China is at it again. Are we being vigilant enough?

February 11th, 2010

This author has posted on many occasions regarding the risks and potential rewards associated with offshore sourcing, particularly as it relates to China and the care we should take in doing so.

A blurb in Today?s News Briefing section of USA TODAY was titled China recalls 170 tons of tainted milk powder. On the surface one might think this is good news because the product was detected and removed from the supply chain. The bad news is we thought the same thing in 2008 about the same exact product. Not the same issues with a new product, but the exact same product that was to have been recalled and destroyed but was repackaged and then distributed again. The product again is milk power tainted with melamine which I have posted on in the past.

The product mentioned above may not have been destined for or ever have made out side of China. The real issue is what is being done by companies to check for and insure the ingredients, formulas and makeup of products they are buying overseas when unscrupulous individuals or poorly run companies try to pull the wool over our eyes. Who is your internal agent that asks the right questions? Who are your service providers that do the same on your behalf? It is something that most companies do not think about and need to.

Below are four posts from previous years on related subjects. Please review and refresh your efforts on the behalf of your consumers to make sure that your offshore purchases have less risk associated with them.

1.?Do we get quality products from China?? When will we and how much will it cost? 9/08/2008

2.?At what cost profit? Procurement professionals need to exercise great care when sourcing food products from China. 10/22/2008

3.?Let?s review a good idea from China and build on the traceability discussion. 10/08/2008

4.?Part II of II What should grocery product procurement professionals know and do about Melamine. 12/01/2008

We look forward to and appreciate your comments.

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SafeSourcing trains hundreds of suppliers every week to use e-negotiation tools to their benefit.

February 9th, 2010

The same question is always asked by those new to the process. How do we benefit from participation in this type of process?

SafeSourcing Inc. places a great deal of value in our SafeSourceIt?? Retail Supplier Database of over 350,000 suppliers located in Mexico, Canada the United States, China, Korea, The United Kingdom and the European Union? Additionally we also place a great deal of value on each individual supplier regardless of size. We believe that well thought out next generation e-negotiation tools can provide significant benefits to buyers and suppliers whether they are hosting or participating in e-negotiation events such as reverse auctions of RFI?s.?

Some but certainly not all benefits that suppliers can anticipate from SafeSourcing are:
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1. An easy to use e-negotiation tool limited to a single page view where a supplier can be completely comfortable that their company?s best foot is being put forward to the soliciting company.

2. An increase in new business opportunities through engagements they would otherwise not be exposed to.

3. Clean data about the soliciting company and an accurate listing of their event guidelines, specifications, terms, conditions and other information necessary to build an accurate and successful pricing strategy.

4. Best practice training in event participation and strategy development.

5. A clear focus on what?s important beyond price in next generation e-negotiation tools such as supplier safety certifications and practices as well as their environmental programs that will differentiate them from other suppliers.

6. Closed loop reporting of results of the specific e-negotiation event a supplier participates in as well as a detailed supplier feedback questionnaire report.

7. Significant time savings associated with new business development that becomes more and more costly as fuel and other related prices continue to rise.

8. Industry pricing trends extrapolated from their view of low quote information during the event if allowed by the soliciting company.

9. Use of the same e-negotiation tools for their own procurement needs.

10. Introduction to an educational website that provides all sorts of free tools for procurement professionals use including a daily safety alerts from over 25 sources, a daily sourcing blog, a? sourcing wiki and SourceBook? the industries only social network for procurement professionals.

We look forward to and appreciate your comments.

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The USDA attempts to make school lunches safer.

February 8th, 2010

The reason I use the word attempt is that quite often programs are announced that are placed on top of other programs already in place that just end up complicating the other programs by adding more process...

Have you ever heard the phrase ?A camel is a horse created by committee?? Well read on.

According to a February 5th article by Blake Morrison and Peter Eisler of USA TODAY titled School lunch safety shored up, The United States Department of Agriculture or the USDA announced steps to ?assure the safety and quality food? purchased for the National School Lunch Program.

