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Category: Sourcing

Understanding the SupplierGATEWAY Bid Tool

Learn about the Bid tool in your SupplierGATEWAY platform.

Supplier Sourcing: How To Find Your Next Supplier

Learn how to find your next diverse supplier in the SupplierGATEWAY Sourcing App.

Brief Overview of Opportunity Posting

Learn how to post an opportunity for suppliers in the SupplierGATEWAY platform.

Healthcare Strategic Sourcing: The Case for a System-Wide Approach

As the head of procurement for your healthcare system, cutting costs and increasing efficiency are two things that are always on your to-do list. Your job is a balancing act – reducing expenses while still ensuring high-quality patient care. Using a system-wide strategic sourcing approach is one buying approach that could dramatically reduce costs and increase efficiency for your organization. Rather than each hospital campus operating independently, think about leveraging the combined buying power of your entire system.

When you source strategically at a system level, you open up opportunities to negotiate better pricing through increased volume and gain more control over product selection. You can also reduce administrative costs by centralizing and streamlining many sourcing and purchasing functions. The key is having visibility into what each campus is buying and finding where there are opportunities to consolidate. It may require an upfront investment in tools and resources, but the long-term payoff could be huge.

Does a system-wide strategic sourcing model make sense for your healthcare organization? For many, the answer is yes. Keep reading to learn how to system-wide strategic sourcing can transform your procurement function.

The Benefits of a System-Wide Strategic Sourcing Approach in Healthcare

Managing spend across a healthcare system with multiple locations is often quite challenging. When you take a system-wide strategic sourcing approach, your procurement team can gain more insight into spend, control maverick spending, reduce costs through improved contracting, and free up money for patient care.

By centralizing sourcing decisions at the system level, you can leverage your combined purchasing power to get better prices from suppliers. You’ll also gain visibility into total spend on categories across all hospitals and clinics, allowing you to spot areas of overspending and make data-driven decisions.

A coordinated sourcing strategy allows you to standardize product usage throughout your healthcare system. This standardization helps minimize the number of SKUs to manage and leads to lower prices through volume discounts and reduced administrative costs. It also ensures the quality and consistency of products used for patient care system-wide.

Developing system-wide relationships with preferred suppliers provides opportunities for partnership and innovation. Suppliers are more willing to collaborate on custom solutions and pilot new technologies when there is a long-term, high-volume commitment. This collaboration benefits both parties and improves the quality of patient care and patient outcomes. 

While a system-level approach requires upfront investment and change management, the long-term rewards of cost savings, quality improvement, and clinician satisfaction make it worthwhile. By implementing centralized sourcing policies and negotiating from a place of greater strength, you’ll gain control of spend and free up funds to enhance patient experience across your healthcare system. The benefits of a centralized procurement model far outweigh the challenges of implementation. With strategic system-wide sourcing, you can transform procurement into a strategic function that fuels clinical and operational excellence.

Aligning Key Stakeholders Across Your Healthcare Network

To successfully source strategically across a healthcare system, you need buy-in from key stakeholders at each facility. That means aligning executives, physicians, nurses, department heads, and others around the benefits of an enterprise-wide approach.

First, bring leadership together to establish shared goals. Explain how consolidating purchasing power can lower supply costs, free up the budget for new services, and strengthen the system’s financial position. Get their input on priorities and concerns. Address these issues to build support.

Next, meet with lead physicians and nurses to understand their needs and preferences. Work with them to find the products and suppliers that balance quality, service, and value successfully. Frontline perspective from lead physicians and nurses is invaluable for choosing supplies that improve patient outcomes, experiences, and safety.

Department heads are also crucial allies. Meet regularly to review budgets, track savings, create efficiencies, and ensure critical materials and equipment are readily available. Provide data and reports to demonstrate any progress or system improvements.

Finally, communicate early and often with staff at all levels. Explain the benefits of an enterprise approach in a way that resonates with their day-to-day reality. Highlight ways it will make their jobs easier or give them more resources to do their work. Answer questions openly and honestly. With the backing of leadership and clinicians combined with transparency for staff, you’ll gain the widespread support needed for strategic sourcing success across the healthcare system.

Conducting a Comprehensive Spend Analysis

To effectively apply strategic sourcing to a healthcare system, you must understand where your money is going. This means conducting a comprehensive spend analysis across all your facilities.

Gather Data from Each Campus

Work with department heads from each facility in your network to collect purchasing data. Ask for reports showing what products and services they’ve bought over the past 1-2 years, including details like:

Look for Spending Patterns

Once you have the data from each location, look for spending patterns across your system. For example, you may find that multiple hospitals have contracts with the same medical supply company or staffing agency. Or specific clinics may be paying higher prices for the same lab equipment. Identifying these patterns will show where you have opportunities to bundle volume for lower pricing.

Analyze Total Costs

Add up what your organization spends in major cost centers like medical supplies, pharmaceuticals, facilities, IT, and staffing. Calculate the total current cost for each category and your overall annual spend. This overview will help set savings targets and determine where to focus your sourcing efforts.

