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Best Practices for Procurement Part 10 - Preparing the RFP - Create Price Lists

3/18/2021

By Sandy Chockla, Franchise Owner, Expense Reduction Analysts.

When creating the list of products or services to be priced, you need to ensure you specify exactly what is to be priced. If you are collecting the price of stretch wrap, for example, you need to specify if it is clear or opaque, the color, the thickness, the size of the rolls, the locations where it needs to be delivered, etc.

You should also decide if you will allow the suppliers to suggest substitutions or alternate products. If so, the best practice is to ask the suppliers to quote the specified product (so you can compare like for like), but then provide additional columns for the suppliers to complete if they have a suggested alternate.

Be sure to collect information in order to be able to calculate your total cost. For example, is the delivery charge included? Will the suppliers offer volume discounts or rebates? Is there is a cost involved with switching suppliers? Examples of switching costs are the cost for tooling that the supplier needs or the cost to educate your employees on the new software.

Sandy Chockla is a franchise owner and Principal Consultant for Expense Reduction Analysts (ERA). ERA has a network of experts in more than 40 overhead expense categories which I leverage to benchmark prices, review supplier agreements, and optimize our client’s purchases or services. This is done without compromising supplier quality or service. If you would like to have a discussion, you can contact Sandy at schockla@expensereduction.com or call direct at 970-232-4860 .

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Why It’s Never Been More Important to be Lean than During/Post COVID

3/18/2021

By Peter Holtgrieve, Partners in Business Excellence

COVID-19 has taught us in business quite a bit about agility, emergency preparedness, and the importance of processes. We have learned what matters, how to make shifts in the face of restrictive ordinances, and decision-making under extreme pressure.
We’ve seen businesses close as they couldn’t manage change, while others thrived. Never before has being efficient been so relevant, and necessary. Those who grew during this time may now be facing a decrease and are planning to adjust once again. As restrictions are lifted, others may be looking at adapting to a new normal. Processes and change management have become a focus.
For me, these have always been a primary objective. What do processes look like, what are they producing, and how can we improve efficiency?

Lean Operations for Emergencies
Emergency situations often reveal the holes in our processes. This is often why organizations, such as schools, run mock drills to test their effectiveness. Those regular drills help teachers prepare for fires, storms, and other dangers.
Similarly, I look at processes so that when emergencies happen, we know where the holes are. The additional benefit is that when there isn’t an emergency, processes run smoother and more efficiently.
Understanding processes and closing efficiency gaps allows management to make better decisions under pressure. They also are more agile because they understand the full workflow and can anticipate the waterfall effect of problems at any point of the flow.

Lean Inventory During Shortages/ Delays
Inventory should be an asset, not a waste of money. Managing appropriate levels of inventory and having a grasp on supply chain is key. How did this last year impact production in regards to inventory? Did it run smoothly, or did it stall? Did product design or workflows change in response? Did deadlines and shipping meet expectations?
Visual inventory management, min/max ordering and other tools can be implemented to support the best possible outcomes to maximize floor space and reduce cold inventory. Understanding and preparing for inventory issues ultimately impacts profitability.
Supply chain interruptions were incredibly disruptive during COVID and taught us a bit more about how to be prepared and shift when we can’t get standard supplies.

Lean Staffing in the Midst of Change
In the face of COVID, some employees are anxiously looking to return to positions. Others, like teachers and waitstaff, may chose other career paths, possibly permanently. Until we are back to a full reopening, it’s hard to know what staffing demands will look like.
HR managers will have their hands full managing this changing dynamic and the secret to success is found in the process. Not only will managing the paperwork and policy management be critical, but training staff to get them fully productive will be important.
The better the processes, the less important the employee’s beginning skill set is. Hiring the right people and teaching them the required skills will be a key in rebuilding staff as the country reopens.

A Little Reflection
How did your processes hold up this last year? Did it reveal some holes that could use patching? Are you preparing for the new normal to come? Do you need support in building processes to support the coming changes? How can I help?

PBEX, LLC is a lean consulting firm specializing in uncovering the holes in organizational processes that result in loss of any kind. We start with a complete review and analysis of the business processes that create efficiency and profitability, and the barriers to them. Contact us today to learn more and to schedule your review with a lean consultant.

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