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Preparedness
By: Grace Crisostomo-Cerdenia
March 2010
Market conditions are always in constant flux and across enterprises, dealing with uncertainties is essentially the air that buyers breathe. Part of this ‘grey’ scenario includes changes evolving within industries, economy, politics, even events unfolding in a region. Key in this year’s domestic agenda is May’s upcoming change of political guard, and quantifying expectations how a revised leadership structure would alter cost structures from key expenditures, to indirect spend.
Within equities investing, specific weights are assigned on country political risk premiums, especially if one wishes to identify an appropriate weighted average capital cost (WACC) structure. Here, elements that are considered in the equation includes an assumed risk-free rate (usually a counterpart rate of return had funds been invested elsewhere), inflation and ‘beta’, or what is most aptly referred to as ‘risk’ coefficient. Once an expected stream of future cash flows are forecasted for companies that have already opened their doors for public ownership, the cashflows are discounted according to an assumed WACC, to arrive on a decision if it would be cheap to purchase a stock, or otherwise.
· Within the wider world of supply chain management, Purchasers as co-decision makers, must carefully identify contingency routes within the negotiation process, especially after thoroughly analyzing which among the expected changes would be classified as ‘artificial’ versus ‘official’. Typically, those grouped under the ‘artificial’ umbrella are regarded as ‘temporary’, sometimes ‘nuisances’, while ‘official’ usually covers events that may create permanent or long-lasting impact within the demand-supply landscape.
· Let’s take a quick glance on pressing issues. Industry leaders are trying their best to minimize occurrences of rotational power outages, partly attributable to weak level of water supply from energy sources. While some might argue that power is not necessarily their underlying key business model, this event is enough to create sizeable weight in terms of potential interruption to production for manufacturers, or lost productivity time for service-oriented firms. Although Purchasing personnel might be quick to address near-term concerns through the use of generator sets for example, such solution only resolves the problem ‘temporarily’. If we were to review time allotted by key personnel involved, a random survey would show 70%-30% mix, in favor of admin-related, and less for planning, joint-venture tie-ups, coordination, even strategizing. Meanwhile, those who outsourced their indirect spend in eMarketPlaces are more apt in responding to the situation, formulating energy derivation as well as saving devices that create ‘protection blankets’ before circumstances get worse.
· In the same manner, preludes to political election as well as transitions to new government create ‘gyrations’ in pricing. Winnowing-out this ‘imbalance’ is best addressed when negotiations are channeled in eMarketPlaces, especially when commitments need to be undertaken to cover extended contracts, or long-term supply for a stock. In fact, information technology has aided in proper breakdown of costing, providing more room for decision-makers to carefully identify which among enumerated variables will be subject to renegotiation clauses. For instance, very little time is spent analyzing prospective suppliers’ debt-equity mix, as more concentration is given on a buying firm’s ‘payment term’ policy. Such ‘disproportionate’ requirement as well as financial status matching often creates abrasion within the order fulfillment procedure, and precious time is wasted in ‘resolving’ issues. While we all recognize buyers and suppliers need to thrive on ‘comfortable’ margins to continue doing business, significant directions in terms of a buying firm’s aggressive capex expansion for example, must be adequately matched by supplier partners. If this does not become feasible, additional selection can be met through eMarketPlaces, on the back of its expanding reach. More importantly, eMarketPlaces facilitate data organization, defraying the need for possible ‘double-counting’ of ‘risk premium’ range, which are typically imbedded in the overall financing cost structure.
· Enterprises’ maneuverability in appropriately predicting future trends as well as responding to day-to-day challenges are best tested when complemented by their participation in eMarketPlaces. Opportunities become more visible when pressed to overcome rough terrains, especially when the technical competence of buyers and sellers are sharpened.
Preparedness
By: Grace Crisostomo-Cerdenia
October 2009
SA strong call resurfaced from recent ‘environmental challenges’ that visited the Philippines, and that’s the Filipino community’s ability to emerge from the rubble. While the painful experience gave ‘hard lessons’ to all, it was also in the spirit of catastrophe that citizens across classes became more involved, synthesizing the essence of ‘preparedness’, when it comes to heeding industry experts’ warning. While timing a natural event cannot be predicted accurately within the confines of human behavior, ‘contingency planning’ is an aspect we could all measure up to.
Within the corporate front, the essence of eMarketPlaces is greatly emboldened, especially when swift mobilization of resources becomes the prime objective. In fact, enterprises who made a firm commitment to participate in an eMarketPlace, are quick with ‘re-channeling’ initiatives, encompassing several cases. Here are some valuable pointers:
· More than selecting an appropriate supplier to fulfill requisition needs, the weight of understanding ‘supplier location’ is underscored. Negotiation of contracts, whether these are made over the short- or long-term, can be viewed with greater ease & prudence, both for its immediate and long-term impact on operations. These days, it does not bode well to depend on a single source, especially for key raw materials used within the production stream, or when supplier partners are largely concentrated on a single area. Fast access is facilitated to equally competent players, especially whose operations work round-the-clock even with unexpected calamities.
· Communication is also streamlined, as specifics are relayed to ‘would-be’ partners. In instances when a buyer for example, is unable to get to their headquarters on time as a result of flooding, web-based access to eMarketPlaces allow swift communication for required items. Referencing past purchased orders need not be made, as details are already captured via an integrated system.
· More time can be devoted analyzing options for ‘temporary warehousing’, especially with regards to protecting expensive machinery investments. Some embarked in leasing necessary gadgets that can at least help elevate wooden pallets and crates, for example, especially when a specific warehouse location is prone to potential flooding, or has high dependency on routes where flood risks may recur.
· Logistics support can also be managed in eMarketPlaces, especially in relocating finished goods towards higher ground. Because expert contractors are embedded in an eMarketPlace network, necessary repairs and other refurbishments are processed fastest. Negotiations covering specific repairs can also be made in advance, with considerations on acceptable ‘reservation fees’, than queuing-up the line when the inevitable happens.
· When it comes to corporate social responsibility, relief mobilization and supplier-network support is also synchronized. This is made possible by enterprises’ access to a wide network of catalogue, especially when purchases related to relief goods are required.
· More time can be accorded in fulfilling an enterprise’s responsibility towards the environment, especially in ‘waste’ disposal. eMarketPlace buyers can concentrate arriving on necessary disposal procedures, especially step-by-step means to comply with their role and their counterparty’s task in the environment. In the end, it’s not simply reverting cash resources to Treasury, but becoming involved within the entire supply chain where buyers elevate their participation even in the ‘recycling’ process.
In its own ‘little way’, eMarketPlaces have aided companies to save significant time, as people resources are channeled to more important duties. An eMarketPlace’s built-in feature plus integrated network help minimize clerical functions & capitalizes on the Purchaser’s significant role in selecting alternative courses of action. This way, business activities are least likely to suffer disruptions without abandoning thrusts towards efficiency & transparency.
More is achieved through simplification
By: Keryx Quiban
July 2009
Simplifying work procedures are among critical tasks inherent in the function of Chief Information Officers (CIO). As specific tasks, duties & responsibilities are mapped, select functions can be defined not only to foster accountability in all facets of the decision-making procedure, but hasten approval structures. This begins by indentifying present process flows, and organizing a scheme to help simplify the communication element within an organization.
