Our eSourcing consultant Temeena Hussain has now posted her fourth exclusive blog in Supply Management focusing on the six eSourcing ‘Top Trades’- spend categories which we believe can generate the highest savings for an organisation.

IT consumables were up for review in week two, following on from the essential category of office supplies in week one. Temeena advised that IT consumables and office supplies should always be treated as separate categories to ensure that the best savings are achieved, due to the constant price fluctuations in the IT consumables category and the demand-driven nature of these products.

IT hardware was up for discussion in week three, highlighting the myriad of components that can be purchased and why it is often more cost-effective to source different products from a range of suppliers, rather than just selecting one supplier or a ‘total solution’.

The latest instalment of our Top Trades blog in Supply Management looked at sourcing professional services. Where many believe eSourcing software to be useful only for the purchasing of products, Temeena highlights why it is beneficial to source services via an eSourcing solution. With professional services being a major spend category for many organisations, it was an important category to feature and an interesting one as it is not always the lowest supplier price that secures the business- making choices based on best fit as well as best value is often the case when sourcing services.

Take a look at the full blog posts on Supply Management here, where you will find hints and tips on how to make the best savings from each of our Top Trades.

Don’t miss the next two weeks of exclusive blogs from Temeena, both of which will be focusing on sourcing services, with next week featuring eSourcing for  the waste management category.

Commodity prices have been the focus of much discussion and unrest throughout the opening quarter of 2012, with the rising costs being at the forefront of procurement professional’s minds.

The Financial Times reported that the price of oil is almost at a record-breaking price per barrel and with raw material costs fast increasing, there are concerns that the price hikes could have a knock-on effect on the already unsteady economy.

Many organisations have reported a struggle in the first part of this year; fighting against increasing key commodity prices and the threat of a double-dip recession, the uncertainty is definitely something most could do without.

Buyers at Muesli are feeling the crunch as raw materials including whey powder, hazelnuts and almonds edge perilously close to a record high. At an average of £608.80 per tonne, the price of muesli ingredients has gone up by 56% over the past three years; it is currently up 13% on the end of 2010 and 1.2% year-on-year.

Another company feeling the effect is French industrial group Schneider Electric; Procurement Leaders reported that the company is blaming the hike in raw material prices for a €463m rise in costs over the last year.  

A tactical approach from the procurement team is often the best way for a business to deal with cost increases and ensuring that the technology supporting the procurement function is flexible and feature-rich is essential when reacting to fast-paced demands and changing conditions.

The regular appraisal and tracking of commodity items is also essential for any team –one of the useful tracking services we’ve seen is in Supply management which provides a monthly commodity prices round-up. There are other services and news sources available for procurement teams to stay well informed of changing market conditions and commodity prices on a daily basis such as the Financial Times commodities section and  The Guardian’s commodities page. Keeping up to date with the latest movements will assist procurement teams in maintaining the best prices, value and returns in difficult economic times.

Do you rely on the above resources to keep up to date with commodities? Are there any other resources you utilise on a daily basis? We welcome your comments.

Supply chain visibility has been ranked as critical to business performance in the annual Global Survey of supply chain progress report.

The report, generated by Texas Christian University’s Neeley School of Business showed that aggressive cost management and the ability to maintain a flexible supply chain are major factors in helping businesses to grow market share.

Supply chain managers were recognised as crucial entities in helping to promote economic revival, while good supply chain management was hailed as being of core business importance.

Survey respondents agreed that flexibility in the supply chain is created as a result of investment in systems that enable greater visibility of suppliers such as eProcurement systems that have the ability to provide supply chain visibility and give an organisation the compliance and control that is often needed when managing a long tail of suppliers.

eProcurement software can enable an organisation to make savings through effective collaboration between buyers and suppliers via an online portal where tenders, requisitions and invoices can be easily accessed and viewed by both parties at any stage in the buying process.

For a supply chain manager, an eProcurement system can provide a detailed insight into prospective and current suppliers, information that on paper would be almost impossible to source. This increased visibility means that informed decisions can be made before a supplier is chosen and the subsequent work will be contracted to meet KPI’s and other expected standards.

The Global Survey of supply chain progress report concluded that those professionals with more visibility and higher quality data are helping their organisation outperform rivals, meaning that implementing an eProcurement system could be well worth the investment.

