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Albertsons Procurement

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					SUPPLIER DIVERSITY HANDBOOK
             For
       W/MBE VENDORS




           October 2005
TABLE OF CONTENTS
1) INTRODUCTION TO ALBERTSONS SUPPLIER DIVERSITY PROGRAM ...................................................... 2


2) BUSINESS CASE ............................................................................................................................... 2


3) REGISTRATION AS A MINORITY/WOMAN VENDOR ............................................................................... 3


4) CERTIFICATION OF W/MBE COMPANIES............................................................................................ 4


5) PRE-PROPOSAL RECOMMENDATIONS AND REQUIREMENTS ................................................................ 4-5


6) PRODUCT REVIEW SCHEDULES AND VENDOR SCORECARDS .............................................................. 5


7) CAPITALIZATION CONSIDERATIONS FOR SUSTAINING BUSINESS IN ALBERTSONS ................................ 5


8) JOINT VENTURES AND STRATEGIC ALLIANCES BETWEEN W/MBE AND NON-W/MBE BUSINESSES ..... 6


9) FREQUENTLY ASKED QUESTIONS ..................................................................................................... 7


10) APPENDIX (GENERAL POLICIES AND GUIDELINES FOR ALL ALBERTSONS VENDORS) ......................... 8




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                            Introduction
History and   Albertsons Supplier Diversity Program was formally established as a
              corporate-facilitated program in 2002. Some Albertsons (ABS) divisions
Background    have had a longer history of doing business with minority and women-
              owned businesses (W/MBEs). For instance, Jewel-Osco has twenty-five
              years of experience in this area.
              Chairman of the Board, CEO, Jeff Noodle has stressed the importance of a
              diverse corporate culture. This emphasis is reflected in one of our
              company’s core values, which states: “With an unyielding commitment to
              integrity, quality and compliance, we will build a strong commitment to
              diversity...constantly striving to build an associate population at every level
              that mirrors our customer base, while also developing formats & products
              that meet the diverse needs of our society.”
              The Supplier Diversity Program is a key component of this vision. Our
              entire sourcing staff understands the value of including W/MBEs in our
              business. Being able to offer unique goods and services to our diverse
              customer base is a tangible benefit to our company.
              No single purchasing/sourcing organization has the capacity to carry all
              available goods and services offered by every qualified W/MBE. It is the
              intent of the Albertsons Supplier Diversity Program to review and consider
              business relations with qualified W/MBE companies that fulfill marketplace
              or supply chain needs, at an acceptable cost to our business. Proposals
              that receive top consideration or initiate a successful partnership will
              present offerings specific to the prioritized business goals of Albertsons.

Business      External considerations are one of the key elements driving the need for
              diversity in our company and our product assortment. Offering merchandise
Case          from W/MBE vendors in ABS stores is meaningful for both our customers
              and our company. A unique assortment of products offering regional or
              ethnic authenticity ties into our brand promise of working hard to make life
              easier for our customers by meeting their diverse needs at one location.
              The purchasing of goods and services that support ABS operations (e.g.
              trucking, construction, warehousing materials, information technology
              support, etc.) is another indirect way of supporting economic development
              of minority communities at large. W/MBE companies typically hire more
              women and ethnic minorities than their non-minority industry peers. In
              many cases, these companies are also located in communities served by
              ABS stores. Many of our valued customers may be employed by
              companies supported in part through the efforts of the ABS Supplier
              Diversity Program.
              Albertsons strives to   have well-integrated efforts in promoting community
              outreach. This is not   just in supplier diversity, but also working closely with
              our colleagues in         corporate (internal) diversity, community and
              governmental affairs.    Altogether, it is a business goal for Albertsons to be

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                 recognized in the marketplace as a retailer that values the loyalty and
                 respect of its many diverse customers.



