Evaluating Supplier Responsiveness

Supplier Responsiveness is one of the key issues that management teams are always concerned with. "How do I know many suppliers are responding in a timely manner to my requests?" Some might ask "Why should I even be concerned with this?" If you are in an outsourcing environment where you have customers relying on you to provide responses to a request in a timely manner then this becomes extremely important. Even if your customer is an internal customer likely their projects are time sensitive and if your suppliers are not submitting responses in a timely fashion then how responsive can you be to your customers? Well I often hear buyers say; "I have a pretty good idea of market price so I will just submit my own estimated cost with fudge factor built in." EEGGAADDSS!!! Your suppliers are the cost experts, they are the ones that should be supplying you with pricing not by educated guess.

The ability to measure supplier responsiveness is crucial in being able to evaluate your suppliers. Tools should be available to tell you how long it takes a supplier, from the time the request is submitted to the time the request is responded too. On a per request basis and overall for a time period. You should be reporting on the following areas:
Supplier, Quote ID, Time Sent, Time Opened, Time Submitted or Time Declined.
Then from a time range you should be able to evaluate;
Number of Quotes Submitted, Number Responded Too, Percentage of Responded, Number Declined, Percentage of Declined, Average Response Time, Average Decline Time.

This will give the buyer the ability to evaluate supplier responsiveness on an on-going basis to keep suppliers responding in a timely manner. Now if you do not actually DO anything with this information then what good is the information.

What to do with the information -
Once you have begun collecting this information you should make this information accessible to your suppliers instantaneously so a supplier can review at any time and be able to adjust their processes to keep up with your response standards. OH you don't have any response standards? Well take some time (3 to 6 months) to look at your suppliers response time overall and average out based on what ALL of your suppliers response times are and establish a set of criteria to meet your companies needs. There is not a given set of times or national standards for responsiveness, nor should there be. These standards should be set by each company to be able to meet their needs. Suppliers should be informed of your companies expectations and should decide whether they can meet those expectations on a regular basis. If they do not feel they can meet YOUR needs then you should consider whether they are the right supplier choice for your company. I can almost guarantee with a high degree of confidence, that if your expectations are reasonable, that most suppliers can meet those expectations that you establish and if they won't there is a supplier in the industry that will! Suppliers are willing to meet your needs as long as they have a way to be able to measure themselves and to be able to communicate with you when they cannot.
Once your criteria is established and you have communicated that criteria with your suppliers you MUST measure and evaluate them and be willing to call suppliers on the carpet when they do not meet your standards. In other words, some suppliers may pay you lip service when you communicate that criteria so you need to be prepared to implement any penalties that were agreed upon. The first time you issue penalties will likely be the last time you have to issue penalties. Suppliers learn quickly that if they agreed up front and you show that you are serious, they will comply with your standards. If they honestly have looked at their processes and cannot comply they will tell you and likely pull themselves out of the competition. Suppliers are in business to make money just like your company so if something is costing them they would rather walk away than to constantly flush money down a hole.

Staple Offer for Corporate Express REJECTED

According to the Associated Press Corporate Express management rejected the proposal within about 2 hours of the offer being made public. CE officials sited the proposal as significantly undervaluing Corporate Express and failing to reflect CE's value.

http://news.bostonherald.com/business/general/view.bg?articleid=1074569&srvc=home&position=recent

Staples Makes Bid to Acquire Corporate Express

In an email to Staples associates dated 2/19/08, Ron Sargent Chairman and CEO of Staples, notified associates of the proposed offer made to Corporate Express. Below is the text of the email distributed yesterday.

"Fellow Associates:

Today we have taken a significant step in creating a bigger and better platform for all Staples associates to deliver great service and value to our customers around the world. We are pleased to announce that Staples has made a proposal this morning to acquire Corporate Express, one of the world's leading suppliers of office products.

This acquisition will not only significantly expand Staples' North American Delivery operations, the fastest growing and most profitable part of our business, but will also add successful Contract businesses in Europe, Canada, Australia and New Zealand to our portfolio. In addition to expanding our business into new geographies and customer segments, the acquisition will complement our organic growth, representing the addition of approximately $8 billion in annual sales to Staples' $20 billion business.

