Monthly Archives: April 2009

Nine More Ways to Save Energy in Your Building

An article from a recent issue of Material Handling Management, which proclaimed that All Roads Lead to Savings, outlined nine ways that you can save energy, and money. So next time you’re looking to cut the energy bill, in addition to sourcing that next energy contract, you might want to remind your organization that they can cut costs further by reducing overall energy consumption using these methodologies, among others.

  1. Fluoresce
    Lighting can eat up to 50% of a building’s energy consumption, especially in moderate climate zones where heating and cooling requirements are minimal (and you’re not running a data center). Convert metal-halide systems to T5 or T8 fluorescent lamps and use LED signage.
  2. Flick It
    Leaving lights on 24 hours a day? That’s unnecessarily doubling or tripling your lighting bill. Turn lights off when not needed (and if you need lighting 24 hour a day, consider LED lights) and consider motion sensors to automatically turn off lights after 5 minutes of inactivity (outside of normal business hours).
  3. Go Solar
    Designing a new building? Consider lots of windows for natural light (and solar sensors to dim lighting when not required) and solar panels on the roof (to reduce the electricity you have to buy). (And if you can get your building efficient enough, maybe you can even sell some of that solar energy at a profit.)
  4. Control the Air
    It takes heat out in the winter and cool out in the summer. Install doors that can open and close quickly and consider unconditioned “foyers” that can reduce energy loss. Use fans instead of air when the heat is mild. Go “casual” in the office and don’t turn on the air until the temperature hits 25 (and don’t turn on the heat until it drops below 17).
  5. Go Lean
    Minimize the distance vehicles have to travel in a warehouse. Put fast moving product close to the doors. Design the assembly “line” to minimize movement.
  6. Get Slack with VFDs
    Variable Frequency Drives, which control the frequency of electrical power supplier to AC electric motors, can reduce the wasteful “in rush current” needed to start a motor.
  7. Retrofit Motors
    Retrofitting old conveyor motors with secondary windings can increase their efficiency by up to 40%.
  8. Keep the Heat
    Up to 85% of the energy used to convert air pressure from 0 to 100 psi in a compressed air system is released as a heat byproduct. If you’re in a cold climate, you could use the heat to warm your building, or you could use it heat the water supply.
  9. A Low Energy Vision
    Design buildings, machinery, and processes to use as little energy as possible.

The British Chambers of Commerce Top Ten Export Tips

The BCC, which recently urged small business to take a measured approach to export opportunities (created as a result of the weakening pound), also provided exporters with a handy dandy notebook filled with its top ten exporting tips that covered some basics that even old pros need to be reminded of every now and again. So, without further ado, here are the BCC’s top ten export tips:

  1. Do Your Homework
    There are export rules for your home country and import rules for the country you plan to import into that cover reporting requirements, safety requirements, and duties and tariffs, among other things. Learn these facts up front, or risk massive fines and seizures later that could, insted of growing your business, kill it.
  2. Understand the Market
    Is your product and service appropriate for the market you want to export into? Will people buy it at a profitable price point? Are you trying to sell a Nova in Mexico?
  3. Research Costs
    In addition to the duties and tariffs, you’ll also incur shipping costs and loading, unloading, and storage costs at the docks, at a minimum. And these costs can increase substantially in good economic times.
  4. Understand Exchange Rates
    A small fluctuation in the exchange rate can lead to a large fluctuation in your profit margin, possibly wiping it out completely.
  5. Look to the Future
    Is there long-term potential in the new market? Or is it a short-live opportunity that will disappear when the economic situation improves at home or abroad?
  6. Assess the Competition
    Who are you competing against? Could they wipe you out with a simple change in their marketing strategy?
  7. Communicate Effectively
    You need to be sensitive to language and cultural differences in your target market. The last thing you want to do is imitate the AT&T Commercial and call your potential buyer Mr. Stinky Fish Face.
  8. Streamline Paperwork
    Not only should you secure export certification and documentation online to save time and money, but you should use leading SaaS trade management systems to manage the process as this will allow you to track your shipments and create any additional documents or reports you might need on-demand. Remember, you need trade visibility.
  9. Don’t Over-Commit
    Take new markets one by one and make sure you’re solid in one before embarking on a second. If you over-commit, not only could you risk them all, but you could lose key customers at home.
  10. GET HELP
    Expert support and advice through every stage of the process the first few times you go through it is invaluable. It is often the difference between success and failure.

Buyer Bereft? the doctor Can Help

This is an advertisement for the doctor‘s services. Regular programming will resume with tomorrow morning’s post.

In this morning’s post, I outlined a sequence of steps that buying organizations can take to return to business as usual and put this recession behind us. However, I know that many of you won’t be able to do it alone, especially with all the FUD that some of the bigger vendors have thrown at us over the years. What’s really needed is clear and concise information that will help you make the right decision. I can help.

