Incumbent and new suppliers can sometimes be reluctant with a reverse auction. The most important advice to remember when dealing with these types of supplier situations is: communicate, communicate, and communicate.
This point cannot be stressed enough. Many feel that by utilizing an online sourcing tool, all communication only takes place electronically. The e-Sourcing tool should facilitate communication, not replace it. It is important to still maintain professional relationships with your bidders and stakeholders through one-on-one meetings or phone conversations. Before initiating any online sourcing initiative, suppliers should be notified about what they will be receiving and what to do with that information. This also gives you the opportunity to minimize any fears and preconceived notions they may have about online sourcing technologies. The Sourcing Team should also properly monitor suppliers’ progress on different tasks set out for them to do, and follow up with a phone call whenever they are not being responsive. This will ensure maximum understanding and participation from suppliers.
Here are some key times that you should communicate with your suppliers.
• before an invitation to participate in an auction, notify them of the upcoming event
• after the invitation is sent, confirming the supplier received it and asking if they have any questions
• when there are dramatic changes to the RFQ including new deadlines, dates or specifications
• 24 hours prior to the auction to verify participation and answer any open questions
• during the auction if there are noticeable issues with a supplier (like not logging in, logging off too soon)
• after the auction to communicate the award decision
Clarity and communication are keys to not only a successful auction, but to maintaining strong relationships with potential suppliers who don’t win.
Simple steps like these will drastically reduce the risk of event day issues and will keep suppliers interested in your business later, as they will feel the process was fairly managed.
Recently, I’ve had numerous conversations with prospects and current clients where the conversation turned to a familiar topic: What are the key selling points to increase use and adoption into business units who are not using eSourcing effectively?
Here are a few short bullets to provide you with a strong business case. These are items that we continue see that sell eSourcing internally as an enterprise solution.
Ability to run reports at a divisional level, as well as the parent company, through the use of project classifications.
By inviting a divisional lead to each sourcing project, or by setting a divisional lead up as a domain administrator, divisions can share upcoming sourcing projects with the ability to aggregate / leverage spend when appropriate.
Each division can have representation to view and score RFPs for a group decision
Divisions have the ability to create customized co-brands all pointing to a single domain. This allow each group to have a their own logo for suppliers but all data is sharing a single instance to manage all project data and reporting.
Ability to centralize a supplier database for all divisions so that they can share supplier information leveraging relationships and low cost vendors.
Standardize supplier communications through email templates, RFP structure, Terms & Conditions documents as well, as what information is collected from suppliers for each sourcing project.
Ensuring corporate compliance is being met through reporting an auditing of projects.
eSourcing can fundamentally improve your process, efficiency and coordination as a team. These in particular would be classified as the third tenant of eSourcing benefits – knowledge transfer and collaboration.
OGCs everywhere are finding that their budgets are not immune to the economic downtown. Concurrently, the evaporation of hundreds of millions of dollars in “deal” fees on Wall Street has many of the law firms scrambling for new business in other practice areas. It’s a great time to be sourcing legal. However, you have to be careful in the way you approach this category and the players involved.
The relationships and confidence your General Counsel has with all of the firms they work with has a higher value to them than simply saving a few bucks. In order to be successful in this category, you have to earn the confidence and trust of your OGC.
By that, I mean the Office of General Counsel (OGC) needs to have a high level of confidence that the insertion of Strategic Sourcing will not, in any way, materially impact the relationships that office has with outside counsel – particularly their “A-Team” of law firms.
So what is the best method to approach this category?
The most successful strategy is to spend 75% of your time on building relationships with the OGC and his team to understand their needs and firm relationships. From that, you will have a better understanding of what they value and will not change. A General Counsel’s level of comfort that you “get it” is directly correlated to how deep into the spend you will get. So, after thorough relationship building, you are left with 25% of the project or areas of spend that you can begin to do tactical sourcing projects. Take a look at litigation support service as a good starting category to source and begin building that bridge to strengthen the confidence and relationship with your OGC.
Many companies negotiate small package programs to cover the documents in small packages, but how much consideration is given to those shipments with weights between 200 and 300 pounds.
Normally a shipper will tender those shipments directly to an LTL carrier along with other shipments. These shipments are known as minimums in the LTL industry and are either tendered loose or stacked on a pallet and shrink-wrapped.
