Six months and here we are again, eWorld September 2017. I am sure that for the rest of the team at Market Dojo it felt like a bout of Deja Vu having gone for the past 6 years but for myself, this happened to be my first trade show since starting here earlier this month.
Luckily, this time around we stayed in a hotel the evening before so missed the 4am start which I believe is the traditional Market Dojo eWorld routine.
So starting the day feeling fresh at sunrise, we headed down to the QEII Centre in Westminster to set up for the day. I worked my marketing magic to make the stand look pretty great (if I do say so myself) on time for delegates arrival at 8am.
We had the privilege of being situated next to two of our close partners standsProvalido and Per Angusta.
The brilliant Claire Boffey who organises the popular event biannually, ensured all the sponsors had free bacon rolls to prepare us for the big day ahead. Unfortunately, for vegetarians like me, this meant sampling lots of chocolates from various stands which gave me the perfect opportunity to gain an insight into other competitors and procurement solutions on the market.
I think for ‘newbies’ like myself, it was interesting to see the range of people which attend the event. Not everyone is there for new opportunity it seemed, which surprised me (just there for CIPS points!) however the ones which were, showed just how applicable Market Dojo is to the market, as many procurement teams are so stuck in old ways and could benefit massively from using a tool to eSource.
The talk given by Interserve, our client for over a year now, grabbed everyone’s attention. The representatives on the day, Kevin Davies and Mandeep Chana, Spoke about changing behaviour through technology, such a popular choice of topic that the room had to be upgraded to a larger space (We hope this had nothing to do with the “free biscuits” title given in the pamphlet!)
Interserve gave an honest talk about their experience of implementing an eProcurement solution, explaining their hardships along the way with software, communication and processes. However choosing the right supplier was fundamental to their success, yep that’s right… us (MARKET DOJO) and Per Angusta.
Our prize draw for a free month licence for Market Dojo was drawn from a hat by Pierre from Per Angusta and Pete from our sales team. Our lucky winner this time, was Kunal Khanderia from Hilton Hotels.
As the day appeared to come to a close, we had some of our best conversations with people who were really keen to learn more about the world of eSourcing and also some of our other products such as category analysis. This went down very well with a glass of white wine to finish a fun first day at eWorld.
Finally! (nearly finished I promise) before heading off back to Gloucestershire, we went for my cuisine of choice, Italian at Colosseo just a 5 minute walk from the QEII centre for some real food (by that, I obviously mean pasta) before another day back at the office!
If you didn’t get the chance to come to the event or missed us for any reason and think Market Dojo could have been of interest to you, don’t hesitate to get in touch for more information or try out our free sandpit tool here!
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!The 3 Stages of Face-to-Face Negotiation
In many cases where a reverse auction can be used, we recommend that you (the buyer) reserve what is known as buyer’s choice. This means that, although the outcome of the auction is important, it is not necessarily the only factor you will consider when awarding the business.
One option you have, that we see many of our clients do, is bring the top three suppliers in to further discuss the tender opportunity. But what do you do then?
We’ve put together a guide on Face-to-Face negotiation strategy to help assist you with this. You can download the full guide for free by signing up to Market Dojo here, then clicking this link.
This can also be applied should you choose not to run an auction and go straight to the f2f stage of negotiation.
A negotiation can be broken down into three main phases:
Preparation, Discussion & Review
The discussion phase consists of three elements:
This is where you declare your objectives and opening positions. This should obviously be a position from which you are prepared to move and thus should be a relatively high, yet sensible, list of demands.
Here you will gently probe each of the negotiation issues, gaining an overall understanding of the position, without making any commitments.
This is the critical point. At the end of this phase you will either have the makings of a final agreement or negotiations will breakdown.
It is also a good time to understand what went well ,what didn’t, and what could be done next time to improve.
The guide itself was put together by the Market Dojo team, combining their 20+ years of procurement experience to bring you a true value-adding document to ramp up your negotiation skills.
For the full strategy behind face-to-face negotiations, simply register (as a host, for free) here first, then click the link to begin the download:
Face-to-face Negotiation Strategy
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!How to Save €1500 in 37 Minutes on your Next Car Purchase
This is a guest post by Vlado Prosenik from Efekto Pro. Efekto Pro are our consultancy partner in Slovenia. They help customers make purchases more efficiently.
