What is the benefit of a large retail supplier database and how do companies use the data to support growing their spend with reverse auctions?

August 8th, 2008

Reviewing why retailers do not have continuing success when running prior e-procurement events over again

Reviewing why retailers do not have continuing success when running prior e-procurement events over again, one area of commonality is a lack of new suppliers. Another is the price being too high for the same event that has already been built and will result in lower savings the 2nd and 3rd time around.

There is a proper way to insure the sustainability of your reverse auctions going forward. Following these guidelines will also encourage senior management to consider placing more spend under the control of e-procurement tools and specifically reverse auction tools. Armed with a robust retail supplier database and related tools:

1. Conduct a detailed category discovery
a. Learn all there is to learn about the retailers way of doing business.
b. Walk distribution centers and warehouses
c. Walk an array of stores and understand all formats of the enterprise.
d. Compile a list of all corporate categories
2. Rank categories by
a. Total spend
b. Importance
c. Sourcing frequency
d. Quality objectives
e. Look for aggregation opportunities
i. Lighters, lighter fluid, flints, fire sticks.
3. Conduct supplier discovery
a. Rank suppliers
i. Size
ii. Experience
iii. References
iv. Environmental certifications
v. Safety Certifications
4. With all of the above in hand; develop a three year game plan
a. Identify suppliers for each event over the three years
b. Develop savings targets by category
c. Develop a three year time line for all categories
5. Role Play internally the first year for a test category
a. Ask the following questions
i. How will you award the business
ii. Review alternate scenarios
iii. Review savings by scenario
iv. Determine which suppliers will be invited back
v. Determine what new suppliers from your database search will be invited next year

I look forward to your comments.

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