Typically, hierarchy structures are first plotted and mapped to corresponding authority related to a Division's overall function. For example, relatively same mid-level managers might be delegated authority to accredit suppliers concerned (e.g., Engineering team evaluating project contractors, Human Resources check on potential health supervisors & security services, Finance and/or Compliance Head evaluates auditor services), before the negotiation route is linked to an Enterprise's Purchasing Team. The same goes with Marketing that usually rate suppliers on the merits of proposed catalogue structure among others, while others decide on the suppliers' ability to respond fast relative to the unit's idea. At the end of the day, negotiations need to adhere to a Purchasing Unit's prescribed policy, to avoid 'frictions' or 'miscommunications' especially during the main implementation process.
If an Enterprise has enough cash resources to buy a system of its own, Technical Consultants are readily available to make their respective recommendations. Usually, companies adopt a 'phased' approach, where investments are made in buying systems that would help address immediate backlogs tied to the overall upkeep of operations. There are ready off-the-shelf applications that can be tapped to handle this, while others invest time & resources in customizing an application that is most fitting to address a firm's concerns.
Below are some of eMarketPlace 101 basics which I usually encounter with CIOs:
What if budget concerns set in?
Then, accessing an eMarketPlace through the web would be the best approach. For one, no major investment is required to embrace this procedure. Second, several benefit from 'multipliers', as personnel are 'indirectly expanded' with the aid of an eMarketPlace's buyers & Technical Team.
Is it possible to integrate disparate systems to an eMarketPlace?
If you have already invested in the past for an Enterprise Resource Planning (ERP) solution & present cash resources are tight as a result of the global economic situation, it is possible to integrate your present system to an eMarketPlace. Since not all suppliers run on the same platform, eMarketPlaces are essential conduits to link a company with several suppliers concerned.
Is my budget scalable if and when I do decide to invest in 'middlewares'?
Middlewares as the term connotes, refers to an 'interface' application that could connect different system platforms to effect a seamless end-to-end transaction. Apart from having to decide on costs, setting up a 'middleware' exchange that could link an Enterprise's internal system to that of external suppliers can be cumbersome. This is especially true, if part of the objective would cover systems that are required to adhere to tight security features (e.g., payment facilities for banks, other globally-interconnected systems). Unless you're similarly prepared to deploy a dedicated Technical Team that can undertake intensive training to external customers concerned, investing in a middleware would work.
All said, more CIOs have taken on a pro-active approach by tying their internal systems to an eMarketPlace. These days, budget planning need not be a hindrance in adopting an e-Commerce approach, since web-based eMarketPlaces go beyond specific concerns as outlined above. Immediate solutions are readily available when technological challenges exist. Most however, opt for strategies that would allow their organizations to improve organically & scalable in terms of expectations.
Keryx Quiban is the Senior Technical Applications Associate of SourcePilipinas.com. For queries, reach him at keryx.quiban@sourcepilipinas.com.
E2-Access ('E'ducation in 'e'MarketPlaces)
By: Maricel Hiteroza
June 2009
Very few solutions are readily available to readers whenever headlines come up in dailies. While competent journalists are tasked in highlighting significant issues that revolve within our socio-political & economic environment, very little attention has been given as to how these issues would be resolved in crisp detail that would similarly be welcomed by readers and/or end-users in the society. Part of the highlight this month revolved in educational institutions, specifically for struggling parents tasked with the responsibility for their children's learning upkeep, and government units striving to resolve lack of facilities to fulfill their role of providing local constituents' basic educational needs, among others. Similar to chain reactions, tuition fee costing while maintaining educational quality are topics that come up each year.
eMarketPlaces have not only made itself visible within the corporate arena, but even to educational institutions. This is part of the mission carried by neutral-centric channels that have facilities coursed through a free-flowing Exchange, especially for sectors that do not have large cash resources to spare for technological initiatives. Since purchasing-related functions are channeled in eMarketPlaces, personnel are armed in their role towards training, and are focused generating resources to support infrastructure-related activities that should help enhance students' learning experience. By streamlining clerical-intensive requisitions via Exchanges, Purchasers have become more pro-active in their quest in flexing available budget and re-channeling these resources into productive use.
For example, estimated average savings for construction- and maintenance-related charges within the educational sector range between 5% to as high as 48%. To get a better glimpse of percentages, imagine allotting five million budget for example for renovation work in existing building structures. If we get simple averaging within this range at 27%, the nominal value would translate to P1.35 million. Imagine, this P1.3 million can be diverted for construction of new libraries, or providing more learning facilities like new equipment and/or computers. Such is the key function why eMarketPlaces exist. Each member's main role is to help Purchasing Managers channel as much resources into more productive use, without necessarily negating essentials in the overall upkeep of operation. Part of that savings can also be channeled to get good-caliber teachers. Another option would be subsidizing other important requirements, the most applicable of which is anti-flu vaccination for students, which could help mitigate the spread of the A(H1N1) virus.
Overall, the education sector can optimize resources as several opportunities for savings are opened. The Purchasing Team's role is magnified as they work alongside the objectives of Treasury unit, and the latter obtains improved flexibility in supporting capital expenditure undertakings. More can be done as educational institutions open themselves to participating in eMarketPlaces, specifically the ones that have the sturdiest commitment in delivering what is expected.
Part of daily 'achievements' I consider in my Profession, is having to end the day realizing I made a contribution for the education sector. The fulfillment of having to empower educational institutions extend the savings they could derive by participating in eMarketPlaces is uncompromised, especially as I see the larger picture as to how available funds are channeled for better use. While there are 'traditional hurdles' within the approval chain, it is worth to make eMarketPlaces more visible as savings through the most effective negotiation approach are drawn in the process. The task becomes fulfilling because these channels allow the sector to carefully plan relative to budget, allow a scheme to consolidate historical Purchase Orders (PO), and enable the respective Purchasing Team to do initiatives that foster learning collaboration.
So the next time the 'recession' enigma stings you, decide whether you would like to be at the 'pessimistic contributor' of the equation, or you'd choose to finish the day becoming a 'solution' guide. As the saying applies, "Effective learning start when one thinks out of the box'. Believe that options are available, and commit to the task so you need not get lost when global economies go through a choppy ride.
So the next time the 'recession' enigma stings you, decide whether you would like to be at the 'pessimistic contributor' of the equation, or you'd choose to finish the day becoming a 'solution' guide. As the saying applies, "Effective learning start when one thinks out of the box'. Believe that options are available, and commit to the task so you need not get lost when global economies go through a choppy ride.
Effective Pricing
By: Rona C. Ramirez
May 2009
The decline in April's headline inflation to 4.8% versus March's 6.4% might be a harbinger of 'hopeful' things to come in the coming months this quarter. Within the purchasing arena however, inflation is just one of the variables where commodities and/or services in question is indexed, relative to a host of other variables that are part of the negotiation process. In fact, timing a 'turnaround' has become more complicated these days, but not for those who are able to read through markets well.
For business enterprises that are still locked within the 'traditional' concept of price negotiation, anything lower than their prior purchase price is considered 'good'. For the smarter ones who managed to ride on an e-Commerce approach however, 'lowest' should be benchmarked relative to the industry, as well as expectations about the general economy. Moreover, adequate analysis within an acceptable yet immediate timeframe should be included, covering key components that make up the selection round.
