E-Sourcing Forum » The 7Cs Cheat Sheet

The 7Cs Cheat Sheet

April 25th, 2007 at 05:00am David Bush - Iasta

Many people often wonder (especially eSourcing newbies) what the criteria are for a good reverse auction sourcing event. Since billions and billions of spend are negotiated through reverse auction technology every year, these rules have been developed and refined over time. Honestly, I do not even know the origin of this list or any of the changes it may have gone through over time. I suspect this was some of the original FreeMarkets marketing collateral that could fill an Olympic sized pool. I do know that I have seen it around enough to consider it public domain.

The 7Cs Category Cheat Sheet

Contractually available
Clearly definable requirements
Competitive supply base
Commercially attractive spend to bidders
Compressible margin
Complete data set
Commitment to process

These are all very good points to address in your decision process. #2 and #3 are probably the most important to understand and account for, as I have stated before. I strongly feel that #5 (Compressible margin) is an admirable but not required goal. Achieving price transparency in rising market conditions is just as successful as getting 14% on your office supplies event. At one point or another, you will be required to focus on these 7 concepts and the amount of savings which is captured and implemented will be directly correlated to the adherence of these rules.

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Entry Filed under: General, Reverse Auctions, Supply Management Best Practices

2 Comments Add your own

1. Mark Usher | April 26th, 2007 at 10:31 am

You know it’s funny. The 7C’s list is just another example of something we should never forget, that is that regardless of technology factors the fundamentals of procurement never change. Back in the “old days” when I was a procurement practitioner at GE we learnt that basically there were 3 ways to obtain pricing for a purchase – (1) published price lists, (2) competitive bidding or (3) negotiation. And of course we were also taught that in some cases you would use a combination of (2) and (3). With regard to when to use competitive bidding we were taught that four of the main factors to consider were (1) sufficient dollar value of the purchase, (2) unambiguous specifications, (3) an adequate number of competing sellers, and (4) willingness of the supply base to take part/enter into a contract. All of these four criteria are in the 7C’s above. My point is that as organizations look to develop top notch procurement talent they should ensure that sight is never lost of the fundamental procurement principles that underpin the technology. Make sure that people aren’t just taught when to use reverse auctions but when to recognize a competitive bidding situation when they see one. As my old boss at GE would say “without the fundamentals we’re at the mercy of bits, bytes and user guides”.
2. David Bush - Iasta | April 26th, 2007 at 11:29 am

Great points, Mark. As usual, GE is at the root of many of business best practices and had already developed the human methods that are now deployed through technology today.

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