Registration     Registering your company in Albertsons Supplier Diversity database is
as a Minority/   important in pursuing business with any of the Albertsons family of banners,
                 which comprise Albertsons, Jewel-Osco, Shaw’s, ACME, Sav-on drugs,
Woman-           Bristol Farms, Super Saver, and Osco Drug.
owned Vendor
                 Companies can register one of two ways:
                 ELECTRONIC REGISTRATION VIA ALBERTSONS CORPORATE WEB SITE
                 You can access the supplier diversity registration by logging on to
                 http://www.albertsons.com/abs_aboutalbertsons/diversity/supplierdiversity.a
                 sp or by following the links from the www.albertsons.com home page to
                 “About Albertsons,” then “Diversity”. Review all of the necessary steps and
                 complete all of the required information carefully. Failure to include any
                 required information may delay our response to your registration request.
                 Questions related to previous years sales and company financial history
                 serve the purpose of providing ABS with insight as to your suitability as a
                 local, regional, or nationally scaled vendor. It is important to both
                 companies that any deals or contracts are beneficial to all concerned
                 parties. Some opportunities may be either too large or small for a W/MBE
                 company to practically and efficiently manage (See joint ventures &
                 strategic alliances for additional perspective). These are important
                 considerations for the sourcing group responsible for awarding contracts.
                 Therefore, we ask that you provide complete and accurate information.

                 HARD COPY PROPOSALS SENT TO ALBERTSONS CORPORATE OFFICE
                 A hard copy proposal/registration may be mailed to:
                 Albertsons Supplier Diversity Department
                 1500 W. Shoreline Drive
                 Boise, Idaho 83702
                 There is no advantage in sending a hard copy introduction of your
                 company. Certainly, more background and marketing information can be
                 provided, but will not factor into the review process. The same information
                 requested on the Web site should be provided when you send a hard copy
                 registration.
                 Vendors can expect a response confirming receipt of registration
                 electronically or via mail 14 days after submitting all requested information




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Certification   It is the preference of Albertsons to do business with W/MBE companies
of W/MBE        that are currently certified with a recognizable certification agency (e.g.
                NMSDC, WBENC or affiliates, a public sector certifying division or
Companies       municipal purchasing department).
                There are some exceptions that can be considered for W/MBE companies
                that have been doing business with Albertsons for 10 consecutive years or
                more. Certification of your company helps to insure the integrity of ABS
                Supplier Diversity initiatives. Non-certified W/MBEs may submit proposals
                to do business with ABS but may be asked to pursue certification prior to
                awarding a contract.
Pre-Proposal    There are certain requirements and review points that will assist your
Recommend-      company in pursuing business with Albertsons.
tions and
                Required:
Requirements
                      Certification (previously mentioned) or certification “in process”
                       documents
                      Dun & Bradstreet number
                      NAICS or SIC Code for the product/service you are proposing
                      Understanding and compliance with all insurance, regulatory laws or
                       conditions pertaining to your industry, specific product or service.
                      List of references that can support your performance in delivering
                       products or services at the scale that you are proposing. Vendors
                       doing business in the grocery retail industry for the first time can
                       provide similar size project references.
                Recommended:
                      Proof of company’s ability to be “scalable” in the eyes of all reviewing
                       parties. In other words, how much business can your company
                       effectively handle? (See Capitalization Considerations for additional
                       insight)
                      Basic technology and EDI (electronic data interchange) capacity
                      Annual promotional plan.
                Additional Insight About Your Product(s)
                It is important that you demonstrate an understanding of how your product
                fits into the merchandising model for Albertsons. You should present an
                overview that includes the following:
                      Preliminary pricing/differentiation strategy relative to the category in
                       which your product will compete
                      Your plan to deliver product to ABS stores and what type of
                       distribution “bandwidth” you propose


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                        Preliminary, comprehensive market approach information - be aware
                         this could factor in our decision about new item setup and
                         promotional fees, which are typically assigned to most product
                         vendors. Albertsons will consider waiving certain fees for vendors
                         that are investing in their own products via demos, coupons,
                         advertising and TPRs.