These shipments can create problems in handling simply because they command an allotted spot with other LTL shipments. They are normally stripped from the pallet and placed in holes between shipments and essentially scattered about the trailer until they are handled again.
Most small package courier companies in the US offer other services such as multi-weight and hundredweight programs geared to the shipments over 200 pounds that are handled within the small package system.
It makes total sense for an organization to look at these additional services provided by US small package couriers since most LTL carriers are shying away and pricing accordingly these type of shipments since they demand a higher degree of handling.
A complete review of your order picking practices must be done in order to reveal if it is cost effective enough and not too labor intensive to move LTL minimum shipments over to multi-weight and hundredweight programs that are offered by US small package couriers.
e-RFx, likely one of the most common acronyms in the procurement, sourcing, and related literature, does not stand for anything in particular, as the X can be a placeholder for I, P, Q, or B which stand for Information, Proposal, Quote, or Bid (though the latter is primarily used in the public sector).
Some benefits of the e-RFx process include:
Sourcing Cycle Time Reductions
An information gathering and analysis cycle that used to take months can now be completed in a couple of weeks as web-enabled e-RFx tools allow for the instant sharing of documents between an organization and its suppliers.
Centralized Repository
One of the most significant benefits of an e-RFx solution is the centralized data repository that allows for all of the organization’s supplier and sourcing related information to be stored in one common location and accessed by all relevant organizational stakeholders.
Collaboration
e-RFx technology can be one of the most significant enablers of collaboration between team members, stakeholders, and suppliers – as all parties involved can come together through the use of a single tool to share information, ask questions, and receive a response.
The best way to ensure that your e-RFx is accompanied by all of the benefits it can bring is to employ best practices. Some of the best practices that can be employed include:
Communication with Suppliers
After the RFx has been sent out to the suppliers, follow up with a phone call to make sure they received it, can fully access it, and understand what they have to do to respond. Be sure that they clearly understand any specialized or customized requests and that their questions get answered promptly. Also be sure to follow up with them immediately after the award, even if they lose, to help them understand why they did, or did not, receive an award and what they can do to make them more attractive as a supplier in the future.
Understand the Requirements
Be sure to understand the technical specifications and requirements, baselines, and demand forecasts. Solicit input and feedback from all key stakeholders and be sure to include all of the information in the RFx up front to insure that the bids received are accurate and that the suppliers will be able to deliver to spec.
Manage the Process
Keep on top of the process from start to finish. Follow up with internal stakeholders regularly, follow up with suppliers in a timely manner, start the analysis phase as soon as the reply deadline has passed, and make the award decision quickly.
For more information on the e-RFx process, it’s benefits, and associated best practices, see the e-RFx for Total Value Management: The Strategic Sourcing Workhorse wiki-paper over on the e-Sourcing Wiki. In addition to more detailed information on a successful e-RFx process, it also overviews some of the internal and external pressures that the e-RFx process can address in addition to basic e-RFx requirements.
I have previously profiled some of the best practices for a reverse auction process. In the final point, I mentioned that better communication with suppliers would help build confidence (and thus participation) in the process. Here is a real example of what happens when most of the rules and suggestions from last week are disregarded. I originally wrote this as part of the eRFx Wiki Series.
Profile: A global, multi-billion European pharmaceutical company determines the need for a large scale IT services procurement. An RFP is issued to gather information and pricing from a global pool of potential vendors. It is estimated this problem is costing the company millions per year in loss.
Problem: A sourcing team and committee are assembled and the first version of the RFx process is created. The document sent to suppliers is over 150 pages long with highly detailed questions regarding all aspects of the technology deliverable. Vendors can quickly deduce that the line of questions show a total lack of comprehension of problems from the buying team with no perceivable direction for the project or understanding of the solutions being requested. Essentially, the buyer is requesting the supplier to spend significant time and energy to respond to questions that have little chance to result in any business.