Within an eMarketPlace shared by corporate and mid-sized players, 'benchmarking' is done with ease & convenience. This is facilitated through the presence of co-team players who assist in the price break-up process. For example, granting everything has been met relative to accredited suppliers that will be participating in the negotiation round, Purchasing Planners are more apt to map-out their pricing objectives, simply by dissecting what should, and should not be included, in the pricing negotiation. Taxes levied on entities are generally treated as 'pass-on' cost. Here, Purchasing Planners must be in the loop if necessary custom duties are prescribed and made integral to a supplier's pricing package. It is also for this reason that Purchasers should be aware on other tax incentives that may have been granted to a participating supplier, which consequently raises their competitiveness in the process. Incentives accorded by the Board of Investments, specifically to sectors that cater to either labor- and/or capital-intensive projects, are in the better position to compete, especially when production expansion initiatives are carried out. Next, thorough understanding relative to item specification must be made, and variables that are typically carried by producers of the items being purchased. If the goods being procured are processed domestically, basic components are taken for analysis: labor, lease/rent, electricity charges, and other raw materials required for the overall production process. For importers however, the computation is typically straight forward, as margins and/or distribution charges as well as warehousing, would be included. In this scenario, volume aggregation would be more crucial, to enable buyers necessary discounts in the process.
The other volatile factor covers foreign exchange (forex) components. For some large buyers, inventory level management is critical relative to the prospective supplier being assessed. If a large part of their inventory has been procured at a 'fairly' high foreign exchange rate vis-a-vis the total billing settlement (e.g., peso-based), chances of procuring an item would be expensive. Here, buyers may at their discretion, map-out a plan with a strategic supplier, by possibly sharing 'incentives' relative to overall financial planning. In the end, both buyer and supplier may work on a scheme that could produce a 'fairly-blended' forex costing component that would be acceptable in achieving an objective to reduce the goods and/or services being sold.
Sometimes, Procurement Planners who are also in the loop relative to Finance, may also consider other 'one-time' charges (e.g., mark-to-market losses), which may or may not be included in the pricing process. This could only be effected when adequate information are submitted in a timely fashion to buyers, especially when it comes to data updates for suppliers concerned. Within eMarketPlaces, data gathering related BIR-submitted financial statements are complied with ease, especially those that have already gone into assisting in the supplier database update process.
In the end, not all variables should be indexed to inflation, until thorough analysis has been made based on any specific item that's being procured. Since all admin-tied tasks are outsourced via a friendly eMarketPlace, Procurement Planners are more able to practice their expertise in spotting where to specifically cut on cost without necessarily hurting prospective supplier-partners in the process.
Rona C. Ramirez is the Senior Business Development Associate of SourcePilipinas.com. For queries, e-mail rona.ramirez@sourcepilipinas.com.
Reengineering Renaissance
By: Joanabelle R. Apostol
April 2009
Keeping costs down while topline slows is easier said than done. Such liner has kept not only higher management busy on costing and added considerable amount of pressure for the sales force, but more with Human Resource (HR) personnel. Within this arena, 'retention of the best of the breed' is becoming more difficult to hold, especially when retrenchment calls set in. The lessons are clear relative to reducing export-driven dependency (especially for markets that are highly affected by the recession), while expanding income sources that are either supported by strong demand or counter-cyclical when economic weakness sets in. For 'smarter' decision-makers however, the other plus stems from adopting technology in administrative-intensive areas that should actually require 'less' attention.
For seasoned players in the race, 'reengineering' might be the most appropriate term. Growth prospects need not be neglected, because as they explore options where to sizably reduce the fat, more have come to realize that losing people need not be the final option. These days, 'work load concentration and reallocation' is greatly underscored, and most would agree corporate survival is tied to expanding businesses where core competencies should be fostered, even when administrative linkages are still necessary to maintain the upkeep of the overall operation. Technology adoption through wise partner selection is actually the key, while allowing key members within the team to do more value-added task that would ride well with the challenges on hand.
Within the eMarketPlace Team I work with, personal encounters with various people, corporate culture and diverse situations allowed me to generate deeper insight how the sturdiest took a more positive approach despite challenging day-to-day circumstances. More than upholding transparency and widening supplier sources for example, eMarketPlaces have moved to other admin-tied segments, with an end-goal of generating higher value-added for the workforce, even when dealing with limited financial resources.
Within SourcePilipinas, eGrocers have prodded HR personnel to provide their share in reinforcing employee assistance, paralleled to obtaining savings through aggregation. Since so-called 'off-work' tasks (or those that should be accomplished after the end-of-day work load) are minimized, employees are empowered to concentrate on their field, and provide more valuable time resources they could utilize with their families, or even for respite and leisure. This is made possible through catalogues which HR could access in an Exchange, especially when complemented with appropriate electronic payment channels. Since personal groceries can be delivered to their office base, HR personnel are able to harness employees' abstention from 'impulsive spending', allowing the latter to save more to support future requirements or possible investments.
Another tributary of eMarketPlaces is harnessing an enterprise's ability to respond to 'environment' responsibility. Those that started their participation in an eMarketPlace early on, are more apt to participate in 'green technology', with the end objective of reducing electricity costs. As a result, their personnel's efforts can be geared towards research, development and training, to allow them to contribute to higher value-added roles. Instead of concentrating in processing requisitions for simple 'trivial-many' or non-essential items for example, time is best spent training these people in areas that are more critical to an enterprise's survival, such as alternative raw material sourcing, for example. Existing personnel who have grown organically within an organization can be encouraged to embolden their relational skills, and may be rechanneled in consumer behavior assessment, or market-profiling. More than managing inventory more effectively, eMarketPlaces also assist in disposals. Here, 'unnecessary' assets can be appropriately sold, and help raise extra cash resources back to Treasury.
While the economic challenge unfolds before the entire globe especially within the region, it is significant to note these are all temporary, and shall come to pass. The resurgence of reengineering is unfolding, but faster response can be facilitated with the aid of technology.
Joanabelle R. Apostol is the Senior Business Development Associate of SourcePilipinas.com. For queries, e-mail joanabelle.apostol@sourcepilipinas.com.
Leadership in eMarketPlaces
By: Edith Espeleta
February 2009
The essence of HOPE is probably an essential element that all of us need these days. The financial meltdown across the globe is a day-to-day phenomenon that we come across with, as enterprises try as much as they can to keep their businesses afloat. The effects are non-debatable, as thousands of workers lose their jobs, companies shut operations, or constantly seek financial assistance from governments. Touted as one of the most powerful countries in the world, the United States (US) is no exception. President Obama definitely has a tough and serious load on his back since he was formally instituted to the role, yet his message of hope, change and inspiration are something that global watchers could start with.
A similar scenario should also apply within the corporate setting that would allow organizations to hurdle difficult times. Companies, more than ever, need 'Obamas', or individuals who create the most powerful effect how the group should operate, cooperate and even create individuals who do not simply become leaders, but inspirational leaders to foster positive growth. By this end, a thorough understanding of leadership would directly affect individual members of a team, and when efforts are consolidated as a whole, anything and everything becomes possible.
So, what does it take to be an inspirational leader? For one, inspiration leaders encourage and bring the best out of people. They are 'near experts' to recognize & utilize each gift, talent & skills of each individual. Such acknowledgment fosters creativity in the team, allowing each member to share their ideas and putting these into action. They also make it a habit to carry on with clear vision & intentions, and create a force that keeps all Team members abreast of developments & more importantly, involved. Two of key attributes among inspirational leaders are their words & action. Inspirational leaders lead by example, and they hold steadfast to their word. These are also well adept to the role of communication, not simply on their ability to speak to others, but on how well they listen. Inspirational leaders always leave people feeling good about themselves. When there is a group of people who feel good about themselves, the result will be a cohesive team who support each other so they could move towards a common goal.
