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

I’d like to thank my SafeSourcing associates both past and present for their constant quality input to my posts and whitepapers and upcoming book.

The Request for Quote (RFQ)

A Request For Quote is typically used to solicit price and price related details such as freight, that meet minimum quality specifications for a specific quantity of specific goods and/or services. “RFQs are usually not advertised publicly, and are used commonly for (1) standard, off-the-shelf items, (2) items built to known specifications, (3) items required in small quantities, or (4) items whose purchase price falls below sealed-bidding threshold. Suppliers respond to an RFQ with firm quotations, and generally the lowest-priced quotation is awarded the contract.” 4

Though the above historically represented the industry standard as to what an RFQ was, it is important to expand on each of the points and understand the pieces from a historical and practical standpoint. With online eProcurement tools suppliers have an indication of where they stand and an opportunity to adjust their pricing should they choose. In standard practice this is done by phone calls or e-mails and one at time. As such it is very time consuming and does show some savings, but not nearly the rate of success online tools have historically provided.

Standard, off-the-shelf items. This is a standard misconception of procurement departments everywhere. The fact is that virtually any product or service can be taken through the eRFX process.  Strategic Sourcing solutions providers with extensive global supplier databases can invite a number of new suppliers to participate in the bidding process on whatever items or service may be required.  Many will have some level of experience in successfully participating in eRFX events in a variety of functional areas within the organization such as HR, Marketing, Construction and IT to name a few.

Items built to known specifications. While this is a valid concern, it is also the biggest reason why projects are never taken out to bid; not having specifications or having the time to assemble them. Working with 3rd party procurement solution providers companies are more able to cover all of their needs, taking into consideration all of the moving parts that affect these items. Such as freight, fuel surcharges, additional fees and hourly rates.  Results can be achieved that are comprehensive enough to allow strong decisions once the project has been completed.

Items required in small quantities. Another misconception about RFQs are the quantities of items that can be sourced and duration of time for which those quantities are needed. There should be no limits at all, including number of items to have the suppliers bid on. With that established, however, there are always unique strategies to every event so that the host company can end up with the most complete set of information while allowing suppliers to focus on those areas that need the most attention.  This is part of the service that needs time to be considered as sourcing projects are strategized and developed.

Items whose purchase price falls below sealed-bidding thresholds. The recommended approach for pricing within the RFQ should be analyzed based on the historical spend, also taking into account any price indexes that can affect future pricing increases. Using historical spends and any additional information available, a max quote is often established that the suppliers must meet prior to participation. Setting a price decrement is also strongly recommended, and often plays a key role in the strategy as to how you would like to have the suppliers act, giving them the flexibility to make price adjustments they are comfortable with while driving savings as part of the process.

Understanding the differences between historical RFQ strategies and changes that are resulting in stronger results is the beginning of assembling the right strategy for your project. Strategies that have proven successful in the past generally have similar features in common and drive the two most important aspects of every project; valuable results and supplier participation.

Details, Details, Details- In the RFQ, send an invitation to potential suppliers containing a detailed list or description of all relevant parameters of the intended purchase, such as:

• Personnel skills, training level or competencies
• Part descriptions/specifications or numbers
• Quantities/Volumes
• Description or drawings
• Quality levels
• Delivery requirements
• Term of contract
• Terms and conditions
• Other value added requirements or terms
• Draft contract

An RFQ event can have many suppliers participating in your project. They will all be actively participating during the RFQ in a preset timeframe, which is usually 15 minutes, but can be adjusted when the line item count grows over 25 items. Within the 15 minutes, suppliers can lower their bid pricing an unlimited amount of times. Like sealed bidding, suppliers cannot see one another’s pricing. There is only one way they know they have a low quote on an items and that is through the use of a low quote indicator when they achieve that milestone by phishing for it.

Missing Pieces– An easy way to establish specifications and develop base pricing is from the RFP responses submitted earlier. Many times a list of suppliers is established that has already been educated on entering pricing through an online sourcing or bidding tool. The RFQ gives the supplier the opportunity within the live event to view whether or not if they have any low quotes and to “sharpen their pencils” in order to lower their pricing if they wish to do so. From this event an award of business based on the results can be made.