Result: Most qualified suppliers are able to quickly surmise that the buying team has gone into this project without doing proper research and can conclude one or multiple of the following:
There is no budget for this project
The questions are so onerous and detailed that a supplier (or incumbent) has already been chosen and the data is being collected to make it “official”
The buyer is going through a price discovery exercise to create leverage against an incumbent
This will never be awarded due to the lack of understanding on the front end
The questions are so wildly variable that the supplier can forecast a potentially unprofitable/undesirable client
Once the RFP has been issued, most suppliers decline the invitation to bid. This results in a critical loss of supply base, reducing the available solution pool to unacceptable levels. Of the bids submitted, none are comparable side-by-side, making all of them useless in current form.
Eight months after issuing the request, the buying team formally announces to the entire supply base that the project has been permanently canceled. Internally, the waste of time and resources of the buying team creates such poor results that it may take years for the initiative to regain effective standing again.
Solution: The buying team should have taken a milestone based approach where an initial survey was issued to gather basic information and build knowledge internally about the marketplace and possible solutions or alternatives to traditional thinking. Once a deeper understanding was built, a subsequent RFx would be generated to follow up unresolved issues and deal with a more qualified group of suppliers. At this stage, the internal buy-in would be approved and communicated to the supply base to convey confidence and keep suppliers motivated in the process. As the bid methodically moves from stage to stage, each supplier that continues the process knows that they are competing equally and the investment being made will have a positive return on investment. Ultimately, every bid is measured by the end result and is affected by the number of companies that desire the business while remaining capable to perform it.
A generally accepted (and obvious) “best practice” is to procure services via a robust competitive methodology. In general, this is achieved by issuing a comprehensive request for proposal (RFP) to each of the potential vendors for that service. The practice has now become so common that many organizations have developed a standardized template (or templates) and are able to rapidly churn out RFPs to meet the demands of its business unit customers. This semi-automated approach accelerates the overall procurement timeframe and enables the organization to rapidly achieve superior results for the procurement of commodity products and services. Unfortunately, as with any automated process, this approach has also led to a reduction in critical thinking that is applied to each RFP.
Hear, Hear! This is precisely the point I was trying to make in the doctor on Technology RFPs: Don’t Put The Cart Before The Horse!, although I was restricting my attention to technology RFPs at the time. “Filling in the blanks” on a template isn’t sufficient for large and/or complex projects. The RFP needs to be carefully composed if you are to achieve maximum value from it. That’s why it was nice to see the article Beyond the Template over on SourcingMag.com which outlined some best practices for:
effectively creating a competitive environment
clearly defining the services being procured
enabling the objective evaluation of vendor responses
achieving optimal terms, conditions, and pricing in the competitive environment
The article may be services centric, but it still has great advice.
Creating a Competitive Environment
Accentuate the positive
Why should the supplier want to engage in a relationship with you?
Clearly specify what you hope to achieve
What are your goals? What do you require from the supplier?
Enable the vendors to differentiate themselves
Be sure to allow some open-ended responses. Check-the-box, multiple-choice radio-buttons, and fill-in-the-blank does not leave much room for vendor differentiation.
Ensure the vendors understand your environment
How do you work? How will the relationship be managed? What do you expect from a supplier?
Emphasize the importance of the transition period
If you are transitioning away from a current supplier or a current process, be sure to explain how the transition process is going to work and what you expect from the supplier.
Defining the Services
Know what you want
An RFP should not be used to gather information to help the enterprise decide what it would like to procure — it should be used to gather information about what the organization is going to procure and how it is going to go about the process.
Define the boundaries
If you are procuring a product, who is managing the transportation? If you are procuring a service, what capabilities will the supplier be providing, what capabilities will you be retaining, and how do you define the break-points?
Define the measurement criteria
How will the supplier’s performance be measured?
Put yourself in the vendor’s shoes
Read the RFP from the viewpoint of a supplier. If there is anything that requires clarification, then clarify it. If you’re unsure if it is clear or complete enough, have an uninvolved third party (such as a colleague in another department) review it.
Objectively Evaluating Vendor Responses
Establish discrete requirements
What do you need at a minimum to consider a supplier? If you are unsure, do a multi-round process where you ask for general proposals on how a supplier will solve a problem, followed by a request for specific proposals once you have selected an approach.
Weight the requirements according to their relative importance In order to score the proposals to select a winner, it is important to give more weighting to key factors.
Define the proposal pricing format
This will allow you to compare proposals apples-to-apples.
Achieving the Best Buy
Make it clear that RFP responses are contractually binding Of course, this only applies to the final RFP/RFQ in a multi-round process.