A few months ago, I realized that it was time to replace my car. I was treating it very well; feeding it with the best fuel and oils, getting it serviced regularly, changing it’s tyres when needed, etc. It was returning my kindness with safe routes, comfort, excellent radio sound, and it was not greedy at all. We were good friends. I thought it would be upset to be sold to a new owner. However, as soon as the first potential buyer showed the money, my friend forgot about me.
Quite sad, my friend left me just because of money. I had to find a new car. Since it served me well, I wanted a new one from the same litter. Since I unfortunately hadn’t won the lottery that week (even now, I cannot understand how I didn’t win!), I started searching for the most economical way to purchase a new car.
I checked the range of vehicles to suit my needs, demands and preferences. I found six such cars. I tested all six, obtained bids and negotiated the price for all of them. Some sellers were friendly, others were professional, some were arrogant, some funny, and some were misleading. Nevertheless, all the cars were beautiful, powerful and clean. For each of them I found both positives and negatives. However, all would give me safety whilst driving and all would bring me to a desired destination at the same time. Provided there is a road to get there, of course.
I found a favourite quickly. The preferable order of the other five was also defined quite soon in my head. I was negotiating the price of my favourite very hard. I even used help of some acquaintances to come up with the best price. At a certain stage, even acquaintances were not able to help me with lowering the price. I said to myself: “That’s it.” “Unless … “ “No, stop dreaming, who will participate in an auction for one car, come on, be serious.” “However, it is not a sin if you try!”
Reverse auction! If I can run reverse auctions for my clients, why could I not run a reverse auction for my car?!
The decision was made. I ran a weighted auction, meaning the winning supplier was chosen for more than providing the cheapest price. If I had set the only criteria of price, I would most likely have not been satisfied with the winning car.
Here are the statistics from the auction:
|Participants registered on Market Dojo||18|
|Participants that accepted invitation||14|
|Qualification bids placed||11|
|Number of participants actively bidding||6|
|Total bids placed during auction||34|
|Auction duration||37 mins|
A participant who I had not contacted personally submitted the winning bid. The next day I went to meet the winning bidder and to sign the contract. They were very professional and friendly. I saved about 1500 EUR according to the best offer I have managed to negotiate before the auction. I had received the car more than one month before the promised deadline. And after a few months of driving the new car, we are getting better and better friends.
It is also interesting that quite a few unsuccessful vendors called me after the auction. They were asking which car I bought, and if they can offer the service. Not one negative comment I have received regarding the selection process. Mostly they commented that they could not give a better price and that it was good to have an opportunity to see their rank during the auction.
If I managed to run a reverse auction to purchase a car, for my own personal use (as erratic and tedious as that process can be), then surely there is great opportunity for reverse auctions to bring savings in areas where the competition between providers is developed. You just have to take it the right way!
+386 41 38 00 37
EFEKTO PRO d.o.o.
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!How Top eSourcing Professionals Develop Lots
To help you get the most savings from your eAuctions, one of our partners, Dave Henshall, has written an article providing all the information you need to create an effective lotting strategy.
Lotting is the activity of grouping items efficiently and effectively to maximise participation in reverse auctions. How you structure your lots can have a huge effect on the overall savings achieved due to how easy/hard it is to bid in an event.
The article provides a wide breadth of information covering:
1. An Introduction to lots and lotting
2. Why Lotting is Important
3. How to Develop Your Lotting Strategy
4. Lotting strategy Summary
You can find this article in full on Purchasing Practice here.
Another public procurement price analysis article has made national headlines this week, found here on BBC News.
The Home Office conducted a study into police procurement trends across 20 common items including batons, uniforms and helmets.
I haven’t read the Home Office study in detail, but these kind of reports can err on the side of rudimentary:
Humberside bought police helmets for more than £43 each while most other forces acquired them for under £30.
This can indicate a savings potential and is undoubtedly a good place to start your evaluation for cost reduction opportunities.
However when you simply compare two purchase prices, rarely, if ever, does the analysis also delve into key contractual differences such as payment terms, rebates, catalogue pricing discounts, minimum order quantities, annual purchase volumes, inclusion of delivery costs, what delivery service levels, product warranties etc.
Then you have the question on whether the specifications are the same. Perhaps Humberside has identified a more costly product that leads to a 20% better safety record from head injuries. Might that not justify the additional cost?
