Strategic sourcing is the ongoing process of finding the best suppliers and using these supplier relationships to maximize value for an organization. This process involves efforts on the part of buyers to carefully evaluate and form mutually beneficial and enduring supplier relationships.
Reverse auctions have become a popular and beneficial trend in procurement. Essentially, they work by having the seller of the service or goods do the bidding while they buyer gets to select the winner. Unlike traditional auctions, the winner is not chosen based solely on the amount of their bid, so the highest or the lowest
As the current economic climate rebounds, more companies are starting to expand their involvement with electronic purchasing systems. This continues a trend that was seen in the late 1990s and 2000, but which has slowed considerably over the past three years as IT spending slowed to a trickle.
More companies today are realizing that their success does not solely depend on what happens in-house; it also relies on having strong ties with the outside forces that make it possible to continue the production process.
Reverse auctions as a tool have been around since the late 1990's. They have been used in the Fortune 2000 to obtain more favorable pricing, to reduce cycle times, and to lower overall supply costs.
A Request for Proposal (RFP), is the primary document that is sent to suppliers that invites them to submit a proposal to provide goods or services. Internally, an RFP can also be referred to as a sourcing project, a document, or an associated event (competitive bidding).
Purchasing the goods and services a company needs to be successful can be challenging. However, one technique can help simplify the process in many instances. This technique, called the reverse auction, allows buyers to initiate the proceedings and to choose from interested suppliers not just on the basis of price but on whatever specifications they feel are most important to their needs.
Auction: A competitive bidding event with a start time and and end time where bidders place bids to discover market pricing.
The Internet has brought a number of changes to the field of procurement. Companies can now place orders with vendors through virtual catalogs in real-time, for example. However, none of these changes seems capable of saving companies as much money as reverse auctions.
Companies today need to shave expenses wherever possible and that includes the purchase of goods and services needed to keep their businesses running smoothly and efficiently. In the old days, the process of finding vendors was extremely limited and was very time-consuming.
Today, buyers for federal agencies, state and local governments, and municipalities are under increasing pressure to do more with fewer staff and resources. This often involves fulfilling their missions and purchasing required goods and services using the most effective and efficient manner possible.
The term reverse auction has been used a great deal in procurement circles and has been touted as the biggest and best way for companies to reduce purchasing expenses. Yet, many companies are still reluctant to get involved in the hoopla because they do not understand exactly how the process works nor do they understand all of the potential benefits.
With reverse auctions becoming so popular, it is highly unlikely that any large supplier of commodities can continue to do business successfully without participating in one. Generally, participation is either met with excitement because of the potential for new work or with apprehension because of the possibility of losing existing work.
Reverse auctions are a powerful tool for purchasing departments
All businesses have used traditional purchase orders at one time or another. After all, they do serve a valuable purpose: they help companies track purchases and prevent unapproved purchases. However, completing and managing hundreds of purchase orders can become difficult even for the most organized business department.
E-procurement systems, applications designed to allow businesses use the Internet in order to acquire the necessary goods and services, are not all created equal. The term itself is quite broad and actually includes several varieties of applications. Part of a successful implementation involves choosing the appropriate application.
An integrated requisition system helps improve communication between buyers
Imagine being able to save as much as 50% on the purchase of computer equipment, office supplies, and other expenses that companies require to run smoothly and efficiently. Well, the reality is that many companies can save that much simply by using MRO or Requisition Software.
E-Procurement is more than just a system for making purchases online. Companies and their business processes can connect directly with suppliers while managing all interactions between them. This includes management of correspondence, bids, questions, pricing, contracts and innovations.
Since the late 1990's and the Internet boom, the promise of e-procurement as a way of saving companies as much as 60% on their bottom line has been much discussed but rarely achieved. However, most companies can see results that live up to those expectations if they use specific implementation strategies
Magazine articles and white papers are filled with optimistic estimates of how much money organizations will save by migrating to electronic procurement systems for all of their purchasing. However, many of these estimates fail to take into account the total cost of adapting these systems,
E-procurement has many benefits for companies when the systems are implemented properly. However, not all companies fully receive these benefits because they end up falling into some common pitfalls that end up making their system work less effectively than it optimally could work. Unfortunately, for most of these companies,
Electronic Procurement (also known as e-procurement) is a way of using the Internet to make it easier, faster, and less expensive for businesses to purchase the goods and services they require.
