Today’s blog is by Gayl Southard, VP of Administration at SafeSourcing.

On a cross country drive, we passed by white piles of tires along the highway.  I wondered what they could be.  It turns out they are silage piles. It’s easy to forget that grass only grows during certain times of the year.  In the winter it is too wet, rainy, or snowy to grow grass, while in the middle of summer, grass will die if not irrigated by man.  How can you create a food supply for the cows so you can feed your cows daily?  How do you store feed all year?  This feed storage problem has been around for farmers throughout time.  A cow will eat over 100 lbs. of feed per day; how do you store enough food for her during those months with less grass.

Farmers today grow feed during the growing season and store it in large piles. The grass is cut, put into a pile, then is compacted, and covered with plastic to protect it from oxygen and the elements. The plastic covering removes oxygen from the pile so the grass can ferment naturally with microbiological bacteria. Oxygen allows spoilage, but the absence of oxygen allows anaerobic bacteria to ferment the feed and prevent spoilage. The fermentation of the grass allows storage for 1-2 years (or more) without any refrigeration.  Fermentation usually improves the digestibility of foods and helps keep your guts microflora healthy.  Making silage is not a new invention. The tradition can be traced to farmers in Germany.  American farmers didn’t start the practice until 1876. From then, many farmers started using these methods to preserve feed for their cows.  The grass is harvested and put into a pile; the tractor compresses the feed pile to eliminate oxygen

Why cover the piles with tires. Most people use tires because they offer good weight, they are easy to move, and take off. They offer enough weight to compress the pile and keep the cover on.  The grass pile is covered with the tarp and tires to keep out oxygen which allows anaerobic fermentation of the feed just other fermented foods like sauerkraut or kimchi.  The fermentation process actually improves the quality of feed for the cows. The pile is carved off and fed to the cows as needed, the feed has a shelf life for 1-2 years (or more) without any refrigeration.  Much of the grass cows are eating is made of cellulose and hemicellulose, the fibrous components of grass that people cannot digest. When a cow eats grass, it first must be fermented by bacteria in one of her stomachs called the rumen. The fermentation of the silage pile is the same type of fermentation that happens in the cow’s rumen. The silage is actually predigested for the cow and makes it easier for her digestive system.

The most common silage in the U.S. is corn silage. Corn is really just a very tall grass.  Compare a corn plant to a wheat plant; they look nearly the same only corn is a much larger plant. The entire plant is harvested, shredded, and put into a pile. The entire plant can be eaten by the cow including the grain. The corn kernels have starch for energy and the stalk has plenty of fiber.  Corn is also environmentally friendly because of the amount you can grow per acre. Less land and other natural resources are needed to grow feed. A corn stalk will grow up to ten feet tall so on a per acre basis you get much more feed. If you grew other grasses, you would need more land.

For more information on how SafeSourcing can help your procurement efforts, or on our Risk

Free trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire team ready to assist you today.

References………………………

Diary Moos, The Dairy Guy, 11/26/2016

Today’s blog is re-post by Gayl Southard, VP of Administration at SafeSourcing.

Psychiatrist Jim Taylor said: “Perception acts as a lens through which we view reality. Our perceptions influence how we focus on, process, remember interpret, understand, synthesize, decide about and act on reality. In doing so, our tendency is to assume that how we perceive reality is an accurate representation of what reality truly is.”1. In reality we are all predisposed genetically by past experiences, prior knowledge, emotions, self-interest and cognitive distortions. For example, if you were to ask several people that witnessed a car accident, many would say they saw it differently. The focus of the witness’s memory is on the action that took place and not on the circumstances under which it took place. Just because the witness is confident about their version does not make their accounts accurate.

Organizations and businesses need to pay attention how they are perceived by prospects and customers. “Does your target audience see your signature products as innovative, well-priced, useful and available? Are customers swayed by comparison advertising that presents your goods as inferior or not worth the cost?”2. You may be the best, fairest-priced, but still have a bad perception. One bad review online review can damage years of building a good name for your company and it will a lot of work to undo the damage. Unfortunately, you may never know were that review came from. It’s not fair, but it’s reality. Use every option to keep your public image positive. Customer service must be at the top of your list for every employee.

For more information on how SafeSourcing can help your procurement efforts, or on our Risk

Free trial program, please contact a SafeSourcing Customer Service Representative. We have an entire team ready to assist you today.

References…..……………………………………………..

1, 2 Harvey Mackey, AZcentral.com, 7/20/2020

Today’s post is by Dave Wenig, Senior Vice President of Sales and Services at SafeSourcing.

At SafeSourcing, we are all about savings. If you are a reader of this blog, you will know we talk about savings quite a bit. That is for good reason. Creating savings through online RFQs have a huge impact on profitability and the savings is often attained very quickly.

A close relative of savings that gets less attention is cost avoidance. Ultimately, both cost reduction (savings) and cost avoidance are valuable, but cost reduction gets more attention. That might not be fair these days with costs fluctuating rapidly and many commodities on the rise.

For example, I recently spoke with a customer who confessed that we were able to create value far beyond the savings we initially portrayed in our RFQ. This customer had the benefit of locking their pricing in because of the RFQ. In the terms and conditions for their RFQ event, we had included a one-year price lock term that each participating vendor had to agree to. In today’s market, the inclusion of that term has caused this customer to get millions more in value from the RFQ because of this cost avoidance.

At the end of the day, by the time their agreement is up for renewal next year, the cost avoidance value created by the price lock will have far exceeded the initial savings from traditional value derived in savings from the RFQ.