  • Real Spend Analysis
    I can help you select the right product and then hook you up with the right services provider to make sure you get this very important process right the first time. The biggest initial savings come from expert consultants familiar with your business, who know where the biggest savings are likely hiding, and who can find them quickly. Most importantly, because my particular expertise in analytics is in designing, building, selecting, and integrating systems, I can show you how to get continuous (not just one-time) value from spend analysis, using an appropriate-for-you mix of in-house and contract resources.
  • Category Experts
    Technology (hardware, software, and IT operations) is always an area with large savings potential. I can help you understand what you need, what you don’t need, and what you should be paying. Outside of the technology category, I can help you identify the appropriate category experts to get you to the next level.
  • e-Procurement & e-Sourcing
    This one of my particular areas of strength, and I can help you with the RFI, evaluation, selection, negotiation, and implementation. I know the process, the systems, the requirements, and the true costs inside-out, backwards and forwards, and blindfolded. I can make sure you don’t get bamboozled and shell out a ridiculous amount of money for a product that’s not right for you. There’s RFP Help Here.
  • Training
    Systems. Processes. Technologies. I can help you with one, or all. I can do a one or two day “blitzkrieg” session on a technology or process of your choice and supply the background you really need before you select a new e-Sourcing, e-Procurement, Optimization, Spend Analysis, Trade Visibility, or other piece of supply management software. After you select the system, I can help you modify your processes to get the most out of that system.

thedoctor<at>sourcinginnovation<dot>com

The Market Dilemma IV: Buyers Win the Battles

Vendors and Consultants are but a small portion of the industry, and the economy … as Buyers, you work for organizations that compose the majority. The only way we’re truly going to get back to business-as-usual is if you use the vision provided by the vendors to identify what clarity you need, bring in consultants to help you realize it (and the significant ROI that accompanies it), and then use your newfound “savings” to procure the best-of-breed sourcing, procurement, and supply chain visibility technology offered by the visionary vendors, as this is the technology that will help you increase productivity and significantly reduce your costs across the board.

Although it might be a long road to recovery that requires much effort and initiative on your part (depending on the size, complexity, and focus of your organization), the starting point is clear. So here’s a simple step-by-step guide to get you on the right path.

  1. Do a real spend analysis.
  2. Bring in category experts to get you real savings on your most profitable tier-1 categories.
  3. Implement e-Procurement systems to realize the savings.
  4. Adopt e-Sourcing to streamline and maximize the savings potential on your tier-2 categories.

1. Do a real spend analysis.

I’m not talking about loading your AP data in a UNSPSC cube and running out-of-the-box reports on your top ten 10 vendors, top 10 categories, and top 10 departments. Even if you don’t know the exact amounts, a simple internal survey will tell you those with uncanny accuracy. I’m talking about loading all of your spend-related data — AP, Invoice, Contract, Third-Party Price Indices, etc. — in a real spend analysis product that will let you slice and dice it any way you can think of so that you can identify (a) where you have made overpayments and extract refunds and (b) identify the top ten categories with with the most savings potential. If you haven’t done this before, you’ll want to bring in an expert. There a few providers in this space that typically find tens of thousands, and sometimes hundreds of thousands, of dollars in overpayments within a week. The ROI is well worth the investment.

2. Bring in category experts.

This is especially important in categories, like energy and telecommunications, that require significant expertise that you might not have. While you might be able to negotiate a 15% cost decrease in a buyer’s market if you’re well informed, a seasoned veteran who has been negotiating these deals day in and day out for a decade (or two) will find a way to save you 30%. And when many of the firms will work on contingency, i.e. you don’t pay until the new contract is cut for an amount less than what you’re paying now, the ROI will be significant.

3. Implement e-Procurement.

Up to 60% of negotiated savings never materialize at many companies. If you don’t implement state-of-the-art e-procurement systems with price control capabilities (contract integration, punch-out price verification, authorizations for off-contract spend), you too could lose 60% of the savings you negotiated.

4. Adopt e-Sourcing.

While you’ll want to bring in the big-guns for the big savings opportunities, as the ROI will be many times what the big-guns cost you, there will be a large number of tier-2 categories where the savings opportunities, though substantial, won’t be as significant if you have to pay high-powered consultants. These are the categories where you get your best returns if you can run the events quickly, and efficiently, in house. And this is what e-Sourcing allows you to do … especially on categories where you need to go back to market regularly because the volatility is too high to risk long term contracts.

It literally is this simple … because once you’re on the right track, you’ll have no trouble staying on the rails.

Open Call for Category Consulting Clarity

As some of you may have picked up from a recent comment of mine on Spend Matters, I got a bit of blasting behind the scenes for my recent post on how to deal with Yo Yo Contracts, with the notable exception of the constructive feedback from Barb Ardell of Paladin who was willing to publicly share her advice with you. The private feedback ranged from statements that I didn’t know what I was talking about because I’m not a “real” sourcing consultant (I never claimed to be a sourcing consultant, I’m a sourcing technology and process expert who freely admits his only category expertise is in IT … and that’s why you never seen me advertising traditional sourcing services through my consulting practice), through statements that questioned practicality (a matter of opinion), to stuff that I wouldn’t (or couldn’t) post, repeat, or respond to.

Usually my readers are pretty quiet, so I found this a bit surprising and, upon further contemplation, promising. If people are willing to get riled up over this topic, then they must be passionate enough to want to write about it. So, in lieu of the cross-blog series that I would normally try to pull together to kick off spring conference season, I’ve instead opted to run a special guest series on category sourcing, starting the week of April 27. I’ve already invited some of the thought leaders who’ve previously posted on SI to submit a piece on how you can save money on raw materials, goods, and/or services in these troubled times, but I don’t want to exclude anyone who wants to take a crack at educating the space. So, if you want to be front and center on SI, just drop me a line or send me a draft post and we’ll get to work on putting you in the limelight.