Training and Communication – Suppliers should be trained as to how to use the eProcurement system, how to place their bids, how to look for the low quote indicator, and at the same time communicated with on questions and the pricing and products and services you are looking for. The overall goal is to drive the best overall value, so suppliers should have an opportunity to enter notes within the RFQ during the live event. This additional information often offers additional hidden savings opportunity, i.e. if 1,000 cases are purchased rather than 900 cases, additional discounts, or other value added services such as freight waived for the first 6 months of a 1 year contract if awarded the business. These additional notes can provide and overall benefit, rather than just a low price wins.

Returning to our original RFI example of a company owning a building they intend to repurpose as a Distribution Center, the process began as an RFI in order to understand what was needed so it could be followed by an RFP in order to collect further detailed information and base pricing. These two steps were then followed by an RFQ in order to compress the pricing from suppliers who participated in the RFP and were invited to this final stage. In this last stage running the line items as a complete list of materials rather than an item by item list, total cost of freight, total installation pricing- which could include teardown pricing which could also be listed as its own line item can have great value and provide the opportunity for the suppliers to keep their focus where it is needed rather than on 100’s of individual line items submitted during the RFP. The four items mentioned here represent the largest spend items of the proposal and have the opportunity to lower pricing by 20% or greater from the original RFP pricing.

Determining what stage of the eRFX process to begin with and how to assemble those pieces can be a difficult puzzle to put together especially if a procurement team is already engaged in a myriad of other daily activities. A good Strategic Sourcing solution provider can help put these pieces together in a way that requires less of your company’s time and resources.

For more information on how SafeSourcing can help you through the complex minefield of eRFX strategies, please contact a SafeSourcing Customer Service representative.

We look forward to and appreciate your comments.

Resources————————————————

http://www.businessdictionary.com/definition/request-for-quotations-RFQ.html

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

I’d like to thank my SafeSourcing associates both past and present for their constant quality input to my posts and whitepapers and upcoming book.

A Request for Proposal (RFP) is a document used in sealed or electronic bid procurement procedures through which a purchaser advises the potential suppliers of (1) statement and scope of work, (2) specifications, (3) schedules or timelines, (4) contract type, (5) data requirements, (6) terms and conditions, (7) description of goods and/or services to be procured, and (8) instructions for preparation of technical, management, and/or cost proposals. As an example, Government RFPs are publicly advertised and suppliers respond with a detailed proposal, not with only a price quotation. They provide clearly quoted specifications for negotiations after sealed proposals are opened, and the award of contract may not necessarily go to the lowest bidder.2

Breaking down each of these 8 pieces of information will help to form an understanding as to whether there is enough detail to move straight to an RFP,  thus skipping the Request For Information altogether.

Scope of Work: This refers to all of the elements that should be included in the proposal for the project and is generally specific to each customer along with the data and metrics provided to shape it. Simply, this is the definition of the needs and expectations for the work needing to be completed.

Specifications: “An exact statement of the particular needs to be satisfied, or essential characteristics that a customer requires (in a good, material, method, process, service, system, or work) and which a vendor must deliver. Specifications are written usually in a manner that enables both parties (and/or an independent certifier) to measure the degree of conformance. They are, however, not the same as control limits (which allow fluctuations within a range), and conformance to them does not necessarily mean quality (which is a predictable degree of dependability and uniformity).”3

Generally specifications will be broken into either performance or technical specifications that define the types of goods or services needed from the vendor community. Developing strong specifications ensures proposals containing exactly what is needed. As a result vendors will know not to over bid or under bid.

Schedules or Timelines: This is the time frame of the expectation of when the RFP is sent to the vendors, when questions (about the specifications or the RFP process) are due from the vendors, when the vendors can expect the questions with answers to be returned, and when the RFP is due to be completed.

Contract Type: This defines to the vendor if the contract is a spot buy, a one year, two year, or longer contract. There may also be additional special contractual requirements added within this area.

Data Requirements: This can vary from RFP to RFP, but every project should collect basic information about the vendors such as, their name, address, primary business, who the primary contact will be with their specific contact and other related information, usually a list of 3-5 references and a list of current businesses that are similar in size to the company running the RFP.

Terms and Conditions: General and special arrangements, provisions, requirements, rules, specifications, and standards that form an integral part of an agreement or contract.