Share Insights Across the System

Conducting a comprehensive spend analysis is a critical first step to optimizing purchasing for your healthcare system. You’ll uncover ways to save money system-wide by collecting data from each facility and analyzing costs and spending patterns. 

Share the results of your spend analysis with leadership and department heads at each campus. Review the pricing, volume, and total cost insights you found. Discuss opportunities to consolidate purchases across locations for the best overall value. By aligning stakeholders around spend reduction goals, you’ll gain support for implementing a system-wide strategic sourcing program.

Developing System-Level Specifications and Standards

Healthcare systems must develop and enforce system-wide product specifications and standards to achieve maximum cost savings and operational efficiency. This means gathering stakeholders from across your facilities to determine which products and services should be standard for the whole system.

Identify Common Purchases

Items frequently purchased in high volumes, such as surgical gloves, IV bags, linens, and syringes, are prime candidates for standardization. Get input from doctors, nurses, and department heads on their product preferences and requirements.

Evaluate Options

Review the different products and vendors that could meet your needs. Consider things like quality, price, availability, and service. You want to find options that will work well for all facilities and provide the best overall value. Expect to compromise to find a solution that satisfies everyone.

Choose System Standards

Select a single vendor and product for each item you want to standardize. These will become your system-wide standards that all facilities are required to purchase. Exceptions can be made in some cases based on unique needs, but the goal should be to have as much system-wide consistency as possible.

Enforce Compliance

Ensure system standards are followed by implementing policies and controls. This can be done by revising purchase order approval processes, setting limits on non-standard purchases, monitoring invoices and spending reports, and training purchasing staff and end users. Compliance is key to achieving the full benefits of your standardization efforts.

Developing and implementing system-level standards is challenging, but the rewards are substantial. By consolidating your healthcare system’s spending power, you gain significant leverage with suppliers to lower costs and improve service. Operational efficiencies also result from the consistency and familiarity of standardized products across all your locations. The key is getting buy-in from stakeholders and strict enforcement of the standards you establish. With time and practice, system-wide strategic sourcing can become second nature.

FAQs About Implementing Strategic Sourcing in Healthcare

Will strategic sourcing save my healthcare system money?

Absolutely. Strategic sourcing is shown to reduce costs by 5-15% on average for healthcare organizations, but some systems have achieved up to 36% cost savings. By leveraging your system’s combined purchasing power, you can negotiate better pricing and terms with suppliers. You’ll also gain visibility into what each facility pays for the same items, allowing you to standardize at the best price.

How much time does it take to implement strategic sourcing?

The time required depends on the breadth and complexity of the categories you want to source. Rolling out a comprehensive strategic sourcing program for a multi-facility system may take 12-18 months. However, you can achieve quick wins in 3-6 months by starting with a few high-spend, non-clinical categories like office supplies, food, linens, and facility services. Focus on the “low-hanging fruit” before moving on to clinical categories.

Do we have to switch to single-source contracts?

No. Single sourcing is not required for strategic sourcing. Consolidating suppliers can maximize savings, don’t rely on one sole vendor. Multi-sourcing, dual-sourcing, and regional sourcing are great options that help create competition, ensure supply continuity, and support local businesses. The key is combining volume across the system to negotiate the best deal, regardless of the number of suppliers.

How can we get physician and staff buy-in?

Engaging stakeholders early and often is key. Communicate the what, why, and how of your strategic sourcing initiative. Highlight the benefits like cost savings, improved patient experience, and less time spent on procurement tasks. Seek input on categories and suppliers to source, and address any concerns. Once contracts are in place, provide training and guidance on using new supplies or services. By demonstrating the value to physicians and staff upfront, you’ll gain their support and cooperation.

What technology do we need?

Most healthcare systems find that a procurement and supply chain platform is needed for system-wide strategic sourcing. Look for a solution that provides spend analysis, sourcing, contract management, and supplier management functionality. SupplierGATEWAY’s all-in-one Enterprise Supplier Management Platform integrates with your ERP for a single source of truth for purchasing data across the system. E-procurement, inventory management, and analytics tools can also help drive the adoption of strategic sourcing contracts system-wide.

Conclusion

While it may seem daunting, the potential benefits of switching your buying strategy to strategic sourcing system-wide are huge. Start by focusing on a few categories of spend that are common across your locations to build momentum and gain buy-in. Once you have a few wins under your belt, use the savings and process improvements to make the case for expanding to additional areas. With the right tools and partners in place to support data-driven analysis, cross-campus collaboration, and supplier relationship management, you’ll be well on your way to unlocking major value through your sourcing efforts. The patients you serve and your CFO will thank you for it. Time to get started!

What Is Category Management and Why Is It Important?

Procurement is one of the most important departments for all businesses. As the primary department in charge of end-to-end organizational spending, procurement ensures that all business operations function smoothly through the acquisition of key supplies and inventory.

With procurement and supply chain management becoming increasingly complex in today’s global economy, organizational spending can easily become excessive, which can have a negative impact on the company. It’s crucial to adopt a strategic approach in procurement and supply management to adapt to the rapidly evolving nature of the market. One of the most beneficial approaches involves effective category management. 

