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Will eSourcing work for my category?

Procurement, E-SOURCING, E-AUCTION, E-PROCUREMENT, E-PURCHASING, MARKET DOJO, MARKETDOJO, SOURCING
Blogs, Best Practice, Category Selection Guides

 

If I was to single out the most frequent question, or more specifically, objection, I am asked by procurement professionals when discussing the idea of moving to an eSourcing question, it is “Will it work for my category?”

The sales training that I have received has warned me of the perils of prematurely elaborating, so I have to strongly fight the urge to shout out a gigantic “YES!” (more to come on that later). Instead, I ask what category it is they are responsible for, and work my way to a more softer ‘yes’ through more questions.

You could be thinking, how can I be so confident that it will work for any category? The truth is that beyond the 30,000+ sourcing events that we have seen ran through Market Dojo, across the 150+ categories to draw experience from, the answer is simple. If you can run your sourcing activities today using traditional communication methods such as email, word, excel and telephone, you can use Market Dojo.

The image above shows the process flow for a sourcing event in Market Dojo. Hopefully this should look similar to the approach that you already have when running a sourcing activity. Whether you are running an RFI, RFP and/or RFQ, you will benefit from a centralised repository for: all your tender information, a better audit and compliance trail, better team collaboration, easier succession planning should someone in the team leave and ultimately time and hopefully cost savings.

Did you ask the same about email, word, excel?

I often wonder if you were to sit back and think about the limitations of traditional tender methods, what concerns would you have? How long does it take to compare proposal responses in word format? How do you calculate and amalgamate all of the scoring across many suppliers and stakeholders? Where do you save your information offline? What happens to the data if someone in the team leaves the organisation? How long do you spend consolidating all of the supplier responses? How long do you spend making the supplier responses into a consistent format? I could go on…

We’re not going to beat Microsoft…but we don’t have to, or want to.

Excel is amazing! As a means for collecting and analysing massive data sources, it is hard to beat for the cost, particularly when most organisations have a Microsoft Office licence. We’re not asking you to stop using Excel as there are many benefits to using it, particularly if you have complex pricing detail. Instead, we would recommend that you use Market Dojo and Excel to compliment each other. We saw a client recently have to gather pricing for 6000 separate line items; they used Market Dojo to qualify the suppliers through questionnaires, and captured consolidated high level pricing in the system, accompanied by an Excel attachment for the detail.

What about reverse auctions?

Raising the topic of reverse auctions when meeting with prospects is one of my favourite parts of a meeting; I really think that they are the ‘Marmite’ of the eSourcing world, and it often creates for a very interesting 10 minutes or so. Never does the question of category become more prominent when discussing auctions. Many are very quick to suggest that “they’re not for my category, but they will work for category x”, which is often very quickly responded to with “well they won’t work for my category x, but they will work for category y” and so the chain continues, often to the point where it becomes full circle.

In reality, there are not many categories that you cannot take to an auction, you just need some fundamentals to be in place; typically that will be a defined specification and liquidity (competition). Yet, even if you don’t have these two fundamentals in place, an auction is still possible.

‘Transformational bidding’ where non price elements such as service, lead-time, inco-terms, etc. can be equated to a value, to factor against the suppliers price. A weighted auction will allow for quality to be taken into account, meaning a suppliers rank will be based upon both their price and quality score accordingly, to reward those suppliers who have a better offering.

Even if you only have 1 supplier involved in your sourcing/negotiation, an auction is still possible. A Japanese auction can be used to negotiate with individual suppliers. We have over 50 examples of clients who have ran auctions with just one supplier!

 

Hopefully this may have given you some food for thought if you were still on the fence about eSourcing. And I look forward to the next time I’m confronted with “Will it work with my category?”

 

May 3, 2019

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