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Posts Tagged ‘procurement’

3 Steps for Annual Cost Reduction

With the current state of economy, it’s more than likely that most organizations would have fallen short of their cost reduction targets for the year. With a steady decrease in industrial outputs, corporations are left with no other alternative but to find methods for cutting costs in business and adhere to the cost reduction targets this year. But, how does one go about doing this?

In a series of 3 articles, we will browse through 3 simple yet effective ways of cutting costs in business while avoiding friction at your workplace.

Our first step toward cutting costs would be Value Analysis. Surely, you’ve heard of it and either implemented it or rubbished it saying it’s only for the ‘Top Notches’. But, is it? After all, it’s not rocket science and is an area to work on for Small Medium Businesses (SMBs) as well.

Step 1 for Cutting Costs in Business : Value Analysis/Value Engineering

The root cause for the ‘Cost’ component can be traced back to the original supplier for the item and the Supply Chain that advances the same  item to you. Quite often the suppliers and the Supply Chain Management personnel (or engine) are themselves not aware of the areas where they can tap a potential cost leakage. A thorough Value Scorecard should be developed to analyze the following aspects and their sub-components depending upon the type of item (or category):

  • Manufacturing costs
  • Quality costs
  • Delivery costs
  • Purchasing costs
  • Overhead costs
  • Engineering and design

It’s more than likely that the Supplier lacks the expertise and ‘intent’ to evolve with this exercise. This is where ‘Collaboration’ comes into picture. A detailed value analysis, based on cost centers for matrices developed in tandem, by you and the supplier will help you understand the cost structure better.

The next step is to quantify the benefit. Once, step ONE is out of the way. Ask the supplier to reduce (say) 5% cost in these areas without compromising on quality.

Caution: Merely, putting up a stipulation will not serve the purpose. It has to be backed by adequate compensations for the suppliers in order to motivate them. It can even be in soft terms like,

  • Payment term lenience
  • Consolidated Orders
  • Scrap Sale at reduced (or free) rate
  • Freight or FOB rate changes
  • Any thing that makes them happy and incentivizes them!

But, how do you go about it? Do you leverage IT for this initiative or go the traditional route of manual calculations?

Purely, up to you! It’s about you believing in the necessity and comprehensiveness of the exercise. Needless to say, an IT Enabled application would be a better and a systematic option, but the other school of thought could be “Let me see if it works and then take a call!” Good for you!

That brings us to the end of our first edition of the series 3 Steps for Cutting Costs in Business. Watch this space for more action…

Author: P. Mane, ODScommerce

Originally posted on Rishabh Software Blog

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How to Reshape Your Supply Chain Network (and Why You Need to Do It Now)

February 1, 2010 Leave a comment

by Khudsiya Quadri (see bio)

The landscape of the supply chain has changed drastically over the past five years. It went from local to global in manufacturing, procurement, sourcing, logistics, and customers. As such, there are some major challenges in the supply chain network:

  1. There are no boundaries within the network.
    There are no physical or virtual boundaries left within the supply chain. For example, the customer could be in North America and ordering a product via the Internet from Ireland—but this creates a problem. Why? Each party involved is not aware of the rules and regulations they need to comply with, and do not understand that an order confirmation from the manufacturer is crucial to the retailer’s (manufacturer’s customer) delivery schedule to the end consumer.
  2. It is difficult to make the pieces of the puzzle fit cohesively.
    Each process within the supply chain needs to work together. For example, it’s crucial for a warehouse to know when the shipment will arrive. If the warehouse is unaware of the delays caused by the transportation company, it will cause labor/capacity and equipment availability issues.
  3. Not being able to adapt to rapidly changing customers’ preferences.
    Organizations need to understand the shifts that are occurring in the customer’s requirements. For example, Coca-Cola recently came out with a product that contains 90 calories for diet-conscious customers. In this scenario, if the organization’s manufacturing and product development was not aligned with the customer’s requirements, an organization could in turn lose these customers.

Now, the daunting question: How can an organization eliminate these challenges/risks and still make its supply chain work accordingly.

The answer: E-commerce.

E-commerce is an electronic exchange of data or a transaction, like an electronic funds transfer (EFT), or an electronic data interchange (EDI).  E-commerce within the supply chain helps create links for each business process. This allows organizations to communicate and collaborate with trading/business partners. There are benefits for using e-commerce- based applications:

  • All information regarding changes in rules and regulation are communicated between trading partners. The shipper is aware of the new laws regarding the delivery destination or location. For example, in the US, the new security program known as the “10+2 rule” mandates that advanced shipment notification (ASN) has to be provided to customs 24 hours before a shipment arrives at US borders.
  • Any changes in the demand for a product/service are communicated instantaneously either via the Internet or through data interchange (portal, EDI, e-mail etc.). This eliminates the excess costs associated with manufacturing and delivering products where there is no demand—or spike in demand.
  • Knowing what inventory is in the store, or in the plant is essential when confirming customers’ orders. By using e-commerce, organizations can get better visibility into inventory levels—regardless of where the inventory is residing. All details of inventory will be provided via ASN or an inventory portal.