What is Category Management?

Category management is a strategic approach to procurement that involves segmenting similar products and services into categories to identify opportunities to consolidate spending and create more value for the business. 

It was developed in the late 1980s by Dr. Brian Harris to take a data-driven project management approach to procurement. Its main goal is to streamline decision-making, optimize the usage of resources, and improve procurement performance

Another strategic approach discussed frequently along with category management is Strategic Sourcing. Both terms are often used interchangeably with each other, although they differ in focus and scope.

Strategic Sourcing mainly focuses on identifying channels where procurement can secure products and services at the lowest cost to itself, which may not necessarily be the lowest price. This is essentially a way to satisfy the organization’s present needs while maximizing the value of its purchases.

On the other hand, category management takes a more holistic approach as it involves analyzing the current market and building relationships with suppliers to drive maximum value to the organization throughout the whole life cycle of goods and services.

Why is Category Management Important?

Category management is a crucial aspect of procurement as it goes beyond simply acquiring goods and services. Through the development of categories, the organization can better understand its spending patterns and identify critical areas where savings are possible. Building meaningful relationships with suppliers can aid in negotiations for better contracts. More insight into the company’s supply network minimizes risks by diversifying its supplier base.

Overall, category management helps businesses build value throughout the entire supply chain. By adopting a more strategic, data-driven approach to procurement, the company can improve business efficiency to achieve better outcomes.

What are the Benefits of Category Management?

The implementation of your category management plan may be the responsibility of your Category Manager, but it is a company-wide function that impacts the organization as a whole. Thorough implementation will affect every facet of the business, resulting in the following benefits:

Improved Vendor Performance

When done strategically, an effective category management plan can streamline your vendor and supplier management processes. Category management gives you a framework to evaluate vendor performance and make changes as needed, helping you work more efficiently.

Better Client Satisfaction

A single Category Manager handles all aspects of each category. They are tasked with sourcing requirements, bid collection, and contract negotiations with suppliers, among other functions. With all that taken care of, other team members can focus on their core organizational responsibilities, allowing them to deliver value-based services that satisfy client needs and expectations.

Greater Insight Over Resource Allocation

Category management offers more insight into the usage of resources, which aids in better decision-making. With a Category Manager in charge of each category, the organization can gather information on price, cost, and spending. You can acquire a complete list of vendors and data on expenditures, giving you an accurate picture of how your resources are allocated. 

Build Stronger Relationships with Suppliers

Category management creates more opportunities for businesses to establish meaningful supplier relationships. You can work with suppliers more effectively and efficiently by establishing clear communication channels, encouraging collaboration, and providing an established framework for evaluating vendor performance and streamlining processes. 

What is the Category Management Process?

The category management process involves a series of steps, each helping business owners achieve better outcomes in a structured and measurable way. Below, we break down each of the steps:

A category is any group of similar items or services under a single retailer. Since businesses deal with a wide range of products and services daily to fuel their operations, grouping these into different categories enables the company to be more efficient with its procurement processes.

Groupings can be made in various ways and will depend on the company’s structure, the industry it operates in, its spending policies, and the nature of the market. More important here is adhering to a single standard of categorizing these goods and services to remain consistent. Today’s most well-known category system is the United Nations Standard Products and Services Code (UNSPSC).

Involving different sets of data is also helpful in understanding the procurement goals of the business. You can obtain greater insight from data on supplier performance, past organizational spending, and the changes in the pricing of products and services to identify prevailing trends and savings opportunities.

Once different categories have been created, evaluate how well they fit within your entire portfolio. This involves assessing how the category works within the organization’s entire portfolio and how they contribute to the overall profitability of the business.

Can these categories help you reach your procurement goals? Is there anything else that needs to be addressed? Assessing the roles of each category enables you to gain valuable insights and make informed decisions that ensure all your efforts are contributing to the efficient allocation of resources. 

As a critical aspect of category management, category performance assessment involves the systematic analysis and evaluation of category performance to identify opportunities for improvement to ensure maximum profitability. In this process, the performance of each category can be evaluated using various key performance indicators (KPIs) as benchmarks.

Analyzing the performance of different suppliers and key competitors is also necessary during this process. Obtain valuable insights using each category’s detailed strengths, weaknesses, opportunities, and threats (SWOT) analysis. Depending on the results obtained, recategorization may be needed.

Set attainable and quantifiable targets for sales, volume, and margin once category assessments are completed. Setting objectives helps you define what outcomes you want to achieve for a specific category.

It’s also equally important to set realistic and achievable goals. Whether you’re trying to improve your profit margin or increase sales volume, category management should be able to help you align your procurement efforts with your organization’s targets. Then, with a category scorecard, you can keep track of the data to understand your progress.

