E-Sourcing Forum » Process integration for eSourcing

Process integration for eSourcing

January 10th, 2008 at 05:53am David Bush - Iasta

Supply and Demand Chain Exec has a fantastic article on eSourcing process integration, which is written by Andy Sealock of Pace Harmon. If you can get past the incredibly unfriendly user obstruction for printing and viewing the article on 7 different pages, you will be able to really get a ton of great information. In fact, I would say that this is the best and most comprehensive content I have read about eSourcing project management.

This comes off my recent post, The Per Event Paradigm, where I tried to dissuade companies from under committing to the eSourcing process. This article validates that principle with many examples of best practices for setting up the proper eSourcing frame work and foundation. I will not steal too much of the thunder from the article, but Andy does say, “a common pitfall is to squander that investment by not executing properly on the associated process integration, and therefore never realize the value projected in the business case used to justify the tool.” Well put.

Some of the key principles that are highlighted include:

Establish Uniform Data Definitions and Provide Training
Build Data Collection Requirements with the End Result in Mind
Data Attributes To Capture for Project Management (including project status levels)

The final page also goes into best practices for eRFx and reverse auctions, which are always good to refresh and understand. One of the comments he makes is:

Companies can better leverage e-sourcing tool auto-scoring capabilities for vendor proposals by structuring as many requirements as possible in the form of binary (yes/no) answers, or requiring the vendor to enter a specific value, or choose from a list of multiple-choice responses. This improves evaluation process efficiency as the assignment of weights to these requirements can be built into the tool ahead of time. The tool will then apply the appropriate weights to vendor proposal responses and auto-score them without manual intervention.

I do agree with this principle, but am not sure the practice can be enforced consistently. It is like telling people that an auction should be awarded to the lowest bidder because all other factors have been normalized. This is true, but very difficult to accomplish in tight time frames and other unknowns.

The article ends brilliantly:

Process integration considerations for a successful e-sourcing tool rollout may seem like a substantial amount of work (and it is), but in reality it is a small investment relative to the payoff received in the form of enhanced efficiency and effectiveness from the sourcing process. With significant dollars and time on the line, it is vital that the enterprise plans ahead and allocates sufficient priority and resources to process integration when making a decision to implement an e-sourcing tool.

Entry Filed under: Functionality, General, Project Management, Reverse Auctions, Supply Management Best Practices, Technology, e-RFx

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3 Comments Add your own

1. Eric Strovink | January 11th, 2008 at 9:39 am

“Companies can better leverage e-sourcing tool auto-scoring capabilities for vendor proposals by structuring as many requirements as possible in the form of binary (yes/no) answers, or requiring the vendor to enter a specific value, or choose from a list of multiple-choice responses.”

This strategy might work for sourcing screws, but for complex commodities it is a dangerous trap. My company declines to answer a large number of RFPs because we can tell up front, just by looking at the RFP and its narrow-minded perspective, that our “automated score” won’t get us past the first round. The prospective customer has already (foolishly) narrowed his choices and his questions to the point where he cannot even consider our approach.

I’m also amused at “Build Data Collection Requirements with the End Result in Mind.” This sounds terrific, but in a complex RFP situation, you don’t know, and cannot know, where the data will take you. Rather than spending endless hours in committee meetings trying to decide what questions to ask, why not run a quick RFI round to figure out where you stand, and what data and solutions you might be missing?

The same incremental approach holds for data analysis. No fixed data schema can anticipate the queries and data organizations that will be needed in future, so no matter what you do, the data warehouse you build will be inadequate. Assume that you will need to create new schemas and new datasets on the fly, on a more-or-less continual basis, or your grand vision for data analysis will falter.
2. the doctor | January 11th, 2008 at 10:50 am

I have to agree with Eric … especially since I devoted a blogologue last month to blasting technology RFPs, which can be found here:

http://blog.sourcinginnovation.com/2007/12/06/the-doctor-on-technology-rfps-dont-put-the-cart-before-the-horse.aspx
3. Greg | January 11th, 2008 at 2:39 pm

Expanding on Eric’s point one line (in the article) further: “This improves evaluation process efficiency as the assignment of weights to these requirements can be built into the tool ahead of time. The tool will then apply the appropriate weights to vendor proposal responses and auto-score them without manual intervention.”

A problem with this approach is that these requirements and the ‘ auto-scoring weight’ applied to each is almost certain to change once the bid analysis gets underway.

Auto-scoring based on a pre-set list of requirements can help when conducting very basic analysis (price, incumbency values, etc.), but for more strategic spends, with many (potentially competing) stakeholders, and strategies that go beyond simply buying something (should I be buying parts or assemblies, materials or finished product, labor or expertise), there is significant value to being able to create new requirements/rules on the fly, and analyze these requirements with a variety of ‘weights’ as new information and options are uncovered and new priorities emerge. Baking these requirements and their corresponding scoring weights into your process or esourcing tool before the sourcing event begins can severely limit your analysis flexibility and drive you to the wrong conclusions.