Commodity Highlight: May

Posted on May 16, 2012 by Michelle Stevens

10 Questions To Ask Before You e-Source

Posted on May 15, 2012 by Kelly Deacon

E-Sourcing is a powerful procurement tool, but as every category manager knows, it’s not always the best approach. So how do you determine when to use e-sourcing as opposed to an alternative sourcing method? Consider the following:

How long has the incumbent supplier had the business?
If the answer is multiple years an auction will help validate that not only is the best pricing being provided, but also the best available quality and service.
Are you satisfied with the quality, service, and delivery of product from the incumbent supplier(s)?
If not, consider an online RFP or RFQ to evaluate alternatives.
Is a past supplier anxious to get your business back?
A reverse auction is a very effective way for the prior provider to compete with your incumbent, as well as other potential vendors, for your business.
How many other suppliers are in the marketplace? How many of those suppliers have been asking for a shot at your business?
More vendors mean increased competition in the auction environment. Suppliers who have been trying to get a foot in the door may be willing to reduce costs to get the business.
How many suppliers are in in the marketplace?
You can invite as many suppliers as you choose, but remember to only invite those you will actually consider doing business with. Occasionally suppliers who initially express interest may not have a full understanding of your criteria and expectations. These vendors can be identified and eliminated before the actual sourcing event.
Has a supplier indicated their company does not participate in online bids/negotiations?
There may very well be some vendors who decline to participate, however it only takes two suppliers who really want your business to result in a competitive auction.
Have you been notified of a price increase?
In a rising market auctions can be used to reduce or deflect an increase, or in some instances get even better than current pricing.
Has the market taken a recent dip since your last negotiated pricing?
This is a good time to consider auctioning the category in order to lock in reduced pricing.
Is the category volume significant enough to be an incentive for the suppliers to participate?
Volume incentives as related to supplier participation will vary based on category. Suppliers will typically participate and provide competitive pricing when there is a win-win situation that warrants their involvement.
Is the category small, but could be a driver in the suppliers obtaining additional business?
In some cases, the volume could be relatively small but getting the business would mean a foot in the door. Suppliers may consider this as an incentive to participate and provide competitive pricing.

When in doubt you can always begin with a Request For Information (RFI) to gather data. You may find the next logical step is to bring the item or service to bid. By putting the information in front of potential suppliers you’ll find answers to your questions. You’re not obligated to award the business. At the very least, you’ve validated that you have the best pricing, quality, and service available to you today.

Contact Intesource for more information on how our services team can assist in gathering the information discussed in this post.

What other questions do you ask when evaluating spend for e-sourcing?

Gartner Supply Chain Conference: Will you be there?

Posted on May 10, 2012 by Michelle Stevens

It’s almost time for the Gartner Supply Chain Conference, May 21-23, 2012 in Palm Desert, California. We couldn’t be more excited to attend!

Today’s economy is demanding more and more from supply chain leaders. Gartner’s agenda delivers the information needed to thrive and overcome challenges, from strategy and planning to distribution and logistics.

This year’s conference provides:

The opportunity to connect with leading supply chain executives
Both strategic and tactical advice from Gartner, industry analysts, and thought leaders
Insight from peer networking and solution provider interaction

We hope to see you there! Contact us to schedule time to meet at Gartner’s Supply Chain Conference 2012.

By Popular Demand: Customizable Columns

Posted on May 8, 2012 by Natalie Bernacchi

“Progress is impossible without change, and those who
cannot change their minds cannot change anything.”
– George Bernard Shaw

At Intesource, we take great pride in bringing products and services to the table that you will actually use. Our mission is to have an impact in your daily workday to create efficiencies, increase productivity, and make you more successful!

Ultimately, our customers are the ones calling the shots. We encourage suggestions and take all feedback into consideration when making enhancements to our system. Since every company is unique in their own way, and with hundreds of potential e-sourcing categories across departments spanning the entire organization, our most recent enhancement provides you the flexibility to customize columns during a live bid or e-sourcing event.

Customized columns can be extremely beneficial for both category managers and vendors in providing more detail or customizing an e-sourcing event based on a particular bid category.

Every e-sourcing event will still have the basic columns:

Group Name
Item Name
Additional Description
Volume
UOM (unit of measure)
Price per UOM
Current Price

Depending on the category or complexity of the RFP, we can add, remove, or even change the name of the column title. For example, Meijer, Inc. recently conducted a Generic Drug RFQ. The host wanted vendors to be able to clearly identify the brand name, generic name, and size of the product, so we created a separate column for each. The host also needed information readily available from a buyer-only view when reviewing the results of the RFP. Since the columns are now customizable by role (buyer or vendor), we were able to include a column titled, “incumbent”, which was viewable by the hosting organization only. This enhancement allowed the host to have all the necessary information in one area, making the post event analysis a much smoother process.