There is a long perceived view that rationalisation and aggregation leads to cost reduction. For example, in the same article Policing minister Mike Penning was quoted:
“For too long the police have approached the market in a fragmented way, buying equipment in small amounts and to varying specifications.
“It makes no sense for forces to buy separately when money can be saved if they act together.”
Bigger procurement is not always better procurement
Interestingly Spend Matters UK recently re-circulated an older post of theirs outling how bigger procurement is not always better procurement. Please do have a read as it provides excellent insight that we won’t duplicate here.
What we’ve seen is that many of our clients run reverse auctions on aggregated volumes, rather than spot-purchases. They are very successful in doing so. That said, even very low value auctions of a few thousand pounds have lead to 30%+ savings, so bigger isn’t always better in our view too.
Large spend values attract large suppliers with the notion being procurement teams can exercise their leverage and use economies of scale to secure better pricing.
Lower spend values attract smaller suppliers and generally there are a lot more of them in the marketplace, which can equate to increased competition and better savings.
Perhaps the price differences seen with the police, assuming they are not associated with contractual or specification issues, are less to do with failure to aggregate demand and more to do with ineffective negotiations for their own requirements?
One step forward, two steps back
One adverse side-effect to bundling up contracts into an aggregated demand is that it diminishes competition.
Taking say £200m of spend that is today fragmented across many hundreds of suppliers and bundling it into a single contract prohibits SMEs from retaining business. As a result some may perish whilst others downsize. The large company that wins the contract swells significantly to cope with the demand whilst other large businesses (if there are any) stay as they are or also downsize from losing their portion of the fragmented spend.
Fast forward a year and the market only has one real candidate who can cater for the demand – the incumbent. This becomes a very poor market to negotiate in.
And so the cycle continues whereby it is decided to fragment the contract into smaller packages to increase competition, except this time there isn’t as much liquidity. So we’re back where we started except with worse market conditions.
Innovation triumphs over imitation
As we’ve just noted, consolidated contracts diminish competition. With less competition, there is less imperative to differentiate. There will be fewer SMEs in the market and they are typically regarded as the key source of innovation with their agility and drive to increase market share. Local police authorities will have their hands tied and won’t be able to engage with the SMEs and so those remaining will have little incentive to innovate.
Furthermore, the other suggested strategy in the BBC article was to standardise the products. This again reduces innovation, as the product spec. would be based on what already exists, not would could be. Once that spec. is agreed, the market is closed out to new ideas. This contradicts with the relatively recentreforms to the EU Procurement Directives.
So what should we do?
We should be focusing on driving the market forward and negotiating effectively within that market. A fragmented market can be your best friend, not your enemy. Procure on best value, not just best price. Don’t focus on Purchase Price Variance but on lifetime costs. Improve through innovation.
We could go on but there’s a risk we’re sounding like a Baz Luhrmann song!
Hopefully we make ourselves clear but more importantly, what do you think about this suggested police procurement strategy?
“relating to or denoting a method of pricing a service or product in which a fixed profit factor is added to the costs.”
You could argue that every item or service sold is cost plus. In other words you need to make a profit to stay in business so that everything purchased has to have a margin added to the final sale value, which will be more than the sum of their parts.
The area of cost plus that I would address is where the client has agreed to buy products or services from a supplier and the final price for those products bought is not known. This unknown value will be created from a cost plus relationship to ensure a profit is maintained.
However, if the client continues to pay, where is the incentive for the seller to ensure they are procuring the goods or services at the market price? Surely the client should be ‘on the ball’ and focus on year on year cost reductions although many times complex and varied builds on a contract prevent this. ‘Should cost’ exercises would be a useful tool in a perfect world if we all had the time but isn’t that why you are together with a trusted supplier? Surely the supplier would focus on procurement costs so their sales exercises would be more competitive? You would think so, but what if the market is not so competitive.
In fact, does the cost plus model mainly arise in non-competitive markets dominated by larger players? If this is the case you could draw the conclusion that procurement is not being driven in the right direction due to a number of unbalanced forces (cost plus, lack of competition, lack of customer focus). This bad practice could easily spiral downwards. However will increased globalism be enough to shake up these suppliers or will the customers drive better value? Either way it often seems that procurement in these type of industries can be an after thought that is of little importance. Viva la procurement revolution.