Description of Goods and/or Services to Be Procured: This description defines what is being requested. It is a bridge between the scope of work and the specifications. This area is typically where vendors are asked to give their proposal of price based on the needs defined and within the guidelines of the specifications.

Instructions for preparation of technical, management, and/or cost proposals: These are the details on how to complete the RFP. Typically the supplier will be given a deadline to complete the RFP, to complete training on how to enter Responses and Pricing, and the additional information the customer may need as supplemental documentation and how to submit that information.

In the example I used in the RFI section, (Owning a new or used facility and turning it into a distribution center) It may be known where the racking should be located, how much racking is required (this would include a set materials listing), the details of labor to install new materials and remove and re-rack another area. All of these details are required for the suppliers to bid the job appropriately. Within a very detailed RFP there are fewer chances for over or under bidding from the suppliers. The quality of an RFP is very important to successful project management because it clearly delineates the deliverables that will be required.

The details received from an RFI can be used to build the specifications for an RFP. Multiple suppliers have verified and provided details needed to complete the project. The RFI may also produce details not previously known, for instance in the racking project: if the location is in California or other geographic areas prone to seismic activity a seismic analysis will also be required to complete the work. This can be completed, but for an additional charge from the supplier. Suppliers may all have similar products, but they may not be compatible to other supplier’s materials. In other words, their product will be proprietary and not interchangeable if a repair is required in the future. These details and more need to be inserted into the new RFP.

So how can an RFI be combined with an RFP? If there needs to be a high level of knowledge about a product, project, or service, but the same supplier has been used exclusively for a long period of time and it is unclear as to whom additional sources of supply might be. An RFI could be combined by asking the questions specifically related to the new potential suppliers; who are they, where are they located, what is their business structure, who the contacts are, what areas or locations can they service, what are their references, etc.  Along with the specifications and details of the RFP, an overall picture will develop of who the company is, what they can or cannot provide, and what their pricing structure will be.

With an idea of how to collect information on a project with little initial data through an RFI and details on collecting RFP responses with the known information, the next step is ensure understanding relative to the best value, data and price from the suppliers that can handle the opportunity.

For more information on how SafeSourcing can help you through the complex minefield of eRFX strategies, please contact a SafeSourcing Customer Service representative.

We look forward to and appreciate your comments.

Resources————————————————

2. http://www.businessdictionary.com/definition/request-for-proposals-RFP.html
3. http://www.businessdictionary.com/definition/specification-spec.html

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

I’d like to thank my SafeSourcing associates both past and present for their constant quality input to my posts and whitepapers and upcoming book.

A request for Information (RFI) is a request made typically during the project planning phase where a buyer cannot clearly identify product requirements, specifications, and purchase options. RFI’s clearly indicate that award of a contract will not automatically follow.¹

An example for use of an RFI would be if a company acquired a used warehouse that needed to be turned into a distribution center. The facility has some racking installed but needs more. There has not been a defined idea of what layout will be needed to improve the warehouse for DC use, nor what types of rack are needed, how much material is needed, nor how long it will take to install the racking. The existing racking is in adequate shape but it is unknown whether it is safe, placed appropriately, outdated, or even needed in any way. A situation like this often is a good time to rely on experts to provide feedback as to these needs.  The best practice would be to get a minimum of 3 sets of data submissions, but I’d recommend getting 4 to 6, submissions from your requests for information from racking manufactures, distributor, and/or installers.

The higher the supplier count, in an area where you have no knowledge, provides the necessary data to begin to make more informed decisions. With at least 3 submissions it becomes clearer if there are major differences between suppliers and how they operate.  Lead time, outsourcing, geographical coverage are all very important pieces of information to gather from the suppliers at this stage of a sourcing project.

The application of an RFI can be used on new goods for use, re-sale, packaging design, any and all services, software, hardware, equipment of any kind, actually it is limitless as to what you can utilize an RFI for in business.

For more information on how SafeSourcing can help you through the complex minefield of eRFX strategies, please contact a SafeSourcing Customer Service representative.

We look forward to and appreciate your comments.

Resources————————————————

http://www.businessdictionary.com/definition/request-for-information-RFI.html

Todays post is by Ronald D. Southard, CEO at SafeSourcing Inc..