Corporate Express has a strong management team leading 18,000 associates in 20 countries, and we believe our combined business and people can be even more successful in building a strong, global delivery business. While Corporate Express has not been receptive to our approaches to discuss a possible business combination, we decided to pursue the proposed acquisition because of the tremendous benefits to both Corporate Express’ and Staples' stakeholders, given the complementary nature of our business and the significant opportunities the combination represents. We hope to meet with Corporate Express’ management and complete an acquisition agreement as soon as possible.

We look forward to officially welcoming Corporate Express to the Staples family in the coming weeks and working together to ensure a smooth transition for all associates, customers and suppliers."

The office products market seems to be heating up a bit. The proposed offer is for 7.25 euros per common share of stock. Staples is touting this as a 60% premium from current market value.

Will stock holders snub this offer like Yahoo investors snubbed the Microsoft offer a couple of weeks ago? Let's wait and see!

Read the official Press Release here: http://phx.corporate-ir.net/phoenix.zhtml?c=96244&p=irol-newsArticle&ID=1109564&highlight=

John

Is Data Reporting important to Print Buyers?

Is reporting important to Print Buyers?
In my humble opinion it is the MOST important aspect of any Print Buyers job. Print Buyers are analyst's they are hired to be able to evaluate suppliers from a wide range of areas; quality, turn-around, equipment capability, etc. However at the end of a job the buyer needs to be able to track costs from every aspect possible. I will try to provide a base overview of some of the things my customers say are important to them from a reporting perspective.

One of the very first things most organizations want to know is Tracking Purchases. Organizations want to be able to tell how many of any given item was purchased in a week, month, or year. This includes many aspects such as How many brochures did we order? How many weretri-fold, c-fold, etc? What was the total cost of all Brochures? Of tri -fold, c-fold, etc? Systems must be flexible enough to capture basic information, Product, Attribute, Quantity, Cost. Or the templates must be granular enough to capture some of this information such as;Tri -Fold brochure, C-Fold brochure, or Miscellaneous brochure, for those items that may not be high quantity purchases or do not fit within regular standards. Either way is appropriate it is based on what level of granularity and or how easy you want your templates to be when specifying. This type of report becomes probably the most important when you are considering establishment of single source providers for individual product purchases or when trying to get a handle on what, when, and how much you are purchasing. A lot of potential customers tell me their single most point of frustration is their lack of knowledge about WHAT they are purchasing! Before you say it...yes, you can go back to your accounting system and trackPO's back to suppliers and likely they are even coded within your accounting system to allow you to see they where budgeted against your print budget. But even this is flawed as I just had a discussion with a customer that their departments would use their print budget code to make purchases for other things such as; shop rags, or for other NON-PRINT related items. So when the president of the company says; "How much did we spend on print?" it is not the easiest question to answer. One organization (actually several that I know of) have had to resort to hiring an outside consulting firm to help them get a grasp on their actual print spend. The sad part of this is that by implementing a system to track print procurement you could easily get an accurate count of your spend down to what was purchased. One customer was able to identify that they were spending $100 million per year on print but it took them 6 months and several thousands of dollars to find that out, when with a system they could have simply clicked a few buttons and had the most up to date information available at their fingertips.

So why should I be so concerned with what I am spending in print?
Because likely your companies CORE business is not print procurement. It is more likely things like manufacturing or service related industry. So when budget crunch comes, a couple of the most likely areas that management will look to cut will be the marketing department where likely all of the print purchases come from. So indirectly (or quite directly) print procurement is the likely area to be cut without any solid information as to whether that is the best choice or not. If a buyer can show and provide accurate and solid information to the company president as to what is being spent, it is easier for them to weigh the Return On Investment and likely they will look to cut costs in other areas of the company if you can show the value that print is providing to the organization. Presidents are going to cut areas that cannot show or even have a handle on the spend. Reporting provides the president with not only the information but assurance that your department is aware and can react quickly to decisions that may need to be made.

How equipped is your organization to be able to respond quickly and accurately to your managements inquiries?

Next episode - evaluating supplier responsiveness!