Use contract-ready requirements in the RFP This will prevent snags in the negotiation.
Don’t put off until later what you can do now
Do your best to make sure that the requirements in the RFP address all key considerations. After all, how likely are you to receive favorable terms regarding any items you forgot to address once you enter into a deal and lose the competitive environment?
This post originally appeared on ESF on March 12th, 2008.
How many bidders do you need for an electronic auction? There are a variety of “expert” opinions on this question. Is it three, four, five? I have heard all of these recommendations. The correct answer is: at least two. But the actual number depends.
I have experienced circumstances where two bidders were plenty. It was a sellers’ market. There was significant over capacity, and the two bidders were hungry. They fought for the business in a bidding war, and the auction delivered significant savings. Conversely, I have heard of events where there were three, four or five bidders with little competition. It was a sellers’ market with limited available capacity. The bidders were satisfied with their market share and unmotivated to bid aggressively. In this situation, an auction might deliver little, if any, savings and sometimes even result in a premium!
A competitive market assessment is the key to determining the “right” number of bidders. This is best achieved by first doing an RFP where you collect preliminary pricing. (I always tell the prospective bidders to submit feasibility level pricing. However, I also state that I reserve the right to award based on these bids. That keeps the proposals serious.) The RFP responses allow the buyer to assess the degree of competition for all items in a sourcing event. You may have three potential bidders, but if the incumbent is low bidder at your current price and the other two aren’t even in the ball park, you will be hard pressed to achieve a savings. I encountered this situation while coaching an event for injection molded parts. After the RFP, we determined there was insufficient competition among the three potential bidders to proceed with an auction. Instead, we identified additional sources and collected preliminary pricing from them. Although this delayed our award by a few weeks, we ended up with a successful auction delivering a 10% savings. It was well worth the wait!
There is no magic number. You need at least two bidders and, most importantly, you need a number that will provide sufficient competition given current market conditions. This will vary from commodity to commodity and from year to year. The buyer should always assess the current market conditions and verify that there is sufficient competition before proceeding with an auction.
Tomkins Associates released some survey results from a recent study they did regarding supplier relationship management with Asia.
With the promise of capitalizing on the low cost labor in Asian counties, businesses have been in an incredible rush to capture the economic benefits. However, companies that do not do their homework are often surprised to find that the business practices they are accustomed to in North America do not work as well in Asia.
In the report, which was authored by Bruce Tomkins, Colin Maxwell, Steven Ganster of Tomkins, highlights of the top 10 lessons learned are summarized.
1. Have a presence in the area and at the sourcing company.
2. Obtain expertise in the complex and varied rules and practices of Asian countries and companies.
3. Pay particular attention to product quality.
4. Be prepared to accommodate extended lead times.
5. Understand the importance of building long-term business relationships with Asian suppliers.
6. Fully understand supply chain capacity and potential constraints that may create barriers for delivery from Asian suppliers.
Most of these are things that can be analyzed upfront through the usage of RFx surveys, although final analysis will certainly need to be qualified and confirmed onsite and off line.
Additionally, many organizations can take advantage of advanced sourcing optimization by addressing each of the supply risks as different constraints in a scenario model. These can all be layered together, or separated by importance. Through the process of collecting information and resulting bids, a sourcing team can determine the best subset of suppliers quickly, before making final judgment and award.
It has been a very long time since I wrote a summary of what is going on, over on the ESF sister site – eSourcingWiki. Since many are now taking long weekends, or full holiday right now, today is a good time to bring attention to what exactly is going on over there.
The wiki series are broken into 4 main categories: The Basics, The Technologies, The Methodologies, Global Sourcing Primers. Within each header category, there are numerous papers on various subjects. At last count, there were 32 (yes, 32!) series available.