Reverse auctions are one of the most prominent trends in procurement today. While this approach to finding suppliers simply wasn't feasible a decade ago, today it has allowed both businesses and vendors to reap some significant benefits. In a reverse auction, the buyer creates a listing of the company’s specific project needs. For example, if the company needs to purchase spools of wire from a supplier, then the company would detail the exact specifications and quantity of the wire they required.
Enterprise Resource Planning (ERP) often describes a broad set of applications that assist companies in running efficiently and effectively by helping them do everything from track orders to purchase parts to provide customer service. In the late 1990's, ERP projects received a bad reputation because many of them were extremely costly were not well thought out.
During the procurement process, most people are familiar with the acronym RFP, which stands for Request for Proposal. As anyone in purchasing knows, RFPs are created by businesses and sent to vendors in order to get a full quote on a project. Generally, the RFP contains the price, as well as any other important details that the businesses might need to consider during the review process.
In many business circles, the word procurement gets tossed around a great deal. However, many people simply don't fully understand what the term means or how it can be carried out efficiently and effectively in the Internet age.
Just as businesses must purchase the goods and services they need to keep their plants running and their customers satisfied, so must governments. However, there are some key differences between the ways governments and businesses obtain these items. First, all government procurement must be done within a strict code of laws and rules.
Understanding procurement begins with an understanding of the terms associated with it. Procurement refers not just to activities done by the purchasing department. The term also includes work done in inventory, shipping, receiving, and a number of other departments, which are in charge of dealing with the goods that come into and go out of a company.
Every company is looking to lower costs and increase profitability. Each year, company management devises new initiatives to cut costs and boost productivity. However, one area that is often overlooked by company management is the purchasing department.
In a nutshell, strategic sourcing refers to efforts on the part of buyers to carefully evaluate and to form lasting relationships with suppliers. These relationships are generally mutually beneficial and also can involve a dramatic change in attitude. With strategic sourcing, businesses view their vendors as partners instead of simply commodity providers. While this difference in attitude may not seem significant, it has a lasting and positive impact on the success of both the supplier and the buyer.
Many companies who have adopted e-procurement techniques or who are moving in that direction are also realizing the benefits of centralized purchasing data. Essentially, centralized purchasing data is just what it sounds like: maintaining a single warehouse to hold all information related to the buying of business-related supplies.
A growing trend in business today has been foreign sourcing. Generally, this sourcing involves allowing a foreign company to handle elements of a company's production and/or service process. Most companies simply view foreign sourcing as a way to save money because these countries charge considerably less
In the last few years, the one thing most businesses were not worried about was having a scarcity of suppliers. For the past few years, the reverse was actually true. The supply of vendors was greater than the demand for their services and, as a result, buyers found the perfect time to begin using high-tech tools to assist in their purchasing decisions.
While many companies have attempted to move toward a more centralized purchasing model, one area of purchasing has remained relatively unchanged until now. That area is business travel. Most companies do not incorporate their business traveling planning into their other procurement strategies and, therefore,
Saving money is always at the forefront of every business decision but when it comes to purchasing and sourcing, there are a number ways to cut costs that are often neglected or which do not use to their full advantage. Companies who fail to see these possibilities could be standing in the way of significant savings that would dramatically improve their bottom line.
One of the biggest trends in business today is global sourcing. In 2001, the United States alone sourced over $1.3 trillion in goods to low-cost suppliers around the globe. Of course, the biggest reason for global sourcing is the cost savings; which can be significant. Most companies report an average savings of up to 30% when they begin global sourcing (also known as offshoring).
While outsourcing to other countries has been an increasingly popular way of reducing costs for businesses, some companies fail to make that leap successfully simply because they don't know how to deal with individuals from other countries. As Westerners, it can be difficult to realize that business is not carried out the same way around the world,
Supplier performance management (SPM) is a business practice that is used to measure, analyze, and manage the performance of a supplier. Supplier management professionals seek to cut costs, alleviate risks, and drive continuous improvement. Companies use systems to monitor supplier performance levels.
Managing vendors is a complex process which, if done right, can deliver many rewards for a large organization.
Supplier onboarding is the process of initiating a new business relationship with an external supplier and integrating that supplier into the company's systems and business processes.
There are significant benefits that an organization can realize from adopting onboarding software. First, as described in Part 1 of this article, a smooth process enabled by software can yield large process cost savings.
Managing relationships with suppliers can be complicated, but it is also important to the overall performance of the company. In many cases, the answer is as simple as choosing a software tool that can help streamline supplier relationship management (SRM).