Once you’ve set your targets, you will need a targeted strategy to help you achieve them. The following are some examples of methods you can employ:

  1. Transaction Building: improve sale volume through aggressive pricing, strategic packaging, and promotions.
  2. Cash Generating: the main focus is to increase the turnover of goods in high-volume categories.
  3. Profit Generating: instead of increasing the volume of sales, the emphasis lies on categories with high margins.
  4. Traffic Building: the primary goal is to improve shopper traffic, which is ideal for destination categories.
  5. Excitement Generating: the strategy focuses on creating excitement for a particular category by tapping into relevant social trends.
  6. Turf Protecting: this strategy is often used when a competitor has increased its activity and you want to protect existing sales. However, this strategy will often have consequences on profit margins, so it should be used as a last resort to remain competitive.
  7. Image Enhancing: use this strategy to improve your overall image and encourage customer loyalty.

 

Category tactics are specific tools, actions, or initiatives an organization takes to implement a strategy and achieve its objectives for a particular category. These tactics are designed to achieve the maximum possible and can be any of the following:

 

Implementation is perhaps the most important step in Category Management. It involves executing the plan developed during the first six steps of the process and working towards your goals. 

This process usually involves five key steps:

  1. Execution: putting tactics into action with the help of all team members, from internal marketing teams to suppliers.
  2. Monitoring and Adjustment: continuous monitoring is required in order to identify areas where adjustments can be made.
  3. Effective Communication: all stakeholders must be aware of the plans and aligned with the goals and objectives set.
  4. Optimization: ongoing optimization is necessary to ensure that all strategies and tactics employed for a specific category perform at their best.
  5. Evaluation: the overall effectiveness of the plan must be evaluated to assess whether the objectives have been met and whether further optimization is required.

8. Review Each Category

While implementing your action plans, you may need to review each category to ensure they remain current. As the market continues to evolve, so will the category dynamics and the strategies you must implement to achieve your procurement targets. Whenever possible, you may need to make changes to each category to adapt and remain competitive.

Implement An Effective Category Management Plan With Supplier Gateway

At its core, category management is all about maximizing productivity while optimizing the procurement process to ensure the efficient allocation of resources. With Supplier Gateway, you can gain the means to create an effective category management plan using our all-in-one supplier management platform.

Get in touch with us today to request a demo of our platform.

Take Control of Your Sourcing With These Three Agile Procurement Strategies

Introduction

Imagine this: Your biggest supplier falls behind on their deliveries, and you’re suddenly faced with a shortage. You scramble to find a new supplier, but you can’t find a suitable replacement in time to meet your deadline. What do you do?

This is just one example of how agile procurement can help your business take control of its supply chain. Agile procurement is a strategic approach to purchasing that allows businesses to be more responsive to changes in the market. 

Post-pandemic and in the midst of a looming recession, supply chains remain delicate and easily-disrupted, which can mean lost profitability. According to Ardent Research, the number of CPOs prioritizing cost-savings has almost doubled from 2021 to 2022. 

Let’s take a deeper look at agile procurement and how implementing it can significantly increase cost and time-savings for your company.

What Is Agile Procurement?

Agile procurement is a sourcing and procurement strategy that enables businesses to be more responsive to the ever-changing market. It’s a way for companies to be more flexible in order to meet the needs of their customers.

Put simply, agile procurement is all about being able to move quickly and make decisions on the fly. It’s about being able to adapt as new information comes in and reacting quickly to changes in the market. This can be done by implementing certain tools and processes, such as contract management software, supplier management software and RFQs/ RFIs.

Agile procurement is often discussed in opposition to traditional procurement. Traditional procurement tends to be a much slower process, where lots of time is taken in each procurement stage. Decisions aren’t hurried, and oftentimes have to go through the hands of numerous people in numerous departments before being approved. 

Agile procurement oftentimes takes multiple procurement steps and deals with them simultaneously. For instance, supplier onboarding and RFP responses often happen concurrently. Contract negotiations may also happen during the supplier sourcing process.

 

Setting the Right Objectives and Goals for Agile Procurement

When implementing agile procurement into your procurement processes, setting the right objectives and goals is imperative. What is your company looking to achieve with this new way of working?

Agile procurement is not about cutting corners or taking short-cuts. It’s about being able to move quickly and effectively in order to get the best results for your business.
Your goals should directly reflect areas in your procurement process that need improvement. 

Questions you may want to consider:

Three Different Agile Procurement Strategies

There are several different theories behind agile procurement strategies that can be used in your business. These three are the most commonly used approaches:

  1. Planning for the Unknown. This type of strategy is used when you don’t know what you’re going to need or when you’re not sure what the supplier landscape looks like. In this case, you’ll want to have a well-defined plan that outlines what product/service you’re looking for and how you’ll go about finding it. You’ll also want to be prepared to make quick decisions when you find the right supplier.
  2. Fast and Furious/Just-in-Time. This option is great when you need to get something quickly, but it’s not a long-term solution. This type of strategy relies on suppliers who are able to meet your deadlines and who have a proven track record of success. You’ll also need robust systems in place so you can make quick decisions and get the products or services you need delivered on time.
  3. Slow and Steady. The preferred option for long-term sourcing and supplier relationships. With this approach, you’ll want to take your time to build a relationship with each supplier and develop a clear understanding of their capabilities. This will help ensure that you select the right supplier for your business and that you’re able to get the best value for your money.