This author discussed this subject in a post on 12/10/2009 titled I loved school lunches and in a related post on 01/21/2010 titled Where?s the Beef and how do we trace it? As my previous posts point out this is not just a beef problem, a recall management problem, a poultry problem (spent hens) or a traceability problem. It is all of the above and more.

Beyond what the USDA can do and what meat packers and processors can do is what the schools can also do. From a pure sourcing perspective, the question is are our schools just buying what the government has to sell in terms of commodities or are they actually asking questions as to where the products came from, how they were grown and what standards the growers and processors are beings held accountable to.

In another post titled Food Safety requires a community effort I quoted President Obama as having said ?There are certain things only a government can do. And one of those things is ensuring that the foods we eat are safe and do not cause us harm.? So congratulations to the USDA for stepping up. But let?s remember that it is a community effort and as procurement professionals we can not let our guard down just because another program comes along.

Our children and our communities are counting on us.

We look forward to and appreciate your comments.

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Giving it your best is more than a practice.

February 5th, 2010

Best Practices. This author does not like this buzz word. How many times during a sales process have you heard the following? ?We follow industry best practices?.

Best practices only become best practices through a thoughtful paying forward of one?s careers learning to others in order to shorten their educational curve to the ultimate benefit of customers, partners and other stakeholders they may interface with in the hope that they will do the same thing.

According to Wikipedia a best practice asserts that there is a technique, method, process, activity, incentive or reward that is more effective at delivering a particular outcome than any other technique, method, process, etc.

When a company indicates to you that they use best practices, does this mean they are supporting what is the best practice for the entire industry they serve such as the procurement space. Or does it mean they are the best practices for just their particular product family?

This author does not believe that a best practice is just following a standard way of doing things that can be carried out by multiple organizations. A best practice is a life long process that by its nature has to evolve over time as tools, businesses, and existing processes change so that a current practitioner performs similar tasks more efficiently or cost effectively.

If one uses best practices, the result should?be an ideal state that a person or an organization set out to achieve in the first place. In fact if the process used is actually a best practice shouldn?t all of a companies customers use exactly the same process. I?m not sure that this is ever a question one asks when looking for a referral about a companies service offerings. Please tell me about your companies? best practice? Are they consistent and carried out each and every time to the desired result?

One way to ensure good quality results is to provide templates that can be used over and over again and are evaluated at the completion of each practice or session of a particular deliverable and changed as need be. This then requires passage to other customers in order to insure the integrity of the process. This elevates the actual process beyond just a buzzword and moves a particular process in the direction of becoming a best practice that drives similar results on a consistent basis regardless of customer.

This author will continue to refer to our services offerings as high quality process techniques focused on continuous improvement that deliver anticipated results. Our customers, supplier participants and business partners will determine if they are best practices for them.

We look forward to and appreaciate your comments.

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What is The Transportation Intermediaries Association or TIA?

February 3rd, 2010

If you are sourcing logistics for your company, working with 3PL?s or otherwise involved in the transportation of products, the TIA is a great place to keep up with the transportation industry.

The Transportation Intermediaries Association (TIA) is the premiere organization for third-party logistics professionals doing business in North America. TIA provides resources, education, information, advocacy and connections to establish, maintain and expand ethical, profitable and growing businesses in service to their customers.

There are a number of certifications offered through the TIA that signify the quality of transportation providers. Please read on to learn more about them.

TIA – Certified Transportation Brokers:
Since1986, the Certified Transportation Brokers designation has signified the highest level professionalism and integrity in logistic brokers. The CTB program tests the knowledge of participants on brokerage, legal and regulatory requirements, as well as the latest trends in transportation and business management.?

TIA – Performance Certified:
The TIA Performance Certification Program is the first business certification program for professional 3PL businesses with proven expertise in logistics. This certification takes the best features of TIA’s? P3 and GPP products, and combines them with the TIA name.

The Platinum Performance Program (P3):
A main feature of this program is that participants are identified by the P3 logo as service providers committed to a set of operating best practices designed to deliver the highest level of customer service. The name Platinum Performance Program and its logo are becoming a standard by which customer service is measured.