**Corporate Social Responsibility – A Sustainable Solution
**Low Cost County Sourcing – A Blogger’s Perspective
**An Introduction Global Trade? – The Basics of Global Trade
**An e-Procurement Primer – 9 Steps to Procurement Success
**A Supply Chain Finance Primer – Financing Your Way to Success
**A Customs and Security Primer – Keeping the Global Supply Chain Secure
**A Free Trade Primer – Global Tax Relief
**A Regulatory Compliance Primer – Keeping it Legal
**Supply Risk Management – Mitigate Risks and Reap Rewards
**Supply Chain Fraud – The Biggest Risk to Your Supply Chain?
So, eSourcing Forum is sort of like a crowded sports bar with a million TVs and every game going…right next to no closing time, rowdy, Rush Street neighbor where glasses are being thrown and people are dancing on tables. However, ESW is like a quiet, locals only, coffee shop serving up some of the best java in town. Take some time this summer to look over the vast ocean of supply chain and spend management topics available on the site. In fact, if you like it enough, you can get behind the bar and start making some drinks, yourself.
Tomorrow we will highlight the newest wiki – Strategic Services Management
Managing Iasta’s user group conference, reSource ’08, was much, much easier this year thanks to SmartSource SRM. Yes, its true, a marketing professional used an eSourcing application. I used SmartSource SRM to collect information and negotiate favorable rates for our conference facility. This included meeting rooms, guest rooms, parking and wireless Internet access, among other things. The process saved me vast amounts of time, not to mention providing direct benefits for our attendees.
After I confirmed the facility, I expanded my use of SmartSource SRM to communicate with Iasta’s potential attendees. This is where I benefited the most. Once I organized my invitee list by customer, I was able to create standardized emails to announce details about the conference’s dates, agenda or other important information. I then used SmartSource SRM to manage attendee registration, payments and conference activity participation.
Now that reSource ’08 has concluded, I’m surveying the attendees about their experiences so we can improve next year’s conference. I’m also distributing post-conference information to conference attendees through SmartSource SRM. This step is very easy since all the attendees are already SmartSource SRM users (often called ‘suppliers’ when used in a sourcing project).
Though this year’s conference is over, the really big benefits will come in the future. I am in the process of helping coordinate our European reSource ’08 conference that will be held in October in London. And, I also have next year’s, not yet announced, reSource ’09. I’ll simply reuse all my recent project work as templates and make a few adjustments to account for new information. And if I have someone else helping out, they can easily see the project’s history.
Most marketing professionals reject the use of eSourcing for marketing initiatives. Perhaps they think it stifles creativity. I think it helps stimulate creativity. By developing repeatable processes for certain areas, I have more time to focus the areas that need creative energy. Also important, not all marketing projects need to be auctions, many are RFx surveys. Non-auction projects add just as much value. Categories that are great candidates for marketing sourcing projects include meeting/guest room rates, giveaways (pens, bags, shirts, etc.), limousine services, media, printing … among numerous other possibilities.
A generally accepted (and obvious) “best practice” is to procure services via a robust competitive methodology. In general, this is achieved by issuing a comprehensive request for proposal (RFP) to each of the potential vendors for that service. The practice has now become so common that many organizations have developed a standardized template (or templates) and are able to rapidly churn out RFPs to meet the demands of its business unit customers. This semi-automated approach accelerates the overall procurement timeframe and enables the organization to rapidly achieve superior results for the procurement of commodity products and services. Unfortunately, as with any automated process, this approach has also led to a reduction in critical thinking that is applied to each RFP.
Hear, Hear! This is precisely the point I was trying to make in the doctor on Technology RFPs: Don’t Put The Cart Before The Horse!, although I was restricting my attention to technology RFPs at the time. “Filling in the blanks” on a template isn’t sufficient for large and/or complex projects. The RFP needs to be carefully composed if you are to achieve maximum value from it. That’s why it was nice to see the article Beyond the Template over on SourcingMag.com which outlined some best practices for:
effectively creating a competitive environment
clearly defining the services being procured
enabling the objective evaluation of vendor responses
achieving optimal terms, conditions, and pricing in the competitive environment
The article may be services centric, but it still has great advice.
Creating a Competitive Environment
Accentuate the positive
Why should the supplier want to engage in a relationship with you?
Clearly specify what you hope to achieve
What are your goals? What do you require from the supplier?
Enable the vendors to differentiate themselves
Be sure to allow some open-ended responses. Check-the-box, multiple-choice radio-buttons, and fill-in-the-blank does not leave much room for vendor differentiation.
Ensure the vendors understand your environment
How do you work? How will the relationship be managed? What do you expect from a supplier?
Emphasize the importance of the transition period
If you are transitioning away from a current supplier or a current process, be sure to explain how the transition process is going to work and what you expect from the supplier.