As businesses are starting to realize, suppliers are an essential part of success. Without the right materials being delivered in a timely fashion, a manufacturing plant can literally come to a complete halt. Without reliable shipping agents, none of the created goods can reach their destination on time and in good condition.
All successful companies build strong relationships with their suppliers. Companies are not isolated entities that simply purchase goods and services from individuals who happen to be able to supply them at that particular time.
For all the talk about supply chains and e-procurement, many companies still have not seen the real benefits of either of these business approaches. The reason is not the technology. The reason is that dealing with suppliers and managing that relationship can be tricky even under the best of circumstances
Supplier Relationship Management (SRM) may not have had a strong following a few years ago, but today more businesses are moving toward the implementation of software that helps streamline those connections so that both vendors and buyers can reap the benefits of the technology.
With all the discussion of procurement and how it works in businesses, the biggest question is does it actually save money? After all, that's the real bottom line. One large company that had an annual purchasing expenditure of about $10 billion was able to shave over 15% off that amount annually just by leveraging the buying power of all their worldwide divisions.
Today, procurement strategies are more a part of a business's success than ever before. Not only has technology given companies the opportunity to truly make purchasing more efficient and inexpensive, but companies are now spending a larger percentage of their revenue on products and services than they were thirty years ago.
As e-procurement moves into the mainstream business world and begins to deliver many of the conveniences and cost-saving measures it promised in the late 90's, some companies still continue to avoid implementing this type of system.
Today, many businesses are spread out with branches all over the world and usually most of these branches are given separate responsibility for purchasing the goods and services they require to keep their part of the company moving smoothly, if not cost-effectively.
One of the biggest headaches many businesses face is purchasing management and inventory. Running low on necessary items, placing duplicate orders, or losing placed orders are just some of the problems that companies may face when dealing with purchasing in a traditional sense.
Generally, when businesses think of procurement they often see in terms of a cheaper/better dichotomy, as if one can not be achieved along with the other. The reason for this viewpoint is simply that it is extraordinarily difficult for even a team of human minds to compare and contrast all the variables involved in selecting the absolute best supplier for major purchase a product or service.
When a person goes to buy a car, he or she usually doesn't visit only one dealer and expect to find a great deal on the car they want. They go to several lots and get different prices from all of them, then they choose the one which offers them the best deal and the most extras. Businesses do exactly the same thing when they are trying to fill the needs of their projects.
The term outsourcing seems to be popping up everywhere in business in recent years. Essentially, outsourcing refers to any instance where a company contracts another company to perform work that would traditionally have been done in-house. For decades, business areas such as advertising and payroll, have been outsourced to other companies in order to minimize costs
For years, analysts have been predicting that e-procurement would be the next big thing and that it would significantly alter the way businesses worked in the future. Unfortunately many companies and investors have failed to realize the promise of e-procurement.
Companies from many different industries and geographic locations have seen strong results from implementing a new procurement system. For example, one home appliance manufacturer actually saved several million on the purchase of a single component for products by using a reverse auction.
Many companies that have attempted to implement some type of enterprise management system in order to unite many of the processes that make their businesses processes run more smoothly have been disappointed by the results. These companies simply don't feel that the system has lived to their expectations.
Investment recovery, also called asset recovery or resource recovery, is the process of recouping the value of unused or end of life assets. Investment recovery professionals seek to identify, reuse, sell or otherwise dispose of surplus assets generated by a company as it pursues its primary business.
Investment recovery professionals are increasingly being asked to do more with the resources they currently have. They face a daunting task. Even in large corporations, there may only be a handful of investment recovery professionals.
Divestment is one of the most difficult and complex tasks that an investment recovery professional undertakes. Effective divestment brings in additional money or benefit for an item,
Appraisal: A written professional opinion of the value of a material, equipment, or other asset.
Asset: Any item that has financial or economic value.
When companies purchase a piece of machinery or office furniture, they are making an investment in their business. Of course, those investments aren't going to remain useful forever: Machines need to be replaced and a change in decor forces a revamping of the office furniture.
Many companies have turned to reverse auctions to help them save money on their procurement expenses, but fewer firms realize that traditional auctions can also be a benefit to their organization. With the right auction software, businesses can create auction events that will allow them to sell their machinery,
Creating, promoting, and completing auctions through third-party sites can have its benefits for sellers. Generally, sellers end up earning more on the items they sell than if they had attempted to sell the item at a fixed price.