Soaring commodity costs for raw materials such as cotton will force clothes buyers to dramatically rethink their sourcing strategies over the coming months.

A report published by Verdict Research concluded that the increased cost of cotton and amplified shipping costs as a result of high fuel prices will push inflation in womenswear up to 2.6% this year.

In an effort to hit margins, many clothing retailers are bumping up their prices, impacting on the consumer’s purse, at a time when public spending desperately needs reviving. Disposable income for many is at an all-time low and with commodity costs continuing to creep up, it could be set to get even tougher.

During times like these, buyers need to focus on efficient sourcing to ensure that the consumer does not bear the brunt of price inflations. Sourcing products and services at the best possible price, whilst at the same time significantly enhancing supply chain visibility- eSourcing technology is one of the tools buyers can utilise to achieve effective cost savings where a number of suitable suppliers can be sourced for an eAuction or eTender, encouraging competition between suppliers and pushing prices lower or improving contract terms as vendors compete to secure the business.  

eSourcing often eradicates barriers that exist in traditional supplier/buyer relations- increased buying reach is a huge benefit of eSourcing; geographical barriers no longer exist, meaning that the most cost-effective supplier can be chosen, no matter where in the world they are based, whilst still ensuring that the supplier meets the performance, legal and any CSR requirements an organisation may have.

With costs ever on the increase, it is important that organisations make savings wherever possible, and with eSourcing technology becoming more advanced, it is looking likely to be the tool of choice in helping businesses to meet crucial savings targets throughout 2012 and in the future.

Two of the UK’s biggest supermarket groups have announced plans to invest huge sums of money in to their logistics.

The Co-operative Group and Asda are each pumping millions in to their in-house logistics in an effort to significantly improve their UK networks.

Asda is hoping to increase capacity and efficiency and reduce annual mileage by one million miles by opening three new UK distribution depots this year, as well as creating 5000 jobs by opening 25 new stores, while the Co-op is investing £22 million in a new distribution depot in an effort to enhance transportation services to its UK stores.

Asda and The Co-op are not the only big names improving their in-house logistics. After five years of outsourcing, global power management company Eaton made the decision to bring logistics back in house which resulted in obtaining better deals from carriers and more concise negotiations in the procurement of services.

US supermarket giant Wal-Mart has also experienced success since moving logistics in-house. The retailer wanted to take ownership of transporting goods from vendor farms and factories to its outlets to improve on-time delivery rates.

Logistics is a sector in which there is always room for improvement; streamlining distribution services can substantially help in lowering the transportation costs within an organisation, but whether or not to outsource services will be the question on many procurement professional’s minds throughout 2012.

Supplier relations have always been important to buyers but it seems that in the present economic climate, it is more crucial than ever to ensure that relationships between businesses and their supply chain remain healthy and free from corruption.

The Supply Management Reader Research Survey 2011 concluded that procurement professionals will be concentrating on cost cutting and supplier relationship management as key priorities throughout 2012.

Some organisations have already started to introduce new measures to help create more transparency in their supply chains.

The notoriously secretive software company, Apple, recently published a list of its suppliers in an effort to tackle criticism over how workers are treated; proving that unsatisfactory supplier relations can certainly generate negative publicity.

The company has also announced that it will be handing over auditing power to independent, non-profit organisation, the Fair Labour Association (FLA) in an attempt to provide unbiased audits across the whole of Apple’s supply chain.

In another example of a company striving to improve supplier relations, builder’s merchants Travis Perkins recently announced that it has invited staff from key vendors to work alongside the head office team. This is a move not too uncommon, with retailers Tesco and Walmart both reporting supply chain improvements since inviting suppliers to work in-house.

With enhanced supplier relations proving to benefit businesses, more may start to look in to increasing communication across their supply-chain.  Where it is not possible to work alongside suppliers, buyers may find eProcurement, eSourcing and contract management software to be beneficial, providing online supplier portals where suppliers and buyers can collaborate and control catalogues, contracts, invoices and other supporting documents.

With cost-cutting a high priority for procurement professionals this year, it seems that improving relationships, communication and trust with suppliers will prove to be a tactical move in helping to meet those savings targets.

