So you’ve been asked to participate in an e-sourcing event. Now what?
Whether you’re new to e-sourcing or have plenty of experience, every e-sourcing invitation represents a valuable chance to help your business succeed. By participating in e-sourcing events, you can:
- Win new contracts
- Grow existing accounts and strengthen customer relationships
- Gain crucial visibility with targets and prospects
- Get a clear sense of what competitors offer and a better grasp of your market position
- Level the playing field with sellers of all sizes
- Hone your value proposition to capture follow-on business
Bidders/Suppliers are without doubt very essential to almost every business. Without raw materials to make what you sell or manufacturers to provide what you resell, you will have a tough time growing. There are also many supplies and services your business consumes as part of general overhead, from paper clips to Internet access. In some cases, this relationship can go beyond the usual bid and supply of goods and services you need to do business. Bidders/ Suppliers can also be important sources of information, helping you evaluate the potential of new products, track competitors’ actions and identify promising opportunities e.t.c. Suppliers can turn into partners, helping you cut costs, improve product designs and even fund new marketing efforts. Hence, selecting good suppliers and vendors should be a major part of your growth plan, and so procurers need to roll out efficient and transparent selection processes in order to attract participation from the best suppliers in the market who are most likely going to provide the best value for money spent.
It is therefore essential that suppliers understand the changes and requirements needed before moving forward with any new procurement process or technology. Allowing your supply community to adapt to and embrace the potential benefits for themselves is a sure way to a smooth implementation.
Some of the best practices to be adopted on proactive supplier adoption include:
- Finding suppliers that are open to technology
- Effective and open two way communication
- Ensure that your suppliers are familiar with new processes and tools
The need for effective Communication with Bidders/suppliers cannot be overemphasised. This is will amongst many others help to curb or completely avoid supplier resistance.
Every e-auction event should;
- Clearly communicate the rules of engagement at the start to all concerned and ensure to stick to those rules
- If changes are required, communicate openly to all participants
- Only allow credible suppliers to participate.
- Do not allow separate deals outside of the established process
- Inform all participants within the agreed timeframe of the outcome
- Unbundling of lots is not allowed unless this is clearly specified upfront
- Ensure simultaneous availability of information to all participants
- During the Bidding/evaluation process to follow the parameters of the RFQ.
We have also seen that for those categories where auctions are applicable, the use of online auctions typically bring additional savings. Auctions move the negotiation from a buyer driven competition to a supplier driven competition. In defining if a category is suitable for e-auctions, answers need to be provided to the following questions in order to ensure that bidders/suppliers are being carried along. These questions include:
- Product/Service: are the requirements easily specified?
- Value: is the package being considered for auction of sufficient size to attract competition for its delivery?
- Market competitiveness: supply base, market evolution, and commodity traded category?
- Position of the buyer in the market: Buyer/Supplier dominance in the relevant market?
- Ease of Implementation: existing contracts still ongoing, extensive supplier certification required, etc?
Although buyers are often concerned that the auction sets up the wrong dynamic for a supplier relationship, in many respects the supplier finds the approach beneficial too. From the start the process is more clearly defined and expectations of suppliers are easier to manage. Less time is absorbed in the selling process. Suppliers are able to benchmark against their competitors and understand how competitive their bids are; and they genuinely know where they stand relative to other Organisations. Suppliers should share the same level of information on the process that is being followed and this creates a level playing field for all. Below are some of the typical questions that would run through the mind of a Bidder/supplier before choosing to participate in the process;
- Why use an electronic E Sourcing system?
- What do I need to access the system?
- When are you introducing this system?
- What do I do when a tender is issued?
- What if I need further assistance.
- Will I be able to return a hard copy of my submitted tender? e.t.c.
Competitive bidding has traditionally been the best option for project sourcing initiatives. More recently, spend management / strategic sourcing systems have offered a reverse bid auction process that has worked well for commodities but not so well for the sourcing of services. CPBID Technologies, creator of Total Bid, has developed a process and method for automating the bid process but also optimizing savings. To date, the Multistage Bidding platform has been used for thousands of projects representing the energy, healthcare, financial, grocery, office, education, and retail industries, saving these clients millions of dollars every year.