Organizations must be aware that the transition to e-commerce needs to happen in a manner where the following considerations are taken into account:

  • Clearly define each business process. If business processes aren’t clearly defined, gaps will be created within an organization’s supply chain.
  • Provide adequate training on e-commerce applications to all parties involved (both internally and externally). If an organization doesn’t provide sufficient training to staff and suppliers, workarounds will be created to avoid using the application which in turn creates additional costs for an organization.
  • The user interface (UI) make sure the e-commerce application is user-friendly. If organizations don’t provide the proper interface, it will take longer to process a transaction because more time is spent understanding the application than actually processing a transaction.

Organizations with an integrated supply chain reap the benefits of faster development cycles for a product and handle changes in the market place without creating a fiasco for the parties involved. With the help of an e-commerce enabled supply chain, companies are able to expand their business into emerging and existing markets and can streamline their business processes with customers and suppliers.

How about you? What are your thoughts on the benefits or drawbacks of e-commerce? I welcome your comments.

Flexible Sourcing and Procurement Solutions for Small and Medium Businesses

November 24, 2009 Leave a comment

ODScommerce’s solutions and services are geared towards Small and Medium Businesses by understanding the challenges faced by these businesses and catering to them. By partnering with ODScommerce, clients would experience the following:

Flexible Solutions made to order

ODScommerce offers solutions that are customized and scaled to meet the needs of individual sourcing organizations, no matter where they are in their implementation of e- Sourcing.

ODScommerce combines a SaaS architecture platform with consulting services to provide a complete Knowledge Process solution for Small to Medium size businesses in sourcing and procurement. Customers may choose to utilize ODScommerce’s complete solution or incorporate a selection of services – such as Spend Analysis, Sourcing Management, or Contract Management – into their sourcing processes.

Each solution adapts to existing business models with procurement /sourcing processes, allowing companies to control the way they acquire goods and services. In as little as 24 hours, the configurable ODScommerce solution can be implemented and fully functional.

Flexible Deployment

In addition, ODScommerce’s OnDemandservices can be deployed in different ways that provide customers with the level of support they need and the control they desire such as self-serviced, managed and full-service.

Clients could also choose project services where ODScommerce provides professional consulting services for those customers looking to expand on the event services, move into an unexplored areas, or improve upon functionality that already exist in their organizations.

Furthermore, ODScommerce provides a compelling portfolio of Knowledge /Business Process Outsourcing Services that can be counted on to deliver value by a professional team that understands business drivers and what is necessary to bring clients to world class standards to compete in the global environment. These services are available with the ODScommerce solution as individual services or add-ons to the event services.

Read More Here!

A SaaS Based On-demand Procurement Service Company, Answers the SMB Need for a Knowledge Processing Procurement Solution

November 4, 2009 Leave a comment

Pittsburgh, PA, Oct. 27, 2009 – ODScommerce, Inc. is pleased to announce a powerful web based solution delivering single-point 24×7 access for all procurement-related processes and sourcing requirements. This OnDemand service model for global commerce offers flexible solutions that are customized and scaled to meet the needs of individual sourcing organizations, no matter where they are in their e-Sourcing organizational function.

Trading events for Buying and Selling are organized for flexible deployment and available in a variety of formats that are client run or ODScommence enabled. Attractive options including customized packages targeted to the needs of the SMB market provide customers with the “right” level of support that they need to operate and manage their business models. These event driven services are organized though a menu approach with each event module adaptable for quick implementation via a SaaS architected solution to support the needs of SMB industries in a secured environment and scalable to meet all customer requirements.

“We are delighted to offer our On-Demand Services for global commerce to our SMB customers and feel that providing these services, that were only available to the Fortune 500 companies in the past, will now provide a healthier and more competitive class of customers in the future.” said Ramesh Mehta, CEO and President of ODScommerce, Inc. “ Technology has facilitated this move and with SaaS and leveraging our world class and proven application customers can expect within weeks to achieve an absolute return on their investment and expect that with time, the savings will compound”. “ Customers can expect some of our services to include RFP, RFQ Auctions, Multistage Bidding, Strategic /Project Sourcing, Vendor Selections, Requisition Management, Contract Management, Requisition Management, Supplier Data Base Management and of course be provided with project services that facilitate any wrap-around services that customers need to operate their businesses”.

For More: http://www.odscommerce.com/news-events/20091027.php