Auctions have taken on a whole new meaning in recent years with the advent of third-party online auction web sites which have millions of members from every corner of the globe who are bidding on thousands of auctions 24 hours a day, 7 days a week. Even though for many people these online auctions
Auctions are not much different than most areas of business: strategy is critical for success. In the case of all types of auctions - second-price, Dutch, English, etc. -- both bidders and sellers need to have a firm concept of their strategy if they hope to have the auction go in their favor.
Today, most people recognize that the Internet has changed the way businesses and individuals handle shopping transactions. After all, millions of people go online to buy everything from computer software to office supplies to heavy equipment. Nowhere has that change been most obvious than in the popularity of Internet auctions.
While auctions definitely have a great number of advantages for both buyers and sellers, these advantages can be reduced significantly by unethical behavior by participants. This type of behavior is usually called collusion because it involves a secret agreement between multiple individuals to circumvent the rules for their own gain.
Each technological trend spawns a number of other related programs and applications. With the online auction trend, a new type of software has developed that helps buyers save money on purchases made through auctions. This new type of software is called sniping software.
While auctions may seem simple, successful participants need to have a firm understanding of strategies and terminology involved in the process. Both bidders and sellers who don't understand the basic terms associated with auctions can end up making errors that either cost them profits or cost them the item they want.
Today, auctions have come a long way since the days when businesses generally used them only for reclaiming their investments in machinery, in automobiles, and in the other tools of their trade. Now auctions have come into the computer age and have changed the way businesses think about procurement and selling goods and services.
Most people who have ever attended or taken part in an auction have experience with English auctions. For those in the United States, these are the most common types of auctions and are generally the type that third-party auction sites most often use.
While most people are familiar with traditional auctions where bids are open and the winning bidder pays the full amount of his or her bid, there are times when that type of auction may not be in the best interest of the seller. For example, the seller may have multiple quantities of the same item to sell but may not be able to sell the entire quantity to only one buyer.
Typically, when people think of an auction, they think of either a numbers of bidders all competing and raising the price until one person wins and ends up paying the highest bid. The reality is that this is just one type of auction.
Auctions are an interesting way to sell goods, particularly for businesses interested in investment recovery. In an auction, an item is placed up for bid. Either the seller or the person in charge of the auction sets a minimum price for the item, and it is at that price which bidding starts.
By now, most people are familiar with business-to-consumers web sites where a number of vendors offer their goods and/or services for sell through an automated, electronic catalog system. After all, that is the system used by the Internet's largest online consumer marketplaces.
With the emergence of the Internet as a new way of doing business came a flood of entrepreneurs with big ideas for the future. Many of these entrepreneurs decided to invest in the idea of the B2B Exchange. Essentially, these exchanges were simply web sites where many businesses came together to buy from and sell to one another.
An e-marketplace is a location on the Internet where companies can obtain or disseminate information, engage in transactions, or work together in some way. Most of the e-marketplaces provide two basis functions: 1) they allow companies to obtain new suppliers or buyers for company products, or
During the last three decades, supply chain management has been both an important and a productive aim of corporations. By working to coordinate the production, shipment, and delivery of the goods required to meet their business needs, companies have been able to more easily meet the demands of their customers.
Supply Chain Management (SCM) software can have tremendous financial benefits for companies. Some businesses have saved millions just by automating their supply chains, but those savings gain often do not come easily. When it comes to implementation, supply chain management software is one of the most difficult systems to effectively put in place.
Since the late 1990's supply chain software has been available to companies, but until recently most firms steered clear because of the costs of implementation and the past disappointments in deploying other, so-called revolutionary technological advances.
Manufacturers know that MRO (Maintenance, Repair, and Operating) expenses can be some of the largest expenses the company records. After all, keeping complex but critical machinery up and running safely and properly is no easy task in the modern factory. What most manufacturers don't know
Many managers initially thought that simply implementing a Supply Chain Management (SCM) system would be enough to keep their inventories stocked with the raw materials needed to keep production flowing smoothly. However, implementation of these systems and software has helped most
With today's emphasize on cutting costs and streamlining expenses, many companies are looking to improve their bottom lines with more effective supply chains. Unfortunately, many people involved with companies don't have a clear understanding of what a supply chain is or how it fits into the companies overall strategy.
Once the idea of significant business collaboration was far-fetched. Most companies were only interesting in getting ahead on their own terms and without interference from other companies, particularly those that might be competition.