Other agile procurement methods that are often part of the above strategies are multi-sourcing and strategic sourcing. Learn more about multi-sourcing as well as strategic sourcing.

Implementing an Agile Procurement Approach in Your Organization

It can be hard to know where to start with implementing an agile procurement approach in your organization, but there are lots of tools out there to help. The most important part is to set up the right system that connects all your stakeholders and makes it easy for them to collaborate.

Start by creating a strategic framework that outlines the key steps in your procurement process. This will give you a clear roadmap for taking action, as well as helping you identify potential risks and opportunities.

Next, look into tools and software that integrate supplier management, onboarding and procurement. The Enterprise Supplier Data Management Suite from SupplierGATEWAY powers an agile procurement system by integrating supplier data management and supplier relationship management into one collaborative environment. It helps automate processes like supplier onboarding, purchasing and analytics. Plus, it’s simple for all stakeholders to use, so it makes it easier for everyone to collaborate smoothly on large-scale projects.

Common Challenges Faced With Implementing an Agile Procurement Strategy

While there are many benefits to agile procurement strategies, there are some common challenges you should be aware of.

The implementation of an agile procurement strategy can be a daunting task. This is because it involves changing the way your procurement team works and how they interact with suppliers. You may also need to make adjustments to your systems and processes, which can be time consuming.

You’ll also need to consider the cost associated with implementing an agile procurement strategy. New tools, systems and processes may require upfront investments in order for them to be effective.

One of the most challenging aspects of implementing agility into your procurement strategy is ensuring that suppliers are on board. To ensure a successful implementation, it’s important that both buyers and suppliers understand what is expected from them during the process and are committed to making a transition to agile procurement work.

Conclusion

When it comes to agility in procurement, remember that it’s not a one-size-fits-all solution. You’ll need to tailor it to fit the specific needs of your business. By taking the time to implement agile procurement strategies, you’ll be able to take control of your business, reduce your costs and procurement-related risks, and get the most out of your supplier relationships.

If you’re looking for more procurement agility in your business, SupplierGATEWAY can help. We offer a range of dynamic solutions that make managing supplier data and relationships easy and affordable. Contact us today to request your demo.

Building a Diverse Supply Chain Takes Work—But It’s Worth It

Diverse supply chain

In this excerpt from his forthcoming book, Anti-Racist Leadership: How to Transform Culture in a Race-Conscious World, former Jamba Juice CEO James D. White—along with Krista White, who has joined him in his work—shares approaches on how diversity and inclusion can strengthen your supply chain.

Given today’s supply chain challenges, leaders have to be proactive in building diversity and inclusivity into their supply chains, as well as in helping suppliers and partners grow to scale. In recent years, more companies have discovered that building a fairer and more equitable supply chain benefits the broader global community, as well as brings a deeper perspective of ideas, and addresses the growing demand among consumers who patronize brands which support relevant social issues. Many of these companies have established models that others can emulate. Here are a few ways a company can create a fully diverse and inclusive supply chain.

Establish Networks through Partnerships with Professional Associations

Professional associations representing BIPOC, women, disabled and LGBTQIA+ entrepreneurs are eager to partner with business leaders to offer more training programs, conferences and networking opportunities. Many industry trade associations have launched their own Diversity, Equity and Inclusion (DEI) initiatives and are actively seeking the support and sponsorship of corporate partners. If you can’t find an existing organization with a program that fits your agenda for creating a more diverse ecosystem, design your own program and enlist the appropriate associations as partners.

Host Your Own Development Programs for Minority-Owned Suppliers

Larger companies in particular are actively developing the suppliers they need. UPS is doing this through partnerships with such organizations as the Women’s Business Enterprise National Council, the National Minority Supplier Development Council and the United States Hispanic Chamber of Commerce, running mentoring and training programs, workshops, professional matchmaking, supplier-diversity conferences and management education to support the growth and success of diverse suppliers. Coca-Cola runs a supplier-development institute in partnership with Georgia State University, providing education for disadvantaged groups on how to start a business. Target hosts a Supplier Diversity Summit, where indirect vendors can learn more about Target’s processes and business initiatives, while at the same time gaining direct access to Target leaders. Target also hosts both Target Accelerators, a quick, intensive training program for entrepreneurs, and vendor fairs aimed specifically at Black-and Latinx-owned businesses.

Become Part of an Industry Organization that Seeks to Achieve More Diverse Ecosystems

Fair Trade USA, an organization of food, retail and consumer-products companies committed to operating within an equitable ecosystem, is a good example of how companies can combine forces to build a fairer supply chain. The organization provides a Fair Trade certification to companies that ensure sustainable livelihoods, environmental protections and safe and fair working conditions for their suppliers. Athleta, Dole, General Mills, Green Mountain Coffee Roasters, J. Crew, Patagonia and Target are among the more than 1,300 companies that have Fair Trade Certified product lines.

When companies combine forces this way, they’re no longer forced to compete by driving down the prices they pay suppliers—in many cases making it impossible for producers in far-off countries to earn a living wage. Fair trade empowers producers and enables businesses to support sustainable livelihoods and practices more transparently.