Product Review           Albertsons is aware of the effort required to launch a new brand or
Schedules and            product in a highly-competitive retail marketplace. Smaller companies
                         may be at a disadvantage compared to their larger well-branded and
Vendor Scorecards        highly-promoted competitors. To the extent in which W/MBE vendors
                         have prepared a comprehensive marketing and promotional schedule
                         for new products being introduced into ABS markets, ABS will grant up
                         to six full months of sales opportunities before a product is reviewed for
                         renewal. Category managers will engage the ABS supplier diversity
                         team to ensure that a fair evaluation is undertaken when reviewing
                         products that have been introduced through the ABS Supplier Diversity
                         Program. It is expected that W/MBE vendors manage deal structure
                         and promotional schedules exactly as presented during the formal
                         proposal process. Significant deviation from the approved promotional
                         schedule could result in forfeiting this extended period of review.

                         Vendors providing goods and services will be subject to quality and
                         delivery schedules as determined in their ABS contract. W/MBE
                         vendors will be eligible for extended coaching/counsel, if needed, to
                         assist in managing the vendor/sourcing manager relationship.

Capitalization           Delivering goods, services and products for resale in the retail industry
Considerations for       involves significant opportunity costs. Listed below are line items that
                         W/MBEs should address in some form while exploring the opportunity
Sustaining               to do business with ABS. The amounts of capital needed to ensure
Business in              operational/sales success will vary by product and deal volume.
Albertsons               Products For Resale
                         Advertising and Promotional Budget (6-12 months)
                         Distribution, Warehousing, Delivery Costs (regional vs. national)
                         Packaging/Label modifications
                         Broker fees/outside sales commissions (6 – 12 months)
                         On Site Demo charges
                         Potential Reclamation Charges
                         Co-Packer/Manufacturer Invoice payment schedules

                         Products for Operational Support
                         Warehousing/Delivery/Shipping costs
                         Defective material allowances
                         Raw material scaled costs
                         Throughput cost for increased product demand
                         Held inventory financing

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Joint Ventures and    In an increasingly competitive industry it is important for W/MBEs to
Strategic Alliances   form strategic alliances to remain competitive. Properly defined, a
                      strategic alliance is when a large non-minority company strategically
Between W/MBEs        selects a W/MBE outsourcing partner to service a large, prime
and Non-W/MBEs        contractual agreement. This is typically done to be compliant with
                      supplier diversity requirements introduced to the prime vendor in a
                      certain service or commodity contract.

                      Facilitating joint ventures (JVs) and strategic alliances (SAs) can be
                      best accomplished when the sourcing organization has a robust second
                      tier supplier diversity effort. Albertsons engages select tier one vendors
                      for second tier reporting. Tier two compliance scenarios are currently
                      under consideration. W/MBE vendors can pursue JV/SA opportunities
                      independently by developing proposals to ABS incumbents or strong
                      tier bidding companies for such relationships during bid opportunity
                      cycles. The purpose of establishing such alliances is to create a strong
                      value proposition (e.g. regional cost savings, operational efficiencies
                      and dual-brand market penetration opportunity) for the larger vendor. It
                      is recommended that the W/MBE engage the ABS supplier diversity
                      team for coaching when pursuing these types of relationships in the
                      interest of doing business with Albertsons.




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                                                     Appendix
                       (General Policies & Guidelines for all Albertsons Vendors)

Albertsons has comprehensive guidelines for all vendors to maintain efficiency and integrity in its
supply chain. The Supplier Diversity Handbook provides a foundation on doing business with
Albertsons for W/MBEs, however all Albertsons suppliers/vendors are subject to the policies as
stated in the comprehensive guidelines. It is strongly advised that you request and review these
policies and familiarize yourself with their content. You may request this document from the
sourcing manager or Supplier Diversity Department. Of particular note for W/MBE companies:



       Fees & Assessments .................................................................................. 4

       Gifts ............................................................................................................ 4

       Promotional Offers/Allowances & Proof of Performance ............................ 8

       New & Discontinued Items .......................................................................... 9

       Deductions .................................................................................................. 12




Albertsons recognizes the value that diverse suppliers provide the company. It is the goal
of the Albertsons Supplier Diversity Team to facilitate mutually beneficial vendor
relationships. The ultimate goal of the Supplier Diversity Team is to assist W/MBEs and
prepare them to do business with Albertsons. Any questions about general vendor policy
and how they might relate to W/MBEs can be directed to the Supplier Diversity Team.
Albertsons reserves the right to assist W/MBEs in approaching and successfully
navigating the supply chain while maintaining a high-integrity relationship that is both fair
and equitable among every vendor and supplier.