This Saturday (21st March 2015) is a very important day in the world of rugby. Not only are the final three games of the 6 Nations impending, the ball is literally in anyone’s court as the title of champion could go to one of three contenders- England, Wales or Ireland. After England smashes France in the final game (kick off 5pm), we shall be crowned victor (fingers crossed!), and I shall celebrate with a pint of cider in the pub across the road!
We British are notorious for our love of sport, as pointed out by a French intern at Market Dojo a few years ago, who wrote a blog post for us, singing the praises of the British culture in one paragraph then calling us ‘rosbeefs’ in the next! (Just kidding Camélia. We know you love England really.)
Having spent the past month becoming au fait with all things eSourcing and eAuction (like my use of the French language there?), I can’t help but draw parallels between sport and eAuctions. The thrill of watching your home team scoring a try at the deciding game of the 6 nations and the excitement of viewing a reverse auction in real time as suppliers bid on your product/service of requirement- in both results, you become a winner.
As the final gets underway, Ireland, Wales and England all have a chance at becoming victor- this really is anyone’s game to win. The same also applies to the eAuction process were all of the players (suppliers) enter the event with equal chances of winning the tender, determined by how they perform in the auction.
You can be a hero whether it’s scoring the winning goal at an all-important match, achieving the best result for your company and hosting a successful auction (or even as a supplier, winning a huge tender through an open and transparent auction process).
Hopefully England will be able to pull it out of the bag and give England that win we deserve this weekend. If they don’t, I’ll embrace my Irish heritage and cheer for them next year instead!
Competition works! But only if customers want it.
The Slovenian Consumers’ Association (ZPS) has demonstrated that a fresh approach can save money. In cooperation with external partners ZPS conducted an auction for the purchase of electricity and natural gas for households. The result was an average 21% reduction in electricity prices and a 15% reduction in the price of natural gas. 24,000 households joined the “change and save” campaign and will benefit from significant reduction in their energy bills, with the same service level they are used to.
Reverse auctions have become available to both businesses and individuals.
10 tips for creating savings with the reverse auctions:
Auctions by the EFEKTO PRO perform for our clients usually bring savings of between 10 and 40%.
Photo courtesey of tawalker
The one feature of Market Dojo that gets me most excited is the Sandpit area, where we invite you to come and experiment with Market Dojo. Everyone likes the option to try something before they buy it. It helps you feel secure and confident in your purchasing decision. It just makes sense!
A key part of our philosophy is transparency, and we already deliver this in other areas (e.g. pricing). So, we wanted to expand that to show everyone what our product can do, before they reach for their credit card.
For those lovely people that have already made the leap to become fully fledged customers, the Sandpit now offers the valuable opportunity to test different strategies before running an event, and to keep these tests separate to the results of real negotiations.
The Sandpit is a great asset for both these groups. It’s available to all our users, it’s really easy to get started using our intuitive user interface and we offer helpful guides providing additional advice. We’ve even made a video to show how it works!
Once you have your feet in the Sandpit, you can test all the features available in a regular event, including RFQ, Questionnaires, different negotiation strategies, and reporting. You can quickly switch between acting as a Host and acting as a Participant (so you see exactly what your suppliers would see).
So, if you wondered what Market Dojo is all about, but haven’t tried us yet, give our Sandpit a go. It’s free to sign up, there is no obligation. We’re really excited about it, and would love to know what you think.
Come on in and have a play!Big thanks to University of Gloucestershire Digital Film Production students!
We would like to say a massive thanks to Tea, Liz, Sanni and their lecturer Ben, all from the Digital Film Production course from University of Gloucestershire , for their time and skills in producing an excellent new video for us.
For those who haven’t seen it, you can find it on our YouTube channel here: Barney – your average co-worker!
The team came up with several great concepts before bounding on with our preference of the story of Barney, your average co-worker, who is bored, frustrated and generally disillusioned with life in the purchasing office, with all the manual processes and wasted time.
However, upon a fleeting introduction to Market Dojo, he latches on to how it can transform his working life by allowing him to carry out his purchasing activities more easily and more efficiently via a web-based tool.
He quickly shares the benefits with his colleagues who are enormously grateful, resulting in him getting the recognition from his boss that he truly deserves.
It was an absolute pleasure working with the team and fantastic to celebrate the completion of the video with an enjoyable lunch out. We are really pleased with the results and look forward to hopefully working with them again.