The same inspiration is indirectly present within the eMarketPlace. Guided by the key vision towards maximizing savings & becoming another extended selling avenue, participants become cohesive with their role to bring about fresh changes to an organization. Creativity is amplified, because with a broader perspective, one can see things from a 360-degree vantage point. More can actually be done via requirement aggregation, and negotiations are simplified when 'parts' are taken as a 'whole'. Communication routes are also encouraged, because as more people contribute their key functions within the completion of a negotiation process, team work is enhanced. Much can be done in the process, since clerical tasks are simplified and decision-makers enable their team to focus on key competencies that would bring about further growth in the organization and in their respective roles in the team.
eMarketPlaces also allow leaders to view intricacies related to the negotiating round. Participating buyers become more objective in encouraging suppliers to provide their best quote, and allow the latter to perform their functions more equitably. Since demand can be forecasted ahead of time, efficiency is achieved through proper inventory and production planning, and logistical arrangements are well-arranged to ensure delivery compliance. In fact, compliance to agreed terms & conditions are best monitored even when renegotiation is required, as Trading Partners are looped within the same platform. And when the key resolve is for 'positive change', leaders in eMarketPlaces make it a point that all connecting tasks are fully accomplished on time, and issues from all counts are likewise resolved.
Overall, leaders who lead by example are also the ones who keep the team united through a singular commitment & vision. These 'rare ones' are those who have taken a 'selfless' route relative to their personal ambitions, especially if they're able to realize that it would benefit the many.
Edith S. Espeleta is the Administrative Manager of SourcePilipinas.com. For your queries, e-mail her at edith.espeleta@sourcepilipinas.com.
Value Contributors
By: Grace Cerdenia
January 2009
The colors of battling challenges vary each year for buyers and sellers in an eMarketPlace. There are times when colors become faint, and in several occasions, they come out bold and stronger depending on difficulties that are to be expected within a 12-month run. So far, equities investing managed to open on the green side despite a foreseeable tougher year for 2009, but the fact remains most businessmen are welcoming the year with utmost caution and optimism combined.
For those who read 2008's year-ender, 'Expediency for positive perspectives', the succeeding will help enlighten on steps, how participation in an eMarketPlace would help those venturing in their respective endeavors become 'value contributors', and become a remedy despite prevailing global anxieties.
With consumer prices on the downtrend, eMarketPlace players are starting to queue up for contract review or renegotiations, while others have started to explore possibilities of selecting alternative variants related to their overall requirement or key business processes. These variants can only be appropriately defined when discipline as regards specification settings are made, to adequately pinpoint which ones can readily be traded-off vis-à-vis those that should be retained. Here, policies are constantly polished to ensure quality goods and services are delivered at a price which consumers could actually be satisfied with, and, arriving on a good package that become friendly to the latter's pockets.
Since these are geared towards obtaining the lowest possible cost, sellers or suppliers benefit in terms of proper production and/or order planning, as they adjust to volatile business costs (e.g., interest rate, foreign exchange trend). In fact, value engineers become more apt stocking 'adequate' reserves, specifically those that can be readily absorbed by customers based on the latter's expected demand and/or sales trend. We think this would be the key practice that would dictate business process flows for the coming months, as enterprises are gauged depending on their ability to respond to abrupt changes within the macro setting, especially when volatile gyrations occur within the demand and supply chain.
An eMarketPlace is also a commendable venue that would allow small- and medium-scale enterprises (SMEs) explore business opportunities. Prospective Overseas Filipino Workers (OFWs) who may have been hit by industrialized countries' economic despondency could explore investing avenues by meeting competent buyers within a larger corporate setting. This can be facilitated via resource aggregation, especially when key members of an SME enterprise manage to define their key products and/or services they could readily trade or sell. Getting introduced is the first step, but eMarketPlaces can do much productivity relative to sealing business agreements that would allow SMEs get a fair return on investments.
The administrative route is also addressed, given a reputable eMarketPlace's ability to link an Exchange with the local financial system's payment gateways. It is much faster to expedite the commerce process since one stands to gain from getting the pulse of requirements from buyers and sellers, allowing for faster payment/settlement procedures. SMEs could even become more equipped and confident running their respective eStore concept, especially when they're bridged to a wide array of prudent buyers and necessary infrastructure to support their marketing objectives.
More than targeting ways to streamline costs and achieve transparency by participating in an eMarketPlace, the outlook has transcended to viewing the Exchange as necessary long-term partners for growth. Much can be done when enterprises (whether large or small) perceive the benefits eMarketPlaces bring even on the sales side, especially to complement their traditional sales force. Customers are retained and demand growth is harnessed, because a step in the proper direction creates value to enterprises who aim to win.
For queries, e-mail grace.cerdenia@sourcepilipinas.com or grace.cerdenia@2tradeasia.com.
Exigency for Positive Perspectives
By: Grace Cerdenia
December 2008
The easiest route these days, is getting oneself tied in the bandwagon of doomsayers, who constantly stress frail outlook is definitely in store next year (or even a year after 2009). We will not delve further into 'bankruptcy' or the 'R' word (it's readily visible in headlines anyway), but on the 'balancing' link that is very much in demand to rectify this view.
Witnessing how global equities markets move has become tougher, especially if one monitors it on a daily basis. In fact, investing these days is not for the 'faint hearted', as it would definitely take deeper guts to buy the concept of 'fresh perspectives'. With bleak outlook expressed left-and-right on the state of the global economic terrain, the 'most expensive' buy-line nowadays, is 'positivism'. This is among the crucial steps one should take prior to equities investing, and upholding this decision before taking any position.
History has repeatedly shown, markets behave in a scheme where 'excesses' are corrected. These excesses have linkages to policies (whether macro or micro in nature), and pinpointing where the problems arose. In fact, problem identification is a skill that is developed through time, set against the backdrop of any trader's experience, correct analysis, thorough reading and obtaining 'perfect information'.
In fact, 'cheap valuations' are no longer the focus of arguments. Beginners to stock market investing would only need to look at chart trends to check how far stocks have come off from their highs, and how low they're getting into if they make a decision to buy. Similar to negotiations, several have embraced a 'segurista' concept, to ensure they're timed to get in at the 'cheapest' lows, and besting others by cashing-in on the 'highest' high.
True to form, 'perfect trades' are actually 'non-existent'. One should therefore decide on circumstances prevailing at a specific point in time once a purchase is made, and vice-versa when a sale is effected. Comparatives relative to events only come in later, simply to give any prospective buyer or seller a good pat on the back that a perfect trade was executed, within a well defined timeframe. This is the key objectives of 'contrarians', or those that go against the trend when everyone else turns pessimistic. Remember, events continuously unfold daily, and everyone would have been billionaires, if all possessed special gifts to spot the 'lowest' point in business history.
Consider this view. Business tycoons would not have achieved their pillars, if at some point they did not decide if they're prepared to take risks. Taking their enterprise to the route of 'going concern' policy, these brave businessmen have taken the bold step to prepare themselves both for the good, and of course, for the worst. The weak aspects however, are negated by proper contingency planning, especially by keeping an open mindset that risks can be mitigated when business models are re-tooled. Such 're-tooling' exercise is a constant discipline embraced by all, to help decision-makers weather the peaks & troughs in any business cycle. Among the clear examples we see include expanding the scope of earnings mix, or adopting less-expensive technology to streamline the administrative route. 'Value engineering' is also starting to take notice, especially on the aspect of boosting productivity by adopting a discipline to uphold the least possible non-essential cost.
