, the next step is to identify savings targets across all corporate spend categories. Once these targets are identified and ranked, a category specific attack plan can be developed that best maximizes savings opportunities.

It is important to note, that savings alone does not create a successful e-negotiation plan. What can not be sacrificed in the name of cost reduction are quality, safety improvement and environmental support programs that enforce your Corporate Social Responsibility (CSR) goals.
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A key challenge for any procurement organization directed to implement e-negotiation tools across all of their unique spend categories, is to not over complicate the process into something that you can?t maintain. At a high level, the following steps will insure that you are headed down the right path.

1.?Indentify business owners
2.?Identify all spend opportunities by owner
3.?Consolidate spends into a total corporate view
4.?Aggregate like categories
5.?Rank spend by category and owner
6.?Develop a total company strategy
7.?Research and Source additional qualified suppliers
8.?Collect detailed specifications
9.?Prioritize events based on spend and Importance
10.?Let your solution provider do their job
11.?Hold e-negotiation events
12.?Negotiate final terms
13.?Award of business
14.?Contract completion
15.?Results Analysis

Most quality e-procurement solution providers have well developed e-negotiation strategy and plan templates that will aid you in implementing your best implementation while maintaining quality and supporting your CSR initiatives.

We look forward to and appreciate your comments.

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Retailers; is your sourcing transparent enough?

April 29th, 2010

This is really an important question? If you are not using e-negotiation tools, the answer is most likely no.

If you are not sourcing at least 30% of your cost of goods and services with e-negotiation tools, you are lagging the leaders in your industry and well behind other industries. Resultantly you are not getting the best costs and not driving the best margins for your company.

The e- negotiation process and in particular reverse auctions since their inception over a decade ago haven driven healthy competition amongst competing suppliers. As such the results of an e-negotiation event can provide a great benchmark for both the buyer and suppliers. For buyers the results can be used as a tool to evaluate how to best source other products and services. For suppliers that don?t end up as the low? bid, have the opportunity to evaluate why that is and what they need to do in order to improve or to be more competitive in the market place. This of course is all happening without the need to collect, collate, compare or negotiate during the process. In other words it is happening transparently to the normal sourcing process.

E-negotiation events provide the opportunity for suppliers that are outside of your business area or knowledge base to bid for your business. That is if your solution provider has access to a large number of retail suppliers.

Possibly the single largest? benefit to? using e-negotiation tools outside of price compression? for? procurement professionals? is that it offers? a significant opportunity for process improvement since most solution providers offer a standard process for hosting e-negotiation events. Everything is done in one place using standard processes to build the event to the analysis of the bids collected. All information is then available for immediate evaluation and archived for easy access in the future. This reduces the overall procurement life cycle time, eliminates or reduces the opportunity for human error, and provides a standard way to award business.

We look forward to and appreciate your comments.

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