Organising supplier spending and negotiating cost reductions was traditionally a painstaking, time-consuming process, but the growing popularity of eSourcing software is enabling organisations worldwide to achieve substantial savings in a time-efficient manner on countless spend categories.

eSourcing can be approached in several different ways, all have the ability to generate substantial savings; it is just a matter of choosing the right approach for your organisation. Our latest Source Material video book- the eSourcing Edition, offers guidance on whether a stand-alone or managed platform or source-to-pay approach is right for you, demonstrating a wealth of experience presented in case studies and video interviews with users of Wax Digital’s web3 eSourcing software.

Where a stand-alone platform may sometimes be appropriate for those with a dedicated procurement team, consultancy services are often still beneficial. Our consultants have a wide range of knowledge and experience in constructing and running eAuctions, from assisting procurement teams in selecting suppliers and advising on the types of eAuction that will generate the best results right through to advising on timescales and expectations.

One aspect of eSourcing where consultancy services really shine through is in helping to determine the spend categories where savings can be achieved. This eSourcing edition of Source Material looks at the 20 ‘Top Trades’ in which repeat savings can often be made. These categories range from print management to professional services, with a dedicated feature on the six Top Trades that our consultants have defined as critical categories for making savings.

Why not take a look at the eSourcing Source Material and contact us with your comments- do you agree with our top six critical categories? Are there any others that you think should feature in the Top 20? How do you feel about managed services compared to stand-alone eSourcing platforms? We welcome your comments.

Chief Financial Officers have cited organisational change and procurement as the main opportunities for companies to cut costs in 2012, according to a recent report.

The report, ‘Cutting Costs to Drive Growth’ was conducted during the Economist’s CFO Summit 2012 in an effort to define the key trends that will shape the CFO agenda throughout this year.

81 per cent of respondents agreed that additional organisational savings could be achieved through improved procurement processes and 65 per cent identified supply chain and logistics as an area which would allow for substantial cost reduction.

Some companies are already encouraging their finance and procurement teams to work together, with eProcurement being the driving force behind the collaboration. Holiday village company Center Parcs has seen significant benefits in the two teams pursuing joint goals since implementing an eProcurement system. The Head of Purchasing commented, “It was a real meeting of minds. The two functions both agreed on the need for the project and on Wax Digital as the vendor to select for it.”

The difficult economic climate and low growth predictions have reinforced the need for effective cost saving initiatives to help drive growth, finance professionals may need to work closely with their procurement teams to ensure that processes are put in place so that finance and procurement can work together to achieve the savings, compliance and control that many organisations so desperately need.

The Chancellor’s budget is met every year with controversy and accusations of bias towards differing parties and this year’s budget is no exception- with the country just about emerging from one recession and the possibility of a double-dip on the cards, austerity cuts and VAT increases were to be expected.

With cost inflations becoming a common element of the Budget, it is not surprising that procurement professionals often face the challenge of fighting to source products for lower prices in an effort to protect the consumer’s wallet as well as their organisation’s bottom line.

In a survey conducted at eWorld Purchasing and Supply Exhibition in March this year, we asked purchasing professionals their pre-Budget opinion on what could be done to help kick-start the UK economy. More than half of those polled believe that the country needs to introduce measures to get the UK spending more as oppose to the continuation of austerity cuts and 48 per cent said that public sector spending regulations restricted best value, suggesting that more could be done to ensure the sensible spending of public money.

Procurement professionals are responsible for making every penny deliver best value, so their views should surely be up there as a source of government spending intelligence. Measures to improve public spending would no doubt boost the economy as well as moral for the many retailers who have suffered throughout the recession and still face uncertain economic times.

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.

Here at Wax Digital, we are very excited to announce that our first of six exclusive guest blogs appeared in Supply Management this week.

Our highly intuitive and feature-rich eSourcing software (web3), coupled with our expert consultancy service makes Wax Digital stand out from the crowd in ensuring that our clients make the best savings possible when running eAuctions and eTenders.

Wax Digital eSourcing consultant Temeena Hussain will be providing an insight into the savings that can be achieved through eSourcing over the next six weeks;  looking in particular at core spend categories and revealing how to achieve the highest savings across each of these six ‘Top Trades’.

This week’s blog piece is dedicated to the savings potential of office supplies, a category essential to almost every organisation, and one that has the potential to achieve high savings. Take a look at Temeena’s blog and please feel free to leave any comments, we welcome your feedback and questions.

We will soon be revealing our 20 Top Trades in the upcoming edition of our Source Material video book -watch this space for more information.

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.

Delays in payments are a common problem across many industries today and can sometimes result in disastrous consequences.

Historic Manchester-based building services company Barratt, went in to administration in November last year after several contractors withheld payments worth £3million, which resulted in job losses and eventually the demise of the company after administrators failed to find a buyer.

Suppliers and sub-contractors are often left to bear the brunt of a collapse, Barratt’s vendors are no exception-with predictions that claims will amount to almost £2million.

While late payments are frequent in business transactions; many companies now use eProcurement software to enhance supply chain visibility which can help in monitoring payments as and when they are due. Feature-rich systems can even provide detailed information about suppliers by capturing contract reviews, payment-term adherence, KPI’s and SLA’s.

Supply management reported on the Capgemini Executive Insight Survey, which found that 29 per cent of the US companies surveyed had experienced negative repercussions caused by delayed supplier payments, including damage to growth and impacts on revenue, proving that a small postponement can certainly have a dramatic knock-on effect in an organisation.

The need to stimulate cash flow has never been more important-with many businesses struggling on the back of the recession and with talk of a double-dip on the way, ensuring supplier reliability will be an important factor in successfully achieving savings and meeting targets in procurement this year.