Fair Trade USA continuously seeks opportunities to expand its reach through business partnerships and through the expertise, technologies and resources provided by philanthropic partners. Consumer awareness of the Fair Trade Certified seal was about 63% as of 2021, nearly double what it was in 2008. Younger customers are even more interested in buying brands that support social responsibility. A Nielsen survey from 2015 found that 73% of millennials around the world said they were more likely to buy brands supporting social issues they care about. Needless to say, when Fair Trade Certified companies work with their suppliers to ensure fair working conditions in their factories and on their farms, they are improving life for people of color in many parts of the world.

The Justice, Equity, Diversity, Inclusion ( J.E.D.I.) Collaborative for the natural-products industry is also working with producers and vendors to develop systematic DEI principles within the fair-trade model. The collaborative is talking about how to create a natural-products industry that yields a strong, positive impact wherever it sources ingredients and production; that brings in the voices of marginalized communities; and that reaps the innovations to be found when you have a diversity of identities and perspectives. J.E.D.I. is looking at DEI in a bigger, more global way, instilling the principles of an intentional anti-racist culture throughout the supply chain and the greater ecosystem.

All industries should be looking at building inclusive industry-wide practices for their supply chains; otherwise, they’ll miss out on critical perspectives.

A few final takeaways:

James D. White is the former chair, CEO and president of Jamba Juice; a board director, and author of Anti-Racist Leadership: How to Transform Culture in a Race-Conscious World. He has more than 30 years’ experience revitalizing some of the world’s leading brands. In talks, he shares personal insights on how to build strong bridges between the boardroom and the shop floor and why investing in your workforce is key. Krista White is a writer and consultant in the field of DEI/Diversity, Equity and Inclusion.

Originally published in Industry Week

 

Economic Impact and Importance of Locally Based Sourcing

Businesses can make a significant contribution to a country’s growth by finding products to source locally. Businesses purchase goods and services locally to support local suppliers’ income and jobs. They also contribute to the general capacity of the country by exchanging knowledge and skills. As long as local supply falls short of your requirements, there’s no reason for firms to avoid buying from their neighbors. Many firms, particularly those in developing nations, may only be able to get a percentage of their items & services from within their own country. It’s usually due to one of four factors: a lack of local availability, poor quality, slow product delivery, or high prices.

Working to increase supply or modifying business expectations are two ways to get around these pricing issues. To change demand, companies should reconsider their selection criteria, focusing more on the country of origin than on pricing. It will be simple to find reasonable alternatives to imported goods. Countries can change their institutional structures in this way to encourage local sourcing and shift country supply. They can also create networks to better match supply and demand on a local level, as well as improve business access to financing.

Here are the top benefits of locally based sourcing:

Increased Adaptability

You never know when a chance or a challenge will come your way. Before choosing a partner, buyers want to know about the product’s growth history, and the ability to scale is crucial. A wonderful customer, for example, might make you an extremely profitable proposal, or an existing client might want you to ramp up to meet demand. Are you ready for it?

The answer is likely yes if you shop locally. This is because local providers are frequently more responsive than suppliers who are located further away. They can deliver items more quickly, and it’s considerably easier for a supplier to coordinate a shipment across the block than it is to coordinate a Cargo shipment across the globe.

More Control

The further you are from your supply chain, the less control you have over it. Suppliers may pretend to treat all clients and buy orders similarly, but they are more likely to remember you if they anticipate a site visit or a drop-in meeting from you. 

Face-to-face meetings will allow you to discuss any issues that arise and ensure that all products fulfill your expectations. There’s also a decreased chance of things getting out of hand. When working with large groups of individuals, many of whom are not on the floor and handling your things, it’s easy to get lost in translation.

When travel is inconvenient or impossible, manufacturers are increasingly turning to videos or their factories to interact with their consumers.

Community Benefits

If sourcing locally raises your bottom line, it stands to reason that it will do the same for other local suppliers and manufacturers, which may be a significant victory for your community’s economy and citizens.

Employees who are pleased and well compensated are more inclined to invest in local manufacturers, and well-known and rich companies are better able to give back to their communities through communities and sponsored activities.

Reduced Costs in the Supply Chain

In order to save money, you should also consider reducing the size of your supply chain. For instance, North American businesses spend more than $1 billion on logistics each year.

Businesses ship and receive components and products all over the continent, and the costs can quickly mount. There’s still the issue of having to hold these items in warehouses until they’re delivered to the next supplier.

Many of these costs can be decreased by establishing a supply chain that is more local. As a result, your bottom line will be lighter as a result of less money spent on logistics.

Deploy Products Faster

It is easier and faster to communicate with businesses in the same time zone when manufacturers source locally, it is easier to deal with difficulties and develop new products to fulfill consumer demand and spikes.

Increasing consumer demands for corporations to be more transparent in the supply chain and corporate social responsibility have reached new heights. For manufacturers, this is a critical time to review their third-party vendor risks and supply chain. 