Defining the Services
Know what you want
An RFP should not be used to gather information to help the enterprise decide what it would like to procure — it should be used to gather information about what the organization is going to procure and how it is going to go about the process.
Define the boundaries
If you are procuring a product, who is managing the transportation? If you are procuring a service, what capabilities will the supplier be providing, what capabilities will you be retaining, and how do you define the break-points?
Define the measurement criteria
How will the supplier’s performance be measured?
Put yourself in the vendor’s shoes
Read the RFP from the viewpoint of a supplier. If there is anything that requires clarification, then clarify it. If you’re unsure if it is clear or complete enough, have an uninvolved third party (such as a colleague in another department) review it.
Objectively Evaluating Vendor Responses
Establish discrete requirements
What do you need at a minimum to consider a supplier? If you are unsure, do a multi-round process where you ask for general proposals on how a supplier will solve a problem, followed by a request for specific proposals once you have selected an approach.
Weight the requirements according to their relative importance In order to score the proposals to select a winner, it is important to give more weighting to key factors.
Define the proposal pricing format
This will allow you to compare proposals apples-to-apples.
Achieving the Best Buy
Make it clear that RFP responses are contractually binding Of course, this only applies to the final RFP/RFQ in a multi-round process.
Use contract-ready requirements in the RFP This will prevent snags in the negotiation.
Don’t put off until later what you can do now
Do your best to make sure that the requirements in the RFP address all key considerations. After all, how likely are you to receive favorable terms regarding any items you forgot to address once you enter into a deal and lose the competitive environment?
This is great advice and, if you have the time, the full article is worth the read.
SCDigest ran a commentary recently which spelled out five recommendations for improving your results for eSourcing.
Prioritize The Trinity Of Reliability, Quality And Price
Very true, eSourcing does not change what you would normally do when going through a sourcing exercise, it just enhances it. If you sense the loss of a critical milestones, recalibrate and get it right.
Use e-Sourcing Strategically
SCD claims here that not all projects are suited for eSourcing. This is a classic trap and not true. It is true that not all things should be reverse auctioned, but teams should get used to using other tools like RFx and optimization for specialized opportunities. Additionally, the sourcing team should be capturing the spend information to maintain quality reporting in the management dashboards.
Provide Clearly Defined And Relevant Specifications
Again, to point one, have good specs whether you are on or offline line and issuing a bid. Otherwise, you should just “re-order” and not “source”.
Focus On The Quality, Not The Quantity Of The Supplier Pool
Here is a good point and where your sourcing organization needs to get serious about using RFx technology to the fullest of its capabilities.
Encourage Suppliers To Participate In Shaping Negotiating Terms
Using collaborative bidding tools like multi-round RFx or optimization allow a much more interactive bidding experience and where suppliers stay engaged and productive for the entirety of the project.
Don’t forget the most important one!
Utilize your eSourcing vendor for high quality support and guidance in eSourcing best practices. In all likelihood, they have already been there and done that, with regards to the problems that you are staring down.
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.
The Doctor, who runs Sourcing Innovation blog, is never short on heavy hitting analysis. I particularly like when he takes on topics in eSourcing (big surprise). Last week, he had an in depth breakdown of the core functionality that most think of for eSourcing -eRFx/eAuctions. Additionally, you will notice his theme of the 12 days of X-emplification and there are others days which have great information on topics such as spend analysis and contract management.
From his prologue, Michael sets up the series with, “This year, in the spirit of giving, and in the spirit of Questions to Ask your Optimization Vendor, the doctor exposes the elephants in the room (Part II), and the doctor goes mental (on Auctions and on Optimization), I’m going to give you twelve posts on twelve different sourcing and procurement technologies and services that expound upon the questions you should be asking, the answers you should be expecting, and, most importantly, why, so that when you set about choosing a technology to help you with your sourcing and procurement challenges, you choose the right one.”
Needless to say, his posts are packed with actionable information and, as should be expected, not light on the criticism of any vendor technology that lacks what he feels is critical for success. I considered offering some analysis of my own, but his spiked eggnog version of holidays, speaks for itself. My only recommendation is to take his analysis on each technology that applies to your company and reformat it for your own needs and challenges. These are worth saving.
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