Getting everyone to believe 'global solutions' are available for 'global challenges' is the first stride to recovery. Note however, that positive thinking also requires a lot of action, to revert to sustainable mending. All of us are contributors, because any single effort 'becomes a foot on the door'…and taking this, 'one toe at a time'.
Grace Crisostomo Cedenia is the General Manager of SourcePilipinas.com. For your queries, e-mail her at grace.cerdenia@sourcepilipinas.com.
Be an Enterprise Catalyst
By: Edith S. Espeleta
October 2008
I came across an interesting e-mailer entitled "Carrots, Eggs & Coffee Beans", and I thought it was worth sharing to Source-IT-Straight readers, especially with the financial crisis gripping the global economy. The topic seems quite timely, specifically in reminding us how we should all view adversities and respond to challenges that come our way.
In the article, different physiological reactions were contrasted when the carrot, egg and coffee bean were subjected to a pot of boiling water. To summarize, the carrot wilted & lost its strength, the egg hardened, while the coffee bean managed to release its fragrance and flavor aside from changing the total appearance of the water. The pot of boiling water is representative of adversities, trials or challenges, and we all respond differently when we all go through a test. A carrot is someone perceived to be strong at first, but with hardships and obstacles, it becomes soft and losses its strength. Meanwhile, an egg is someone who starts with a very kind and soft heart like its yolk, but with hardships & trials, it changes. Its shell may look the same but 'internal bitterness' made it cynical and stiff. Lastly, the change in the color of the water when the coffee bean was boiled is perceived as someone who gets better, and decides to do something positive in the most difficult circumstances. More than highlighting various responses to adversities, the article underscores positive commitment and attitude, as key route to success and happiness.
The same lesson applies today, given the bearish headlines that relentlessly unfold since the US financial debacle started this year. With an uncertain investing environment, several businesses have become more cautious about expansion efforts, as global financial institutions are still 'risk-averse' to support short- to medium-term liquidity requirements. Within the eMarketPlace we operate however, it is interesting to note that the sturdier ones are those who view opportunities despite volatile business scenarios. More and more Trading Partners are finding reasons to link up within our Exchange, to better cross-sell items and services, and keep themselves attuned to decision-making patterns among buyers. Since eMarketPlace Entrepreneurs manage to veer away from stringent administrative procedures and are able to focus on their core competency, most have taken a pro-active role to respond to challenging times by diversifying earnings resources.
These days, every contribution from each department within an organization matters. Over and above the sales force, specific units are expected to perform in ways that would help companies grow regardless of whether their contribution is deemed large or small. For example, paperless routes via e-Commerce transactions help trim paper, printer and cartridge requirements, as savings are funneled back for more important needs to the Treasury Department. Demand for consolidated communication channels through the internet which facilitates data integration as well as requirement aggregation is also intensifying, especially when the sale or disposal of a certain item is linked to requisitions of new items. Here, participants are assured of extra funding sources relative to tight budgets, without necessarily trading-off the essence of transparency. Speaking of budgets, those who started early on with their information technology (IT) drive are swifter in sourcing raw material variants or alternatives, providing flexibility and balance between the objectives of their Purchasing units vis-à-vis Quality Control teams. As a result, greater resources can be devoted to Research & Development, that help create multipliers to the firm's organic growth cycle.
In summary, the quest for continuous improvement should not be overlooked, even when the most pressing era occurs. Challenges require Enterprise Catalysts, as these precious resources are the driving force that keep global economies moving.
Edith S. Espeleta is the Administrative Manager of SourcePilipinas.com. For your queries, e-mail her at edith.espeleta@sourcepilipinas.com.
Beyond rhetoric
By: Grace Cerdenia
July 2008
Political leadership is on spotlight with today's State of the Nation Address (SONA). With the investing community watching, statements of facts and policy directions will also be on top of international credit rating agencies' watch list, specifically in regard to retooling 'risk premium' expectations on the Philippines vis-à-vis the region and the world. These 'risk premiums' create a bearing in setting borrowing cost expectations (e.g., interest rates) within the financial sector, by balancing a country's political and economic pluses and minuses, as well as trajectory where it would head next based on appropriate policy mixes.
Once borrowing costs are set, the same is applied within the corporate arena's business model. Such test will be applied relative to corporate spending against cash flows derived from operations, to adequately gauge where necessary adjustments between the two should be made. This cycle trickles down to an enterprise's Treasury, Plant, Purchasing, Marketing/Sales, and rankings will be equally applied on the Human Resource side. Productivity will be measured on per worker basis, which closes-in the chain as end-users that go through a spending-income checklist.
Unfortunately for most, skyrocketing fuel prices have put significant pressure on the expenditure side. Unless quicker measures are deployed to improve the income portion, several dread the possibility when cost-push scenarios pile up, leaving ordinary consumers reliant on debt. In plain theory, imbalances either on the left or right side of an equation are abhorred. However, there are approaches that can be done within our reach to balance this uneven setting.
True to form, ingenuity is always emulsified when Pinoys go through rough times. Most are driven to find additional income sources, possibly via 'informal markets', to help an ordinary Juan dela Cruz cope with rising prices. In fact, challenges bring out innate entrepreneurship ability, especially when small and medium enterprises (SMEs) move forward to participating in eMarketPlaces.
The information and technology (IT) arena could actually be an ally to those who might wish to hone his/her entrepreneurial skills. In fact, decision makers who continuously evolve in eMarketPlaces have more room to appropriately assess and balance situations, without necessarily foregoing revenue-generating opportunities available in Exchanges. eMarketPlaces help prospective businessmen achieve saving and do selling functions, without the hassle of worrying on the added spend that comes along by buying an infrastructure. For example, farmer and/or fish cooperatives could readily check on timing and availability of their produce, based on requirement invitations available in an Exchange. Supply could be readily marketed through electronic catalogues, and relayed in an instance within a community concentrated in scouting for new supplier partners. Community leaders could readily aggregate common supply, without necessarily abandoning the concept of pricing transparency through negotiations. Lastly, communication channels are also expanded, as transport requirements could be readily tapped through logistics providers present in an Exchange.
Scorecards are always present beyond any leader's State of the Nation Address. These are typically disguised in various forms, from children's report card, medical history, Key Performance Index record and the like, but the important element is that scorecards help us check specific points where we all are, against the direction we intend to go to. Striking a delicate balance defining 'adequate' living standards do not simply end within a business leader's desk, but should also revolve in the way we perceive things and our corresponding behavior in doing what is necessary to hurdle the situation.
Rather than rely on endless rhetoric, enterprises especially SMEs could expand income possibilities by entrenching themselves in an eMarketPlace. After all, the best challenge next to flagging 'Business as usual', is 'Working to serve you better.'
For queries, e-mail or grace.cerdenia@sourcepilipinas.com grace.cerdenia@2tradeasia.com.
Automating within an inflation-driven environment
By: Edith S. Espeleta
May 2008
How far crude prices would go has become the latest topic on the block, and all enterprises are in a constant flux in discovering ways how to survive these challenges. Higher electricity, distribution & manpower charges are to be expected as crude costs escalate, and trade-offs between these variables need to be carefully considered to make sure end-users are adequately protected in terms of spend concerns. Consumers are becoming more price-sensitive with regards to the items or services they purchase, and companies have a tough call to ensure pricing remains competitive without significantly altering their operating margins. Given this, companies are left with two critical options - either to maximize revenues, or reduce costs. Ideally speaking, businesses are compelled to do both.