While I am not saying cost, avoidance is better than cost reductions, I am saying that there is a strategic way to make sure that you are able to get both, but it is difficult to do this without the use of tools like online RFQs that put the necessary pressure on vendors to compete and agree to more favorable terms.

Do not keep accepting cost increases and wishing you could create cost reductions. Contact SafeSourcing with your procurement needs and we can help.

For more information on how SafeSourcing can help your procurement efforts, or on our Risk

Free trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire team ready to assist you today.

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

This is an oldie but goodie. Enjoy!

So, are you a buyer, a category manager, a commodities trader or a little bit of each? Be careful because commodities make your job of buying tricky.

As an example, Oil is the most widely watched commodity. This is because the price of oil changes daily which has a great effect on other goods and services that are produced around the world. As such commodities have an impact on supply and demand of almost all products.

Let’s take a look at a fairly simple example. As a buyer you are planning to buy Windshield Washer Fluid, Anti-Freeze products or both. Consumers buy these products at Grocery Stores, Auto Parts Stores, General Merchandise Stores, Convenience Stores and Drug Stores and on line at Amazon. There are many global suppliers for these products whether they are private label in nature or mixes for use at service stations. The products can be near shored and off shored. The commodity markets that drive pricing in these items are actually quite a few such as the methanol market, ethylene glycol market and resin indexes that effect packaging. If that were not enough, the product is also influenced by the price of oil because of its impact on the logistical component or how the products get to market. This can be a combination of ocean bound freight and land freight both of which are impacted by the price of fuel as well as issues like availability of drivers. The packaging of these products is also influenced by another commodity which is the pulp market that drives pricing for corrugated and other paper-based packaging.

So, it’s a pretty simple product and you just got a good price for. The question is did you really? You better go back and take a look at the fine print. You might want to look for things like escalator language and contract termination language. These and other similar tactics can result in higher prices.

Your best bet however might be to find someone that knows what they are doing in the procurement solution provider space.

If you think that’s complicated, how many products do you think are influenced by the price of corn, maize or its genetic modifications? The answer is 100’s including non-edible products like glue for packaging. As such the influence may be actually in the 1000’s. How do you keep up with the changes in this commodity? One way would to discuss it with a company that sources categories dozens of times every year when you may source it once every few years which is also a mistake. SafeSourcing Inc. is that type of company that annually saves our customers in excess of 24% across all expense, cost of goods and capital spend areas.

For more information, please contact a SafeSourcing Customer Services Project Manager in order to learn more.

We look forward to and appreciate your comments.

Recently, it’s been easier than ever to tell who are vendors and who are partners.

Today’s post is by Dave Wenig, Senior Vice President of Sales and Services at SafeSourcing.

Times are tough for many businesses. For many business the road to a full recovery is still long, even as some businesses boom and others find they haven’t been overly impacted. Regardless of how long or short your road to recovery is, I suspect you’ve had an opportunity to see how some of your vendors have behaved during this difficult time and have taken note.

We’re no different. Typically, the stories I share are those of our clients. In this case, we have been able to make observations both through our clients and in our own dealings with vendors.

We’ve seen some real partners out there. Even while their own business might have been struggling, they are still looking for ways to help their customer. Some are doing so an downright creative ways. One example would be offering up less expensive alternative products for consideration instead of the passing along outrageous price increases caused by increased demand for many supply items globally. Another example we’ve seen is partners considering and allowing changes in agreements to accept lower volume orders than had been agreed to previously.

Vendors taking steps like these are great partners. When the dust finally settles and we are all back to normal, the customer will remember that these great partners were there for them during their time of need.

We’ve also seen some vendors out there who have proven to be bad partners. In the face of adversity and when their customers needed them, they chose to take advantage or to refuse to provide any assistance. I previously talked about price gouging in another blog post. The sad reality is that this is also happening.

Vendors who prove through their actions that they are not your partner will also be remembered when this is all over. The reality is, your customers are not going to forget that you didn’t help them or that you decided to try to help yourself at their expense. While I don’t have a crystal ball, I can tell you what the future has in store for you if you fall into this category. Your customers will leave you as soon as they have the chance to do so.

Right now, SafeSourcing is helping customers replace some of their vendors with partners. Right now, our customers are saying no to price gouging. Right now, all vendors have the chance to show that they are great partners. If you would like more information on how SafeSourcing can help you, please contact a SafeSourcing Customer Service representative.  We have an entire team ready to assist you today.

Today’s post is from SafeSourcing’s  monthly newsletter that goes out to over 6500 subscribers.

Here’s some examples of where price increases rising and according to sources, why!

McDonald’s Raises Menu Prices In order to keep up with rising costs, including a 10% increase in employee wages this year, McDonald’s has increased their menu pricing. The company is struggling to hire enough staff to keep their doors open even with higher wages as an enticement. The company is paying more for paper, food, and supplies. The commodity costs for the year have risen 3.5% to 4%, up 2% from earlier in 2021. It is expected that menu prices will increase by 6% compared to last year. “Companies across the globe are raising consumer prices in response to growing costs spanning distribution and freight to fuel and food. U.S. inflation in September remained at its highest rate in more than a decade, Labor Department data showed.” Starbucks Corp. will increase the average employee pay to $17 an hour from $14. Baristas that have been with the company will get a 5% pay increase and employees that have been with the company for five years or more will be eligible for up to 10% pay increase. Many restaurants have increased menu prices to offset higher wages for cooks and servers, as well as increased prices for meat, packaging, vegetable oil and other commodities.

At SafeSourcing we help our B-to-B customers keep their costs down so that their B to C customers do not have to suffer huge price increases. You can too if you contact SafeSourcing.

References

Heather Haddon. WSJ, 10/28/2021