Financial Security

With local suppliers that utilize a currency that is stable, companies can avoid currency exchange rate risks. Over the course of a supplier contract, exchange rates may fluctuate contract, exchange has a considerable impact on the pricing of imported goods. The currency risk is large for enterprises operating in nations where the currency is very volatile. On financial hazards can also be avoided with local sourcing. Trade wars and instability in foreign countries are just two examples of hazard associated with global sourcing.

Increased Revenue

Local sourcing can not only help you save money, but it can also help you make more. Because your efforts to maintain a tight and fast-paced supply chain may impress local businesses, which might help you acquire new customers.

Make your commitment to local sourcing a part of your marketing and sales strategy. Consider incorporating it into your one-of-a-kind selling offer. You certainly will enjoy the move.

Understanding The Famous 7 Step Strategic Sourcing Process

In today’s competitive business climate, many professionals are continuously seeking ways to optimize cost but still assure the highest quality of products and services. To achieve that requires a lot of effort on constantly improving and re-evaluating the purchasing activities of a company, which is also known as Strategic Sourcing.

What is Strategic Sourcing?

Strategic Sourcing is a procurement process that creates efficiency across all activities within the procurement cycle to secure the best possible price for a product or service. The main objectives are to save money and improve the acquisition process, supplier performance, and minimize risk. 

Strategic sourcing focuses on the shared gains in a collaborative relationship. Strategic partners look for new innovative ways for your products and services. In turn, they want your commitment to the long-term strategic partnership.

In this article, we introduce one of the best practices used by many procurement professionals. No matter the purchasing size, the 7-step strategic sourcing practice, originally developed by A.T. Kearney, has been tested and proven effective for sourcing products and services. The final results could be cost-saving, greater value-added and time saved.

Step 1: Profile The Category

The first step is to identify the sourcing category or commodity, including the volumes (quantity, types and sizes) spent on products and services, current prices and suppliers, and specification details. Also, don’t forget to analyze your users – who they are, where they are located – and departments involved in the supply chain.

Step 2: Supply Market Analysis

Understand your buyer power and category critically to position the sourcing strategy by performing market analysis. Then, you determine what strategy approach better fits with the type of service you’re sourcing.

Kraljic’s Matrix is seen as one of the most effective ways to segment the vendor base. This two-by-two matrix is mapped against two key dimensions: risk and profitability. Risk demonstrates the likelihood of unexpected events occurring that may disrupt the operations. Profitability describes the possibility of impacting the bottom line of the organization.

Once you identify the segmentation of a product and service, you’ll have a clear vision of how the product and service impact the overall business, then be more confident about what strategy and partner relationship you should implement.

Step 3: Develop a Strategic Sourcing Strategy

It is a critical step in deciding where and how to buy while minimizing the risk and cost. To get the best of our supplier pool, you should consider both existing and potential suppliers. Establish your business’ goal and the minimum requirements for suppliers, then list the selection criteria that are most suited to your requirements, capabilities and resources. A cross-functional team with critical stakeholders is highly recommended.

Step 4: Select The Strategic Sourcing Process

Time to solicit bids! The most common method that many businesses are using is Request for Proposal (RFP). 

If you’re not familiar with the term, RFP is a document that solicits proposals, which is often used through a bidding process, written by an organization interested in acquiring a product or service from vendors for their project. The document outlines the details of product or service specifications, requirements, pricing breakdown, legal and financial terms and conditions, and evaluation criteria.

Step 5: Negotiate with and Select Suppliers

Now you may have many suppliers that respond to your RFP. Your next task is to shortlist the most potential suppliers, then interview for clarification or asking more details if needed. The more information you have from each supplier, the better decision you will make. 

To do that, you need to form the best possible team that knows the product or service you want to purchase, which helps ask the right questions to potential suppliers.

Step 6: Implementation and Integration

Communicating with suppliers is an integral part of strategic sourcing. After negotiation, you may have the decision of what suppliers you want to partner with. Make sure you notify those successful suppliers that are going to be involved in the implementation stage. The more complex your product is, the tighter your cooperation and partnership should be. It’s critical to integrate suppliers into your meetings or discussions included in the implementation stage, making sure they’re up-to-date on the most recent changes and updates.

Step 7: Benchmarking 

Many people underestimate this step, but it’s a huge mistake to skip it. It’s essential to measure the supplier’s performance over time – starting with benchmarking the current status of the product, continuously monitoring the results and ensuring the goal is being achieved. By doing so, you can quickly identify the problem during the implementation and notify your supplier to address the issue with the lowest business impact.

How SupplierGATEWAY can help with strategic sourcing

In today’s chaotic world, all organizations need strategic sourcing to stay competitive and relevant to the market and deliver the most significant benefits for the organization.

Here at SupplierGATEWAY, we are experts in offering supplier data management and source-to-pay solutions that help businesses employ strategic sourcing easily, quickly, and inexpensively. Our easy-to-use and instant-on software gives you all the tools to post new project opportunities to your suppliers’ list, source and engage with suppliers globally, customize your project’s requirements, solicit bids, and even pay your suppliers with rebates. Everything is automated and managed in one place.  