One of our customers recently mentioned that they were dealing with one of their vendors to purchase back some obsolete inventory.  This is just one of the methods some companies use to move old or excess items they have purchased and today’s blog will be taking a look at a few more.

Vendor Assisted – The example mentioned above is one method of dealing with excess inventory, and is one of the most important methods to consider when negotiating the purchase of new items.  Unfortunately, many companies miss this opportunity until it is too late.  Letting vendors you deal with know they may have an opportunity to buy back you excess inventory up front will many times get more aggressive pricing from them on the new items you are purchasing.

Third party buyback programs – If you are not able to negotiate a deal for your obsolete or discontinued items up front with the vendor, another approach is to contact third party companies who special in purchasing excess inventory at a reduced price and reselling it through their own channels.  Depending on the type of product you are looking to move there will always be companies who will specialize in handling it for you.

Donation Programs – Occasionally the sale of excess or obsolete will either not be possible or will not be not as valued as the tax write-off given when it is donated.  As in the cases above there are many companies who will coordinate the pickup and redistribution to charities that they work with; taking the entire burden of getting rid of the products off of your business and providing you with a tax incentive on top of it.

There are many ways to take care of your excess inventory and as is often the case, the earlier you plan the more options you will have in the directions you can take.  For assistance in finding ways to move your excess, discontinued or obsolete inventory, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

Today’s post is by Gayl Southard, Administrative Consultant, SafeSourcing.

Target is introducing same-day delivery.  Birmingham, Alabama and South Florida rolled out same-day service on February 1^st, quickly followed Alabama, Georgia, North Carolina, South Carolina, and Tennessee. Target plans to have this service in all stores by the end of 2018. “Same-day delivery was at the top of our list when we were thinking about ways to make shopping at Target even easier,” said John Mulligan, Target’s executive vice president and chief operating officer said in a statement.

Shipt, an on-line grocery marketplace retail giant, was purchased in December for $550 million. By using the Shipt app, Target customers can purchase over 50,000 items from Target. Amazon currently dominates 38 percent of all online shopping. Amazon customers are used to speedy service, convenience, and low prices. Target wants to capitalize on this market.

Amazon does offer its own grocery delivery service called Amazon Fresh; however, they scaled back the number of locations it’s offering it once they purchased Whole Foods. It seems people are still willing to go to the grocery store and buy in person. Target is anxious to capture and keep this delivery market. Target will also deliver grocery essentials, home, electronics and other products. By the end of 2019, it will also include all Target’s major product categories.

Enrolling in the Shipt program costs $99 per year. That’s cheaper than AmazonFresh, which costs a $179.88 per year, on top of a $99 Prime membership. The move comes as analysts speculate that Amazon might want to buy Target.1

Allow SafeSourcing to help your business be more competitive with your sourcing needs. For more information on SafeSourcing, or on our Risk Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you.

Sources—————————————————————-

1 Ben Popken, Business, 2/1/2018

Today’s Post is by Eli Razov, Account Manager at SafeSourcing Inc.

At SafeSourcing, we help our clients save money on a wide variety of categories, ranging from sugar to fuel hauling.   There isn’t much we haven’t sourced. One category we source regularly is Propane Tank Exchange. This has consistently proven to be a successful event and we are offering an opportunity for you to become involved. But first let’s learn a little about propane.

Propane is part of the liquefied petroleum gas family and is a gas under normal atmospheric pressure and temperature. Applying more pressure and lowering temperature, will cause that gas to turn to a liquid. Liquid propane is stored in pressurized tanks ranging in many sizes from the little tanks many of us use in our backyard grills, to giant industrial tanks. Propane is two hundred and seventy times more compact in liquid state than when it comes in its gas form. Much like natural gas, propane is odorless and has odorants added to serve as a warning. More than half of the propane used in the U.S. comes from raw natural gas. Raw natural gas contains many components, five percent of which is propane. Propane is processed out of other gasses at natural gas processing refineries. From here, underground pipelines are used to transport propane to distribution terminals. These distribution terminals are operated by many different propane companies. Here these companies “bottle’ the gas and it transported for use.