Ask your e-negotiation solutions provider how they evaluate the transportation companies they work with and what certifications they hold?

We look forward to and appreciate your comments.

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OPIS is the leading U.S. provider of retail fuel price information.

February 2nd, 2010

If you are a retail buyer of fuel in either the contract or spot markets or you are involved in your company?s logistics planning, you should be following OPIS.net and OPISretail.com.

With prices at more than 100,000 stations, no other source offers more timely or accurate data than OPISretail.com.

Whether you are looking for a feed of actual site prices in real-time throughout the day, rolled up averages of a data subset, or historical data for trend analysis, OPIS puts all the information you need at your fingertips.
All major players are included, from traditional major brands to regional independents to aggressive convenience store chains, as well as the supermarkets and big box stores.

For the 6th consecutive year, OPIS has compiled, crunched and condensed its retail and wholesale data into one exclusive and highly valuable report.

The OPIS Retail Year in Review and 2010 Profit Outlook Report delivers a 360 degree look at last year?s retail landscape – revealing the brands and markets that dominated and the ones that were most challenged.

Inside this year?s report, you?ll find critical data needed to benchmark your company?s position in 2010 including historical price changes and in-depth analysis of the changing relationships of the entire supply chain, from the futures market to the individual outlet owner.

Please vist OPIS.net to learn more about their valuable services.

We look forward to and appreciate your comments.

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A customer asked me what a reserve price reverse auction was today.

January 29th, 2010

I thought I might share my answer that there are all types of Reverse Auctions. A Reserve Price Reverse Auction is just one of them?

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. This 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. I personally have seen retailers try to just use their existing price from their last contract. This type of practice may set unreasonable expectations, particularly if the market has changed dramatically in an upward direction since the last award of business. In today?s market, fuel would be a great example of something that you would not set a reserve price based on a previous contract if you wanted incumbent or new suppliers to take you seriously.
Traditionally, 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. 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.
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.net spot fuel or rack rate updates.. 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? look forward to and appreciate your comments

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Try buying products and services that are safe and support the environment.

January 27th, 2010

The sourcing of quality safe retail products at the best market price that support sustainability is the most difficult job in retail.

Do consumers have the right to expect products, services and other finished goods they purchase from their retailers to be safe and eco friendly?

If so, what level of safety should they expect? Does safety extend beyond the personal safety of their families, pets and loved ones to the ecological impact the manufacturing of these products has on our planet? Who should bear the expense of this increased safety; suppliers, retailers, or consumers? Are there more effective ways in the form of better processes and more modern easy to use tools to reduce costs and increase safety and eco awareness?

A Consumer?s Perspective:

Many baby boomers remember listening to the nightly news as children and young adults and hearing the local anchor person ask the following question. ?It?s 10 o?clock. Do you know where your children are??

In those days, it was fair question. Prior to the development of pagers, cell phones, personal digital assistants smart phones, and Apples newest offering the question challenged parents to be accountable for their children and insure that they were safe. Today, a simple text message or phone call provides some level of security to parents, albeit not the level of safety one might like. But, do we know how the safe the products we consume and use are? Toy recalls, pet food recalls, tainted drugs, many food born illness outbreaks from salmonella to e.coli, melamine, BPA issues, children?s jewelry. The list grows daily.

The question consumers are asking retailers more often these days is how safe is your supply chain? That?s because every retailer has a similar but different supply chain.? Consumers are interested as to what level their retailer understands where their products come from??? The Public Health Security and Bioterrorism Preparedness Act of 2002 was fully enacted in 2004. It requires processors, distributors, importers and other reseller groups in the United States to maintain records that identify the immediate sources that they receive food from and the recipients they send it to. There are any number of other laws and standards we discuss in this post regularly covering virtually every product made.

Should consumers have anything to worry about and if so what risk does this pose for retailers? Visit us tomorrow for some answers.

We appreciate and look forward to your comments.

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What type of category savings can you expect from the use of E-RFX tools?

January 26th, 2010

I have had many retailers ask me the question, what are some examples of category savings we might expect when running E-RFX events? The answer is that it depends on who you are asking and what you actually are measuring.