Some examples of custom columns for your next e-sourcing event include:

UPC Codes
MFG Part Numbers
SKU’s
NBE (National Brand Equivalent)
Country of Origin (for Import Products)
Origin/Destination (for Transportation events)
Store Locations

Think about the options you have when creating columns for your next RFx. They’re limitless and can be tailored however you see fit! Let’s see how creative you can get with your customizable columns on your next e-sourcing event!

Category Highlights: Benefit Consulting Services

Posted on May 3, 2012 by Kelly Deacon

In a recent reverse auction an Intesource partner addressed the complex area of benefit consulting services – with great success.

Event Highlights:
Five vendors quoted on 22 items including general consulting, compliance matters, claims audits, senior credentialed actuary, compliance specialist, and clinical medical consultant.

A total of 149 quotes were collected in the span of 21 minutes.
The buying organization achieved savings of $131,380 or 45.9% – over $25k more than the reserve price.

What complex spends have you tackled recently?

The Importance of Specs

Posted on May 1, 2012 by Tracie Rohn

As part of the client services team at Intesource I work with both vendors and buyers on e-sourcing events exposing me to both viewpoints as to why providing the correct specifications is fundamental to the success of an event. Every buyer knows correct specs are important, however they can sometimes be difficult to obtain (i.e. new category, using the same supplier for years, etc.). In any event, accurate specifications are essential and here’s why…

Top 3 Reasons to Provide Accurate Specifications:

Accurate Pricing
Correct Product
Less Questions

Expanding on each of these, first is pricing—this may be the most obvious, and also the most critical. To be sure the reverse or forward auction results in the most accurate and transparent pricing possible the vendors need complete specifications to quote ‘apples to apples’, even one small error or omission can completely distort pricing and the buyer may not get the product they expect.

This leads to the second point, product—let’s say a reverse auction has ended and samples have been requested from the vendor with the best pricing. If the buyer receives samples of inferior quality it’s typically because a vendor decided to quote what they felt was a “comparable” product. This is just as important with services; if the scope of work isn’t clearly defined you are going to end up with countless questions and possibly guesswork, which could potentially delay the timeline or lead to less than desired results. Leave no room for interpretation or assumptions.

Last is questions—yes some are unavoidable or unforeseeable, but the more information put into the vendors hands at the beginning will result in less time being spent back tracking or hunting down the correct answers. This encompasses every type of e-sourcing project whether it’s a reverse or forward auction, an RFP, or even an RFI.

If you do run into a project where you simply don’t have specifications, don’t worry – it happens. There are a few resources you can always turn to;

The incumbent – simply ask them to provide you with the specs for the product or service you’re currently receiving.
Ask your Account Manager at Intesource. We have a specification library with complete specs for hundreds of categories.

What other methods have you found to be helpful in obtaining specifications?

Intesource Top 200 Percentage Savers

Posted on April 26, 2012 by Michelle Stevens

The following are the top event savings completed within the last 2 years – March 31, 2010 to March 31, 2012.

Deposit Tickets: 81.49%
Wage and Labor Posters: 77.39%
Relocation Services: 75.20%
Defoamer: 74.36%
Office Supplies, Stamps, and Forms: 72.28%
Printed Roll Stock Film for Nut Packaging: 72.23%
Warehouse Thermal Pallet Labels & Thermal Ribbons: 68.67%
Background Checks: 68.00%
Cut Resistant Glove: 65.25%
Background Checks: 60.40%
PL Plastics: 59.26%
Lighting Maintenance Service: 58.47%
Wipes: 58.08%
Loyalty Cards: 57.52%
3 X 13 Fencing: 56.60%
Wine Bags: 56.13%
Background Checks: 55.81%
Plastic Totes: 55.66%
Onions Bagged: 55.50%
Baby Center Plastics: 55.03%
3rd Party Administration Services: 54.30%
Pharmacy Warehouse Construction: 54.16%
Office Supplies: 54.13%
Foaming Hand Soap: 53.82%
PL Humidifiers and Vaporizers: 53.50%

Contact an Account Manager to view the complete list.

A Portrait of an Auctioneer: Spartan Stores’ Craig Green

Posted on April 24, 2012 by Lindsay Bernacchi

Spartan Stores has been an Intesource Partner since November 2010. In that time period they have enjoyed a gross savings of $6.2 Million based off of over 177 awarded events. Much of their success can be attributed to the acceptance of the e-sourcing process across the entire Company. Over 13 departments have utilized the Intesource tool! These events have been as diverse as Vision Insurance to Private Brand Popcorn. Below you will find just one of their department’s experience.

In His Own Words
Craig Green, Procurement Manager, Meat/Seafood Division

When I was first approached about running a reverse auction I was a bit hesitant about it. When Bryan [Bryan Porritt, Project Manager, Strategic Sourcing, Spartan Stores] came out to help me set everything up for the first time it took nearly 2 hours. I remember telling him, ‘I don’t see how this will work if it is going to take this long to set up an event.’ He assured me it wouldn’t. So we ran our first event and it was a complete dud. I must admit I was a bit discouraged.