Propane has many uses.   Some applications include farms, businesses and industry. Uses range from heating and cooking, to brooding chickens, and small machinery operation. The U.S is the single largest consumer of propane in the world. Supplying one percent of our energy, nationwide it falls seventh behind hydroelectric power as an important source of energy. The transportation world makes up about six percent of the total propane usage. Cab companies, to school districts, use propane instead of gasoline. Retail stores across the country use it in many ways, primarily as a resale product for consumer use often for back yard grills.

So what does this mean to you? Many of our retail clients currently have a Propane Exchange offering at their stores. What many don’t realize at first is that there are numerous vendors in every region competing with the larger, national vendors and that this is a very competitive category when sourced using e-Procurement. With the use of SafeSourcing’s services, many of our clients have saved significantly. The last client who sourced this category with SafeSourcing saved over fourteen percent. SafeCollaborative™ is a new way for many companies to pool their procurement needs to aggregate larger savings with higher purchasing volumes. We will be offering a Propane Exchange SafeCollaborative™ RFQ Event in Q1of 2018 which is open for any company that might want to join. If you have any questions or are interested in participating please contact us at 888-261-9070.

For more information on how SafeSourcing can assist you or on our “Risk Free” trial program, please contact a SafeSourcing Representative we have an entire team waiting to assist you today

Sources………………………………………………………….

1. http://www.lpgasmagazine.com/defining-the-state-future-of-the-propane-industry/
2. http://www.indexmundi.com/commodities/?commodity=propane&months=240

Today’s post is written by Ivy Ray, Account Manager at SafeSourcing Inc.

Nuts are the little snack that is known to pack a powerful nutritional punch!  There are several tree nuts that are considered a great source of gluten free nutrition. Research has shown that nut consumption has consistently been found to be associated with a reduced risk of cardiovascular diseases.  Here are a few nuts that we’ve sourced:

Almonds
The US is the largest market for almonds, with about 30% of the crop sold for domestic use. About 52% of all almonds produced go into retail products, 20% go to foodservice applications, and the remaining 28% is used for bulk sales and snacking. Seventy percent of the almond crop is shipped internationally with Spain, Germany, Japan, China and India being the leading export markets. Today, 80% of the world’s supply of almonds comes from California. When compared ounce for ounce, almonds are the tree nut highest in protein, fiber, calcium, vitamin E (alpha-tocopherol), riboflavin and niacin. Among tree nuts, they are the best source of six of the 13 nutrients for which there are Daily Values (DV), and among the lowest in calories.

Cashews
Today the principal producing countries of cashews are India, Brazil, Vietnam and Mozambique.  Cashews are marketed in the shelled, roasted and salted forms for use as a snack and as an ingredient. Although cashews are one of the lowest-fiber nuts, they are packed with vitamins, minerals and antioxidants. These include vitamins E, K, and B6, along with minerals like copper, phosphorus, zinc, magnesium, iron, and selenium, all of which are important for maintaining good bodily function. Cashews contain a lot of vitamins and nutrients, but they also contain a lot of fat. The good news is that these fats are mostly monounsaturated and polyunsaturated (the healthy fats).

Pecans
The principle producing countries for pecans are the U.S., Mexico, Australia and Israel. Pecans are marketed in in-shell or shelled form and can be eaten raw or roasted. Pecans are the top nut and are among the top foods to contain the highest antioxidant capacity. This means pecans may help decrease the risk of cancer, neurological diseases and coronary heart disease. Pecans contain over 19 vitamins and minerals, including vitamin A, vitamin E, folic acid, calcium, zinc, magnesium and potassium.

Consumption of nuts has been linked to cancer prevention, heart health, and weight maintenance. They are packed with the vitamins and nutrients essential to good health.  Nuts are a great source of healthy nutrition, and SafeSourcing is your source for e-Procurement.

For more information on how SafeSourcing can assist you in exploring your procurement solutions for your business or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.
We look forward to your comments.

Sources……………………………………………………………..

U.S. Department of Agriculture, Agricultural Research Service. 2010. USDA National Nutrient Database for Standard Reference, Release 23. Nutrient Data Laboratory Home Page, http://www.ars.usda.gov/ba/bhnrc/ndl
Texas Pecan Growers Association, www.pecans@tpga.org