There are probably at least a dozen websites that speak to category savings. Each discusses different numbers. The reason the answer depends on who you ask is that to begin with every company defines categories differently. A simple example might be something like bottled water. Is bottled water really a category or is it a sub category of beverages which is a sub category of grocery. The first question that requires an answer is?Are you looking for true category savings or are you looking for specific product savings?? A follow on question might be; Are you asking for actual realized savings or are you asking for savings that are reflected at the end of an E-RFX event? If you are asking for true realized savings, there are a multitude issues that need to be discussed.? If the successful supplier is your incumbent, then the savings may actually be closer to those viewed during the E-RFX event; however, reality indicates that a large number of incumbents do not end up with the low quote.? If the supplier is not the incumbent, there are actually quite a few elements that result in realized savings that have to be considered.? By in large, they can be included in a catchall phrase referred to as switching costs. To begin with the supplier that you plan to award your business to may not be an authorized vendor in your data base. As such, the IT department and or the finance department are needed to add them to your database. A new contract may also be required with a company that you have not done business with before which requires the involvement of your legal department and may, in fact, add delays to the process that requires you to order additional product from your existing supplier at potentially higher prices than awarded during the E-RFX event.? If products are being delivered to a distribution center, slotting requirements are needed and pick lists require updating in order for the product to be available when ordered by individual store locations.

Now, let?s go back to the actual E-RFX event for a minute. At the end of the E-RFX event when business was awarded were the savings the same as displayed during the event? Did the E-RFX event just provide you with high level savings made up of all low quotes; or, if business was awarded to multiple suppliers ,were savings calculated in that manner?? Were funds, if included in the winning bid, included in the savings and treated the same way that your company treats them from an accounting perspective? Is shipping included in the final price and was it included in the price from your previous contract?? Are pre-event historical savings a result of how companies awarded business; or are you being quoted a historical average of all low quotes run through a system even though business was not actually awarded that way and savings may not have been realized?

So, what can you expect for category savings in an E-RFX event? The answer is it depends. It is however critical that you make sure you are working with a provider that knows what they are talking about.

We look forward to and appreciate your comments.

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This author loves all kinds of Salami. Is it traceable?

January 25th, 2010

I grew up in the Boston area where we had a very large Italian population particularly in an area known as the North End. It was working at the Mira Mar (Look at the Sea) when I discovered the wonders of top quality Salami.

Rose said, ?toughie (their nick name for me) get out of the Salami?. I had this bad habit of reaching in the refrigerator (possible contamination) and taking 5 or 6 slices that had been cut in half for pizza and stuffing them in my mouth all at once. The Salami was either Genoa or Volpi or some other top quality brand. I did not even know where it came from and I?m sure that neither Rose nor Margaret (both from Italy) the proprietors could trace it either.

Today I live in Arizona. We have a few good Italian eateries here but not a very large Italian community. I was reading the Arizona Republic today when an article jumped out at me titled R.I. Company recalls salami. This article was attributed to the Associated Press. Being as Rhode Island is very close to Boston and also has a great Italian section called Federal Hill and the subject was salami I read on. As you are aware, my most recent post was also on product safety and traceability, titled Procurement Professionals can aid in product safety adherence.

The article went on to say that a Rhode Island meat company had recalled 1.24 million pounds of pepper coated salami after month?s long investigation of a salmonella outbreak that sickened 184 people in 38 states by comparing shopping receipts of those who got sick. This certainly supports one forward and one back accountability from a retailer?s perspective but this author is not sure that the intention of the rule is to have to chase down receipts which is extremely time consuming, costly and a strategy that provides the possibility of an extremely limited sample.

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. Doing this systematically is where the retail industry needs to be.

This author has discussed this in numerous previous posts. One of my favorites is from September of 2008 titled Traceability-also-requires-sensibility-if-you-want-a-safe-supply-chain.? So what can you do as a retailer? Begin by asking your e-procurement solutions provider how they address traceability with their tools.

We look forward to and appreciate your comments.

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