Create an agile supply chain, automate your processes, and start saving your team time and money today! Schedule your demo now.

5 Tips To Write An RFP That Get You Results

Creating a Request for Proposal (RFP) is a crucial business practice that allows a company to identify and engage the right supplier to satisfy a requirement. A well-written RFP substantially increases your company’s chances of getting the services or products you need at a price that works for you. The ultimate goal is to ensure you’re working with qualified suppliers at what you consider the best value.

In this blog, we will give you a clear picture of what RFP is and list five tips for writing an effective RFP that can help you get high response rates.

What Is RFP?

According to Wikipedia, A request for proposal (RFP) is a document that solicits a proposal, often made through a bidding process, by an agency or company interested in procurement of a commodity, service, or valuable asset, to potential suppliers to submit business proposals.

In simple words, an RFP is a document created by a buyer requesting information about a product or service requirement, generally sent to suppliers to propose solutions. The purpose of an RFP is to enable buyers to compare the features and prices across potential suppliers. 

A great RFP contains clear criteria that are important to a buyer. By properly structuring and articulating the requirements in an RFP, you can identify how well each supplier understands your project and set benchmarks to measure a project’s success later. 

RFP Format

This is one of the biggest challenges in crafting RFP, mainly because there is no standard format. The typical RFP includes sets of questions that are split by section and subsection, which is more important for large or complex requirements. 

RFP responses can be as simple as yes/no interrogations or require narrative responses. Additionally, suppliers may be requested to submit other information and send additional documents such as the company introduction, why they believe they’re a better fit than the other competitors, etc., to explain the rationale behind the answers.

What Key Elements Should Be Included In RFP?

Though each RFP varies based on the goals and needs of a project, there are a few core elements that should be included in most categories (according to HubSpot):

  1. Background/Introduction
  2. Project Goals and Scope of Services
  3. Anticipated Selection Schedule
  4. Time and Place of Submission of Proposals
  5. Timeline
  6. Elements of Proposal
  7. Evaluation Criteria
  8. Possible Roadblocks
  9. Budget

Tips To Write A Compelling RFP

When you are putting together an RFP for any category, it is critical to provide a clear overview of the project to attract the best responses. With these five tips in mind, you can be confident that the RFP process will be productive for you and the suppliers who elect to participate.

Planning

Planning what to put into an RFP will save you a ton of time in the process of reviewing and selecting the right suppliers. Regardless of the scope and complexity of your RFP, these three main components should always be at the top of your mind.  (i) Making sure you have clearly defined your need, (ii) establish your communication strategy and (iii) define your evaluation criteria.

Stakeholders Involvement

An RFP is all about solving problems for your business. To draw great responses from the suppliers, you must ask the right questions. How can you achieve that? Collaborate with stakeholders. Coordinating with people who will be impacted the most by your purchase will help you identify the challenge, the tools you need, and define success. Bringing these people into the early stage of writing RFP will help prevent scope ambiguity and unclear requirements to suppliers. 

Be careful to separate our needs from wishes.  Unless money is no object, you may have to clarify what you must have versus what you would like to have, if possible.  The process of determining this also has an impact on how you set your evaluation criteria.

Set Important Dates

People usually underestimate the importance of time when writing an RFP – both theirs and the suppliers’ time. 

Be detailed without being prescriptive

Focusing on detailing your project goals instead of telling suppliers how to do the job will encourage respondents to freely use their expertise and insights in presenting their solutions. Suppliers are more likely to respond to RFPs that gives them room to be creative and suggest solutions. 

Remember to ensure that you can still evaluate the responses relative to your needs. This is, after all, about what you want.

Be Transparent:

A great RFP should include as many details as possible to describe the requirement so that respondents don’t have to guess what you need or have to make lots of assumptions. By removing the guesswork, you allow suppliers to focus entirely on the solution – such as optimizing a budget range, satisfying both low and high-level requirements and so on.

RFP Is A Time-Consuming Process…

The better an RFP is, the better the proposal your suppliers can send to you. The best thing to remember is – if you can’t describe what you want, then there is a high likelihood your supplier cannot describe the solution in a way that will be acceptable to you.  Up-front work that results in clear and concise requirements, timelines, expectations and evaluation criteria yields the most effective responses (assuming you engaged the right suppliers!)

One way to reduce the challenge is to use automation to eliminate the non-value-added effort and make sure the right suppliers are in your respondent pool.  

Remember, the software can be your friend (finding potential bidders, distributing information and coordinating responses, receiving bids according to policy standards, etc.) and can also be your enemy (asking 100 boilerplate template questions when only ten would do the job). A judicious combination of planning and automation helps you achieve your goal – working with qualified suppliers at what you consider the best value.

In the SupplierGATEWAY Sourcing app, you can quickly post new opportunities to promptly find prospective suppliers that are likely to meet your needs. The easy-to-use Bid app accelerates and streamlines the process of engaging suppliers to request bids and quotes and manage responses, even for small projects. Also, The software enables you to schedule web meetings, conference calls, or even in-person meetings with selected suppliers – all in one place. If you’re interested, watch our demo and get started today for free.