Supply chain management can be a tremendous asset for companies because it can reduce costs, improve the profit margin, and offer a better return on investments. However, those advantages do not mean there are no potential problems related to supply chain management that companies may need to deal with.
As the term implies, supply chains are actually made up of a number of links that are connected to make a stronger chain or, in the case of business, a more profitable company. Unfortunately, many businesses looking to streamline their production and cut their costs by updating their supply chains leave out some of the critical links in the chain.
For many companies, putting together a supply chain can be an easy part of supply chain management. The real difficult parts often seem to come from adequate supply chain planning. The difficulties that often arise as a result of poor planning can be extremely problematic for a business.
The majority of companies are already familiar with supply chains and supply chain management software. However, many of these companies may be missing out on another valuable piece of software that will help them increase their efficiency and boost their profit margins.
With increased globalization and offshore sourcing, global supply chain management is becoming an important issue for many businesses. Like traditional, supply chain management, the underlying factors behind the trend are reducing the costs of procurement and decreasing the risks related to purchasing activities.
As the concept of supply chain management becomes more popular and more technology-focused, many companies are finding it necessary to provide some additional training for individuals who will be working directly with supply chain technology. However, these same businesses recognize the need to provide this training
For decades, supply chains have been viewed as simply a way to reduce costs and to get goods to the right people at the proper time. While these ideas are still possible and are true of supply chains today, they also have the potential to achieve greater importance with the companies who use them effectively.
With companies rushing to try to implement the latest and greatest technology in order to get one step ahead of the competition, many are finding that selling the employees and others involved in the change on the project is more difficult than actually putting the software in place.
Developing an effective supply chain is not easy. A company must have the right technology and the support of the best suppliers for it to work. However even once that obstacle has been overcome, another major issue may still loom ahead: finding real cost-reduction in the supply chain.
Companies looking to purchase supplier relationship management software may seem dumbfounded when it comes to selecting the appropriate tools for their needs. However, one thing they should be looking for is software built on the J2EE platform.
Companies today know that competition is increasing and buyers have more power than ever so they recognize the need to achieve a greater advantage in the market. The only way to accomplish this is by adding additional value to their product or service.
Now that more companies have begun to focus on the value chain as a way to improve their market position, the inevitable result has been the evolution of technology to help these firms more effectively accomplish these tasks.
When dealing with inventory, many companies mistakenly believe that centralization will cost them more in the long run. They can't imagine that maintaining their inventory in a variety of warehouses instead of just one would really save them money in the long run.
No matter what product a firm manufacturers, one of most important parts of that process of serving customers and manufacturing products has to be logistics. Logistics includes all of the shipping and delivering involved in the production process,
When companies are interested in improving the way they do business, it often involves improved manufacturing management. Unfortunately, manufacturing management is often not fully understood by those people who are involved in decision-making.
When manufacturing was in its infancy, companies found it difficult to keep a steady supply of the materials needed to keep the machines roaring and the products rolling off the assembly line. Some companies chose to order an abundance of stock which cost them more in warehouse space and sometimes left them holding a large quantity of unused inventory
EAI (Enterprise Application Integration) has become one of the most popular new trends in business streamlining or in business consulting. Essentially, EAI is the process that connects multiple applications so that they can work together in order to accomplish business tasks.
Customer Relationship Management (CRM) has been around for a long time, and it has gone through a number of evolutions as a result of changes in the economy and the business mindset. Today, CRM has gone through yet enough of those evolutions
A great deal of discussion regarding the roles of vendors in supply chain management involves two areas: ways to lower costs to remain competitive and ways to add valuable services that give a vendor a competitive advantage. The reality is that most suppliers cannot go any lower on their prices and still remain in business.
Back when the Internet was first becoming popular with the public in the late 90's, the concept of the portal was being born. Originally, portals were used by large Internet and media companies as gateways to information. The idea was that offering a single entrance to users for news,
More companies are finding that logistics software can help them streamline many of their processes and can help their production cycle run more smoothly. Logistics software essentially is a program designed to help businesses manage the multitude of elements that go into the production process,
Utility Industry
The utility industry is currently undergoing a significant structural transformation. More competitive markets, government regulation, and business opportunities are driving many of these changes.
Enterprise Resource Planning (ERP) software may be an acronym businesses and the media throw frequently throw around. However, most people really are not clear about what it stands for or what ERP software is meant to do for a company.