The Per Event Paradigm

Add comment January 8th, 2008 David Bush - Iasta

So, you are a CPO and you have decided that using eSourcing technology is a good thing and read some information about auctions that sounds compelling. Now, you have to make some decisions on how you want to implement your plan and drive the best value. Suddenly, the idea comes to you that buying sourcing projects “by the drink” is a good way to pay for what you use and amounts to the perfect plan. Not so fast my friend…you are probably making an unwise decision and here is why.

1. Not committing to the process. By choosing the non-committal route, you are effectively rudderless on eSourcing strategy. The term of having “skin in the game” always comes to mind and without it, you are basically admitting that there is no plan to embrace the eSourcing process.
2. Artificially eliminating opportunities by cost of service and support. When you pay as you go, you have to consider the cost-benefit of every single category opportunity. This becomes a non-stop struggle of trying to assess the situation and potential for savings. Consequently, the uncertainty forces many good categories to drift away.
3. Losing valuable data for tracking spend under management. If you cherry pick opportunities, you are only tracking data on the categories that actually get tapped for eSourcing, which paints an incomplete picture of the strategic sourcing process.
4. Losing the benefit of sourcing automation and efficiency. Again, when you just pluck a few low hanging categories for reverse auctions, you are losing the benefits of knowledge capture and transfer, standardization and process efficiency. This is one of the huge benefits of eSourcing that goes well beyond an auction.

What appears to be good on the surface, actually becomes a self fulfilling prophecy on eSourcing failure. I have seen it happen in the past and the result is almost always the same. There have been exceptions, as evidenced by a new client of ours, who absolutely did not have the ability to go long on eSourcing when they started working with us, but they always had the intention to embrace it when the funds became available. However, most companies that choose this path are doing it for the wrong reasons and the results are predictable.

I also found this article about budgeting that people might find interesting. Budgets are important but should not impede the goal of success.

Entry Filed under: General, Supply Management Best Practices, Technology