A few weeks went by, and I wanted to try it again. This time it only took about 10 minutes to set up and we saved nearly $11,000. As the weeks progressed, I continued to try different events ranging from ground beef to lobster tails. On the ground beef events we have saved anywhere from 10K to 43K. The best part about it is being able to get a better cost of goods from our incumbents from what they had previously quoted us. And it still amazes me to see the leader of an event continue to bid the price down to try to hit our reserve.

Also because of this program we were able to run shrimp and at very aggressive retail at the holiday time. We have also been able to find replacement products at a much better cost of goods that which we are now selling better than anticipated.

Though not every event is successful, it has changed the way we look at spot buys and I know we will continue to save on cost of goods, as well as time, through this program.

Department Snapshot
Events Run: 23
Total Volume: $6MM
Savings To Date: $382,000

RFI: The most underrated tool in procurement

Posted on April 19, 2012 by Kelly Deacon

The Request For Information or RFI, a seemingly simple data collection tool that can be a procurement professional’s best friend.

RFI’s have come to play an important role as risk and transparency remain top of mind for business leaders everywhere. RFI’s have become a means to efficiently gather the important facts that will enable buyers to make the best decision for their company and in turn, their customers.

The most common uses for an RFI in procurement are:

Gain a better understanding of categories
Gather and evaluate supplier capabilities
To better understand internal stakeholders requirements

RFI’s can be executed prior to, during, or after negotiating terms and can be applied to any or all participants. The results can give procurement professionals valuable information about their vendors beyond the terms being negotiated.

Some of the features Intesource partners enjoy related to RFI’s are:

A questionnaire library for hosts
An answer library for vendors
A simple means to evaluate responses through an array of scoring methods
Side-by-side comparisons for easy analysis
A Survey tool which can be used independently of an e-sourcing event
Management of the entire RFI process (i.e. Q/A and follow up calls)

How have you used an RFI to increase efficiencies in your procurement process?

e-Sourcing Obstacles: The Fear of Change

Posted on April 17, 2012 by Kelly Deacon

Change is inevitable. Unfortunately, for some people change is uncomfortable, and for others it may be downright frightening. In a recent blog post 5 reasons people resist change , Julie Rains addresses the fear of change – one of the biggest challenges in e-sourcing. Based on the five beliefs about change outlined in the article I’ve added an e-sourcing perspective to ease the transition from the tried and true to the new and unfamiliar.

1. Productivity will plummet and stress will skyrocket

Fear: The worry being that the extra time and effort required “will certainly detract from productivity, output and peace of mind.”

Fix: E-Sourcing has won over countless buyers who have cut hours, even days, from the sourcing process. The proof is in the pudding. Provide real world examples of how an initial investment in learning new technology and processes can lead to significant improvements down the road.

2. Embracing change means admitting past mistakes

Fear: The savings that can result from an e-sourcing event can be intimidating to buyers who may worry the new process will reflect negatively on their past performance.

Fix: Take the focus off the person with reassurance that proposed changes reflect technological advances. As Rains puts it, “Emphasize the need for continuing renewal, not as an indictment of the past, but as a strategy for ongoing success.”

3. Failures are not occasions for learning

Fear: Being comfortable with a particular process includes understanding possible outcomes and reasons for success or failure.

Fix: Provide training and education to be able to interpret results and pin point potential issues. In many cases automating the e-sourcing process simply means the price collection process is more efficient and effective – all other factors are consistent with traditional means of sourcing (i.e. market conditions, quality assurance measures, supplier vetting, and so on).

4. Difficult problems arise from change

Fear: Veering from the status quo can uncover weaknesses and vulnerabilities. Rains points out that the side effects of change may involve handling unfamiliar situations and dealing with consequences that one cannot predict or control.

Fix: “Acknowledge that unpredictable things may happen”, says Rains. But by doing your due diligence at the onset of the e-sourcing project the likelihood of problems arising is greatly diminished.

5. Preserving status…is key

Fear: In the article Rains refers to preserving status with colleagues and employees, however in the case of e-sourcing it’s the desire to maintain relationships with longstanding suppliers.

Fix: A common misconception is that business must be awarded to the low bid. In actuality, the host typically awards on a variety of factors including price, quality, and service levels. The host may choose to stick with the incumbent, usually at a markedly lower cost, or they may select to award to a new vendor. An online auction simply brings transparency to the market. For tips on dealing with incumbent suppliers read ‘The Lowdown on Incumbent Supplier Participation’.

According to Walter Anderson, “Nothing diminishes anxiety faster than action.” Becoming comfortable with anything comes with practice. The good news with e-sourcing is results can come quickly and can have a powerful impact on a department or entire organization, which makes a pretty good case for change.