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                                                       Appendix
                                            (Procurement Policies Supplement)
1) INTRODUCTION
      Policy Goals & Compliance .........................................................................                  3
      Albertsons Philosophy .................................................................................              3
      Amendments ...............................................................................................           3
2) GENERAL POLICIES & GUIDELINES
      Albertsons Signing Authority ........................................................................                4
      Fees & Assessments ..................................................................................                4
      Gifts ............................................................................................................   4
      Labor Practices & Working Conditions ........................................................                        5
      Sourcing Specialist Requirements ..............................................................                      6
3) PLANS & INITIATIVES
      Procurement & Merchandising Commitment & Approach ..........................                                         7
      Promotional Offers / Allowances & Proof of Performance ...........................                                   8
      Notification of Cost Change .........................................................................                8
      New & Discontinued Items ...........................................................................                 9
      Program Changes ........................................................................................             9
4) OWN BRAND PRODUCTS
      Our Own Brand Code of Practice ...............................................................                       10
      Intellectual Property ....................................................................................           10
      Packaging & Supplies .................................................................................               10
      Disposition & Use of Albertsons Own Brands .............................................                             10
      Embargo or Bans .........................................................................................            10
      Packaging & Finished Goods ......................................................................                    10
5) TERMS & CONDITIONS OF PURCHASE
      Alcoholic Beverages ....................................................................................             11
      Bankruptcy ...................................................................................................       11
      Billing & Remit to Addresses .......................................................................                 11
      Carrier Unloading Method ............................................................................                11
      Case Weights .............................................................................................           11
      Chain Sales ................................................................................................         11
      Compliance & Product Guarantee ..............................................................                        11
      Credit Checks .............................................................................................          12
      Deductions ...................................................................................................       12
      Delivery Appointments .................................................................................              12
      Distribution Center Invoice Requirements ...................................................                         13
      DSD Invoice Requirements..........................................................................                   13
      Electronic Invoicing / Remittance, Cash Discounts & Payment Term ..........                                          13
      Food Safety .................................................................................................        13
      Freight Collect ..............................................................................................       14
      Identification & Risk of Loss.........................................................................               14
      Inclusion of Minority & Women Owned Businesses ....................................                                  14
      Insurance Requirements ..............................................................................                15


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         Pallet Exchange ...........................................................................................      15
         Perishables ..................................................................................................   16
         Product Quality ............................................................................................     16
         Product Registrations / Certifications ...........................................................               16

      Purchases Calculation .................................................................................             16
      Recalls ........................................................................................................    17
      Receiving Requirements ..............................................................................               17
      Sell by Dates & Product Rotation ................................................................                   18
      Sorting of Goods ..........................................................................................         19
      Supplier Damages & Shortages ..................................................................                     19
      Timing & Delivery Dates ..............................................................................              19
      Uniforms ......................................................................................................     19
      UPC Case Bar Coding .................................................................................               19
      Warranties ...................................................................................................      20
6) NATIONAL RECLAMATION POLICY
      Scope ..........................................................................................................    20
      Handling Reclamation ..................................................................................             21
      Definitions ....................................................................................................    21
      Unsaleables .................................................................................................       21
      Pre-damage Direct Product Costs ...............................................................                     22
      Post-damage Handling Costs ......................................................................                   22
      Reclamation Center Processing Costs ........................................................                        22
      Damage Program: National Brands .............................................................                       22
      Processing Shoots .......................................................................................           22
      Damage Program: Own Brands ...................................................................                      22
      Resets, Callbacks / Guarantee Sale Program .............................................                            22
      Manufacturer Recalls ...................................................................................            22
      Continuities ..................................................................................................     22
      Shipping .......................................................................................................    23
      Warehousing ...............................................................................................         23
      Invoicing.......................................................................................................    23
      Product Reviews / Counts............................................................................                23




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