Although fiscal authorities have contemplated adjusting wages to cope with rising fuel costs, streamlining the workforce isn't the most effective way to cope with higher inflation. Instead, companies need to look for additional avenues to maximize their topline, and help lead to business expansion. Diversifying the earnings mix is driven primarily by the sales force behind it as well as indirect distribution channels. Sales targets can be met through effective strategies that have been carefully & thoroughly planned, and must be supported by sheer determination of management and its people.
Meanwhile, the expense side is not to be left on its own. Decision-makers are more than alert capping faster growth in expenses, specifically those tied to their overall operation. In this light, most have taken a different perspective relative to automating administrative procedures, with an aim to help business leaders decide more accurately and responsively depending on the timeframe covered.
For example, sifting through historical data in terms of quantity and pricing can eat a lot of time, simply to find out how many supplies of a particular item is required to sustain operations for a particular month. Process automation through eMarketPlaces could lead to reducing a day's work, as purchasers can do a lot more, thereby improving their productivity in the process. Since data capture is possible and purchasing requirements can be expedited fast, more time can be allotted to developing alternate raw material channels, assessing present suppliers' capability and expanding regional network to benchmark production methodologies.
Contrary also to common belief, automation will not displace people but would positively affect an enterprise's thrust to optimize manpower resources. More than just absolute savings, facilities available in eMarketPlaces allow companies to benefit in terms of time to process a transaction. Simply imagine performing traditional style of soliciting quotes from various suppliers, a process that normally takes days, or a day if you're lucky. Automating this scheme would simplify the communication route as terms and conditions can be readily sent uniformly to participating Trading Partners, and leave prospective suppliers an hour or less to submit their most competitive bids.
Automating part of the sales system need not also compete with a company's traditional sales team. In fact, more can be accomplished, as catalogues available in eMarketPlaces help expedite the sale closure. By extending an indirect hand to present and prospective clients, greater opportunities evolve in enhancing and bridging relationships between customers. Opportunities to trade can be subject to a more open environment, allowing companies to obtain wider access to value-added services.
Simply put, demand and supply forces will always move about in any condition within a volatile environment. The question most leaders need to deal these days, is how swift have their present systems been able to respond to changing macroeconomic scenarios. To some, investing in automation might simply be regarded as one-off capital expenditure or capex. To most however, automating is equated to investing in transparency that should redound to faster, wiser and more relevant business calls.
Edith S. Espeleta is the Administrative Manager of SourcePilipinas.com. For your queries, e-mail her at edith.espeleta@sourcepilipinas.com.
Price targeting and variant identification
By: Grace Crisostomo-Cerdenia
April 2008
Escalating prices and tighter budgets have become the core challenge among buyers and decision-makers daily. Such challenge is presently underscored, in the wake of volatile logistic charges that are eventually included in the goods and services we buy. In this light, selection as to the most appropriate costing has become tougher, when we're confronted by variability in demand and supply situations, especially when we tackle the issue of cost avoidance.
World markets in general, have no other recourse except to pre-tool their respective systems towards higher costs. This is because in a span of about five years, global enterprises have been accustomed to benign inflation environment, where cost savings are generally easier to get. By cost avoidance, we refer to having to obtain prices that are lower than prevailing market prices. In such a scenario, ingenuity as regards cheaper alternative options becomes necessary, not to mention swiftness relative to response time from other accrediting units, or those within Quality and Control Group, among others.
Let's consider an example. Is it easier to simply import similar yet cheaper branded medicines? While I favor the proposed Affordable Medicines Act, there are economic implications to consider if such as scheme is adopted 'drastically'. If 'x' item costs only P6 per table in India for example, versus selling prices of P44.75 apiece in the Philippines, considerations need to be made why such disparity occurs, specifically when we plug-in charges based on the 'cost of doing business' at home. There might also be other 'unknown variables' that need to be weighed, part of which includes possible subsidies granted by other countries' government and/or private groups, in the overall production. Such subsidies might stem either from excess reserves from government, or from supporting multilateral financier-supplier groups.
While cheaper imported medicines would definitely redound well on consumers' pockets, it might also be disadvantageous for producers that have already invested at home. Continued patronage for cheaper imports from traders for example, might create its toll on domestic employment numbers, as items that should have been sold by local producers were not taken-up by end-users.
How then, do we go about helping present producers come up with cheaper alternative variants?
Within the assessment stage, industry practitioners need to devote time analyzing the 'sum of parts' that goes into the production of an item. This valuation exercise could only work when appropriate financial disclosures are made, and existing 'fences' are regards data sensitivity is defined. While authorities need to carefully consider enterprises' privacy, rules should also be appropriately outlined as regards relevant data where implied presumptions can be inferred. When this is established, financial planners need to determine investment per unit of output, especially when upfront capital expenditures (capex) come to the fore. For one, recoverability of capital is among essential components in determining our overall 'fixed costs'. The second stage covers outlining operating charges, part of which covers raw material ingredients or packaging when items are simply 'tolled' (or re-packed) at home. This should also consider utilities, labor and freight-related charges per item, to properly determine those that are deemed sensitive to fluctuating prices. Lastly, issues tied to tariffs and taxes (including those remitted on the national scale and to respective local government units) must be adequately synthesized, to measure our local companies' ability to compete vis-à-vis regional counterparts. When these are in place, monitoring becomes easy and it would be more convenient targeting areas where cost reductions are feasible and necessary.
Within the e-MarketPlace we thrive, Trading Partners have more time to devote in the sample exercise above. Decision to participate is easy, especially since no capital investment is required and collaborating within a diverse Purchasing Community becomes possible through simple access over the net. Not only are registered Trading Partners kept up-to-date with domestic and international suppliers interested to participate in servicing each market, but also relative to trends on proper contract formation, requirement aggregation and negotiation, among others. Report generation is simplified, and more time is devoted in arriving at the best decision when it comes to anticipating changes in market trends.
More than just adopting an e-Commerce approach, singular direction in upholding transparency is the first step in clearing allegations of 'corruption'. Thorough and less time-consuming administrative strategies are formulated when attention is given on price-cost breakdown, especially in embracing appropriate risk-return management solutions.
For your comments / queries, e-mail: grace.cerdenia@sourcepilipinas.com or grace.cerdenia@2tradeAsia.com
Ain't apples-to-apples
By: Grace Crisostomo-Cerdenia
February 2008
Each trading day at the local bourse is never the same. This is perhaps the 'special spice' fund managers confront daily when dealing with equities-related transactions, especially when profiles of buyers and sellers are unknown. Demand and supply situations change by the second from pre-open towards run-off, and investors need to carefully weigh their list of external and internal considerations prior to executing the best option for a buy or sell call. Wall Street's weakness has exerted influence on sentiment lately, and information flow has become equally vital to provide investors the confidence they need before positioning at the local stock market. Even recommendations to either buy or sell a publicly-listed company vary between brokerage houses, depending on gathered data while sifting numerical facts that could influence share price performance. Some have in fact, transgressed to 'mature' calls, correlating the holding period that would be most fitting before recommending a stock, tied to weightings based on sector categories' prospects and challenges.
Similar challenges are also encountered by buyers and sellers in eMarketPlaces. Approaches toward appropriate pricing are carefully examined, based on outlined requirements conveyed during the pre-bidding stage. This significance is underscored when supplier partners need to effect upward adjustments in prices, driven mostly by factors outside their control (e.g., volatile crude costs, electricity pricing, tariff changes, foreign exchange, raw material destination, among others). Proper benchmarking is also made through eMarketPlaces, especially when comparisons need to be realistically plotted based on prevailing market scenarios. To cite an example, third quarter 2007 Purchase Order prices may no longer hold February 2008, and Purchasers need to revalidate if this trend is supported through up-to-date catalogues posted in an Exchange.