Outsourcing has been a common topic for discussion in the procurement industry in recent weeks- this is perhaps due to the mixed bag of opinions that arise when it comes to weighing up the positives and negatives of sourcing products, services and whole departmental functions from external suppliers.

Logistics software company Freightgate conducted a study on trends for 2012 which concluded that supply chain and logistics outsourcing are set to become increasingly popular over the course of the year, with an increasing demand for better collaborative business processes said to be at the heart of the predicted trend.

Peter Smith started the New Year with an article in the UK Spend Matters blog titled ‘Why the public sector needs more outsourcing’ which has since sparked a series of discussions on the whole issue of outsourcing in both the public and private sectors.

The economics of outsourcing have long been disputed among buyers; mostly because of the costs associated with obtaining products and services from external suppliers. But there are also ethical factors to consider - unsafe oil rigs, poor railway maintenance and sub-standard cleaning in hospitals have all been associated with the culture of outsourcing, problems which can generate bad publicity as well as preventing organisations from achieving their (often well-publicised) CSR policy.

While procedures and software can be implemented to help organisations effectively monitor and measure the standards and costs of external suppliers, it is important to ensure that the right balance across quality, efficiency, responsibility and costs is achieved for outsourcing to meet the original needs and organisational objectives.

This year has seen many eSourcing success stories, with both public sector bodies and private companies revealing huge savings following successful eAuction events.

Norfolk County Council revealed that it saved around £218,000 from just two electronic auctions for transport services and the Guardian Government Computing Network reported that an eAuction attracted around 60 operators for contracts to conduct services on 33 school run routes.

At Wax Digital, we have seen our clients drive successful sourcing savings through our on-demand web3 eSourcing platform, which can be delivered as either a managed or customer-driven event.  Oxford University and Friends Provident are amongst customers that have achieved average savings of 37% by utilising eAuctions.

As eTenders and eAuctions are now widely recognised as tactical and strategic tools to enhance savings, it is a great time for us to announce that our web3 eSourcing platform is now available in 10 different languages; Chinese, Dutch, English, French, German, Italian, Polish, Portuguese, Spanish and Turkish. Purchasing from overseas suppliers has become somewhat a necessity in many industries to source the best value products, which means that being able to transcend language barriers between buyers and suppliers is now more important than ever.

It has been an exciting year for eProcurement and eSourcing and with another dip in the sea of recession predicted, it is likely that the popularity of eTenders and eAuctions will continue to grow in 2012, providing a helping hand to businesses and helping to achieve savings when they need them most.

Helping to reduce the effects of climate change has become a huge responsibility for big businesses and in recent years companies have been looking deeper in to their supply chains to source the most eco-friendly products in an attempt to minimise their impact on global warming.

The toy manufacturer Hasbro has recently published its core list of suppliers in an effort to encourage transparency and to address corporate social responsibility principles in its supply chain. Other large companies such as Nestle and Coca-Cola are also planning ways to decrease their carbon footprint.

The Drinks Business Review reported that Coca-Cola will be investing £50million into three of its UK facilities to help reduce water consumption and to provide new machines that will help decrease the need for cardboard packaging. Nestle Waters has splashed the cash too, spending £35 million on a new eco-friendly factory in Derbyshire. The company aims to significantly reduce the site’s total energy output and to also reduce the amount of water used in manufacturing.

So many big names are making a conscious effort to ‘go green’ and it is likely that more will follow suit over the next 12 months. With energy and water consumption becoming a major concern around the globe, there is no better time for companies to focus on managing their supply chains to enable them to purchase from the most environmentally-friendly sources possible.

From the start of next year, most public procurement processes are set to be governed by a 120-day deadline. 

Supply Management reported that Cabinet Office minister Francis Maude called for the changes in response to the revelation that the average government procurement currently takes around 200 days to complete. 

The government aims to achieve the target by encouraging closer and earlier engagement with suppliers and markets which should enable more clear and concise invitations to tender, it is hoped that publishing the data will expose failings in the system and encourage greater clarity in government procurements.

eProcurement software is proven to cut costs and shorten the buying cycle by providing transparency through the buying process as well as substantially reducing the processing time. Could eProcurement prove to be the key in helping the government adhere to the strict EU public procurement rules and meet the 120 day deadline?