So, can negotiations be 'perfected' enroute eMarketPlaces?
Let's define 'perfect'. 'Perfect' could mean hitting desired level of savings based on a Trading Partner's budget, or it could also mean achieving higher-than-expected proceeds when disposing an item. By 'perfect', purchasers might give higher regard on other 'intangible' variables based on their internal supplier scorecard system, giving emphasis on after-sales service/end-user satisfaction, up-to-date delivery & well-defined admin procedures, or even extended credit terms. Simply put, the initial step to perfection entails defining clear-cut priorities and objectives, to properly guide participants how the awarding process will be handled.
Next, one must carefully assess prevailing market conditions during the time of the negotiation. Snippets of bulleted economic/political/industry 'situationers' are hardly visible in requisitions. This data becomes very useful, as decisions may have been effected when certain macro variables are strong (e.g., interest rates are at all-time lows, fears of US recession, etc.). Most, if not all, adopt a common practice where negotiated prices are compared versus historical purchase orders to save time. The 'smarter' ones however, are much able to appreciate the concept of 'cost avoidance' especially when expectations are up that prices might move higher within a defined horizon. More often than not, enterprises' Purchasing Team need to negotiate quickly as items are typically classified 'rush'. When this happens, negotiations are often limited to a buying party's existing Trading Partners, owed to the time element required for the accreditation round.
eMarketPlaces assist in filling the gap by facilitating negotiations that streamlines the administrative route. Since clerical functions (e.g., relaying item specification, terms & conditions, etc.) are outsourced via electronic means, pre-selected participants before the actual negotiation are given ample time to review to weigh their ability in servicing & properly financing their client's requirement. Over and above obtaining an important risk management partner, time management is likewise highlighted, as buyers gain flexibility to better understand the intricacies involved that alter demand-supply situations that create its toll on pricing.
Allegations of 'irregularities' especially for large-ticket negotiations are avoided when objectives, resources and functions are carefully mapped. eMarketPlaces help facilitate the conduct of transparent and smooth negotiation process. The concept of awarding however, is based on defined variables.
For queries, e-mail grace.cerdenia@2tradeasia.com or grace.cerdenia@sourcepilipinas.com.
Ascend to Higher Levels
By: Grace Crisostomo-Cerdenia
December 2007
Portfolio fund managers come up with an effective investing plan by properly identifying their entry & exit strategies through quantified risk-reward mix. Typically, such risk-reward mix is expressed in terms of anticipated returns, which are often benchmarked to yields provided for by other securities instruments. These are deliberated by decision leaders, especially when it comes to 'expected threshold' that optimize return when plotted against a specified investment horizon. Moves to either buy or sell are best supported by technical analysis, specifically in gauging price and volume movements.
Meanwhile, a unique discipline exists when negotiations are facilitated in an eMarketPlace, especially in an Exchange that captures items across industry categories. Besides having to contend with diverse corporate culture & stages of technology-adoption, efforts to ensure transparency is starting to emerge from merely putting the negotiation round within an acceptable tech-based process flow covering supplier accreditation, migration, requirement posting, actual auction & awarding. In fact, more and more enterprises are evolving to a stage where appropriate 'input-output' variants are determined, especially those that create a sizeable impact on demand-supply movements. There are items more sensitive to distribution costs (e.g., fuel price-sensitive items), rent & electricity charges, labor, or even other 'qualitative' aspects such as delivery, after-sales service and corporate governance, to cite a few.
While expected returns can be properly set relative to investments, the same cannot be singularly made within the Purchasing process. It is not enough to merely set a ballpark figure relative to absolute expected savings for example, as items procured vary depending on the level of a unit's importance within the overall supply chain. For example, C-level mandate to reduce costs by 15% is easier said than done, as thorough analysis must be made to check if expectations are 'realistic' when subjected to the actual pulse in the market.
Let's talk a quick look on the peso's appreciation vis-à-vis the greenback. The present view so far is that as a result of an expected influx of investment in capitalized industries such as mining, exploration, business process outsourcing (BPO) & OFW remittances, some economists see the peso strengthening further, possibly until first semester of 2008. Given this, there are suppliers who might not be as 'responsive' in terms of reducing their selling prices, at least abruptly over the near-term. This might be due to possible inventory front-loading, especially if ill timed when the local currency traded weaker vis-à-vis the US dollar. The smarter approach to obtain 'feelers' therefore, is when bids are gathered online, enabling buyers to crosscheck suppliers with commendable 'hedging' strategies.
Meanwhile, suppliers who participated in eMarketPlaces early on, are more able to gauge appropriate demand trends, apart from broadening customer coverage. In fact, pricing initiatives are amplified, especially when it comes to arriving on a 'blended' scheme that is not too harsh on budget, neither burdensome for markets served. Suppliers can also 'smoothen' demand seasonality, especially since a slow season for a customer might be the reverse for another. As a result, suppliers' Sales Team benefit via 'multipliers', allowing most to establish long-term contracts and maneuverability in planning their respective production scheme.
Despite challenges encountered this year, there are pluses to count and opportunities to look forward to as both buyers and suppliers greet 2008 with higher sense of vision, mission and objectives. Perspectives are enriched when leaders view intangible elements that help fortify an enterprise's growth, beyond number expectations.
For queries, e-mail grace.cerdenia@2tradeasia.com or grace.cerdenia@sourcepilipinas.com.
Win Investments
By: Grace Crisostomo-Cerdenia
October 2007
Equities markets within Asia benefited mostly from a liquidity-driven rally, set against the backdrop of improved economic growth expectation, single-digit interest rates and benign inflation, to name a few. Numerous channels have been opened for prospective investment opportunities, part of which is mirrored through investors' increasing zest for equities in line with everyone's aim to maximize portfolio returns.
With the speed and readiness of information available through technological channels, response time has apparently been fast. While most are aware of challenges besetting the US economy related to credit default issues, several are likewise quick to underscore the reality there are no quick overnight fixes to the issue, and alternative investing markets are readily available. This underscores the fact capital flows work within a pre-defined framework, specifically in areas where risks and returns are transparently defined.
Yet, similar to any cycle however, investments can be there for the long haul, or otherwise. Some might be quick to jump boat in alternative markets where restrictions are less and growth opportunities are wider, especially where business decisions can be made with peace of mind and comfort. This separates what we often read as direct investments, and those funneled in volatile capital markets.
Within capital markets, several if not all enterprises, have upgraded to an era of 'cooperation' than 'competition', to best reach intended markets via wider marketing channels. This can be summarized through a 'win-win blend' in terms of competency, as most seek to avoid replicating the wheel as regards procedures that have been tested through time. For example, hybrid and/or sophisticated investment instruments have mushroomed quite strongly, simplifying complexities for consumers who might opt paying a considerable 'premium' vis-à-vis the benefits they get within a specified timeframe. Financial product offerings have also been diverse, and most head towards an 'all-in-one' concept that would best fit future needs.
The essence of whether or not direct investments can be maintained, also highlights aspects tied to negotiation, especially in enabling involved agencies meet identified objectives. More often than not, the underlying purpose prior to implementing projects for example, are among what we refer to as 'prospect-openers', yet little consideration is given relative to identifying awarding criteria. Others encounter difficulty when they visualize concepts to contracting parties, especially when one has very little knowledge on detailed specifications.
People who pro-actively involve themselves in private eMarketPlaces strive hard to perfect negotiations, by properly outlining procedures to determine 'reasonable' pricing for goods and/or services being procured at the swiftest possible time. Since basic procedures are in place, eMarketPlaces ensure nothing has been skipped from pre-qualification to order tracking. This concept of perfection occurs when all agencies involved in the negotiation round, are 'compensated equitably', beginning with an identified objective on awarding: Would the lowest price matter? Are there other valid considerations aside from price (e.g., expertise, value-added contribution, financial maneuverability)? Have contingencies been outlined in case macro scenarios change within the fiscal and/or monetary setting? and so forth, and so on. The challenge actually rests in enumerating both tangibles and 'intangibles', and whether there are ways to quantify the latter. Simply put, suspicions or any allegations are best avoided, when these are carefully factored-in prior to a buy and/or sell move.
For centuries, the investing process goes through constant re-shaping. The final analysis tells us that investment growth is fortified when basic principles deployed are directed at winning them.
For queries, e-mail grace.cerdenia@2tradeasia.com or grace.cerdenia@sourcepilipinas.com.
Reinforcing Fences via eMarketPlace Channels
By: Grace Crisostomo-Cerdenia
August 2007
The country went on a roller-coaster ride lately, from inclement global weather conditions to financial markets that went on a roil following US sub-prime mortgage lending issues. Demand for accurate forecasting has become more valuable these days, and only those with keen eyes for details get results.
Several have upped the ante for anticipation and contingency planning, depending on time horizon considered, and likely elements surrounding these circumstances. Similar to ‘reinforcing fences’ however, these come at a cost. More than providing flexible methods to weather forecasters in tracking temperature changes through specialized monitoring systems for example, the important element is that updated tools provide the plus relative to building confidence to help mitigate risks. Simply put, faster solutions are made when people are best equipped.
Realistically, budgets for general businesses are centered on those that provide the fastest RoI (return on investment). Minimal, if not nil attention, has been granted on the backroom side, for simple reasons that these are typically viewed as ‘cost centers’. The argument for business owners, usually boils down on statements such as ‘I should have’ when confronted with worst situations. Macro thinkers however, are able to view on these conditions as ‘challenges’ that will be hurdled, believing things occur for a valid reason. Business models are tested as these go through peaks and troughs of events, to ensure systems and procedures are firmly rooted as conditions unfold. True to form, not all can afford the extra spend, due mainly to tight budgets. Businesses revolve in cycles, and even the sturdiest are not exempt when investment tides change.
When cost and elements linked to anticipated returns are considered, outsourcing’s significance is brought to the fore. Enterprises that go the smarter route are becoming larger in number, specifically those that have underscored the importance of accountability, not only in instances when inevitable conditions happen. Outsourcing also amplifies appropriate ‘check-and-balance’ procedures, especially when decision-makers need to respond fast to market and/or industry trends/changes.
Let’s take a closer look on key essentials prior to forecasting. First, data must be made available fast. Sifting through countless information available from the web is a task that form part of seasoned experts’ list, especially in winnowing-out the most important ones and getting these first-hand from direct sources. Second, variables need to be logically linked (possibly via a mathematical model), especially in establishing correlation and pre-defined timeframe to establish a trend. For example, quarter-on-quarter comparison might be more feasible in case year-on-year data includes one-off items. Lastly, recommendations must be outlined given defined objectives. These are usually derived either with affirmation, or outlining options in case approaches do not work.
Online equities trading platforms for one, allow investors to extract data related to their portfolio. Apart from transactional features available in facilities like 2TradeAsia, fund managers can get themselves up-to-date with information tied to securities they own, and view ledgers that detail transactions, estimated capital gain and dividend declarations, to name a few. Linkages to listed firms are also simplified, as the platform can get themselves linked via listed issues’ Investor Relations arm. Research-related inputs are also accessible, especially for those that scout for fundamental merits in specific issues they intend to own. Sophisticated tools are also available (e.g., price charts), that allow investors to examine proper timing in buying and selling securities.
For transactional business-to-business eMarketPlaces like SourcePilipinas.com, negotiation-related documents can be archived, created and retrieved. Supplier selection and accreditation standing can be facilitated, so buyers are kept up-to-date with their business partners. When correlations between inter-linked variables are established, purchasers can readily decide on negotiation processes, especially when prices are seen to trend higher for the remaining months this year. Less time is required in checking necessary product attributes, and outlining item specifications can enhance processes.
By properly facilitating all admin-related functions through these platforms, people resources can devote time quantifying essentials. So, when major trend reversals happen, think again if you have reexamined contributions from those who work backstage.
Forward-looking mode
By: Grace Crisostomo-Cerdenia
July 2007
This week, all ears are attuned to President Gloria Macapagal-Arroyo’s State of the Nation Address (SONA), specifically on subsequent plans that will be implemented for the remainder this year. What has been visible thus far, is that privatization efforts are bound to be supported, a feat that could allow fiscal authorities attain their earlier estimated budget gap goal. If plans are upheld, these measures will help reinforce investors’ long-term perspective on the economy, with keener attention on borrowing costs’ stability.
For one, we have witnessed momentum improvement in equities trading, and administrative work has been extremely extensive with the roster of capital calls from selected listed companies - from listing by way of introduction to initial public offers (IPOs), stock rights, preferred share float, corporate bond issuances, and capital restructuring, among others. The peso has likewise appreciated further despite local monetary authorities’ move in reducing benchmark overnight borrowing and lending rates, sustaining domestic companies’ capital expenditure strategy. Overall, the financial system has been buoyant, and authorities need to ensure the influx of investments is adequately supported.
Similar optimism has reverberated within eMarketPlaces. Enterprises are selectively moving into longer-term contracts (e.g., one year and up), especially when flexibility is accorded in pricing negotiation routes. Referencing is also made by benchmarking contract costs versus prevailing market quotes from key players, to revalidate price trends, real time. Others embark on operational synergies, especially those that provide the best fit relative to an enterprise’s business model. So how do companies get to this level?
First, decisions must be upheld if company owners are willing to embrace transparency with existing and prospective Purchasing-related trading partners. Here, historical data extraction becomes crucial, as these help leaders digest and correlate information covering selected trading partners’ influence for both direct as well as indirect costs. In fact, those that participated in eMarketPlaces early on achieved greater control in adopting forward-looking strategies, especially in verifying who among suppliers would prevail and participate in their advancement.
Second, defined standards must be formed. Similar to any benchmarking plan, quantification tools constantly evolve as there is no exact science to accurately compute end-user expectations. Assuming an enterprise is engaged in vehicle production, costing can be segmented to specific color element that can help in pricing the final output. Intra-network collaboration is also amplified, especially when Purchasers require assistance from selected team’s proficiency.
Third, take on an open stance as an eMarketPlace isn’t just about buying. Facilities available within these Exchanges have useful systems to assist the sales cycle, part of which includes adopting general (or those accessible to all) and specific catalogues. Others have advanced features to monitor contract compliance, enabling market watchers to get ready alerts before embarking on contingencies. Database accessibility, especially for accreditation, can also be facilitated, specifically for Finance that would like to better understand cash flow disposition.
Overall, historical data extraction help provide the view for an enterprise’s business terrain. More than targeting average savings and sales criteria, ‘intangible benefits’ thrive in eMarketPlaces, specifically those with a forward-looking stance in shaping and re-shaping their enterprise’s model.
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