I met with a local retailer last week and we were discussing how to run high quality retail e-neogtiation events during an interesting white board session. This author has posted on this subject before. After the conversation with the aformentioned retailer
E- negotiation events have been around since the late 1990’s and are commonly referred to as reverse auction events. These events may also include any or all of the RFI, RFP and RFQ process.
These sessions can from time to time also run as forward auctions in order to reduce over stock conditions and reduce shrink. Regardless of the naming convention used there are certain rules which if followed will create higher quality events for the retailer and the supplier? This will result in creating better savings opportunities or cost avoidance in a tough market. The importance of focusing on a clear process will increase event participation. This focus on quality will be recognized by your existing trading partners and potential new sources of supply, and will keep them coming back in the future to compete fairly for your business.
1. Executive sponsorship is mandatory
a. This is required at the CEO, CFO, CPO, CLO or head of the supply chain.
2. Get the entire buying organization together for a kickoff session.
3. Provide an over view of what you are going to do and the impact it can have on the company. Use company financial models.
4. Discuss and agree on success criteria.
5. Every event is not a homerun. Singles and doubles score runs.
6. Create a fun environment.
7. Consider prizes for the most creative use of an auction.
8. Use scorecards by department with percent of savings.
9. Discuss the meaning and importance of corporate aggregation.
10. Hand out event templates to gather existing product specifications.
11. Put a time requirement on data collection.
12. Gather an accurate list of your present suppliers.
13. Work with your sourcing company to identify a top 100 list of events.
14. Calendar the events.
15. Prioritize by dollar value, date and strategic value.
16. Conduct department level discovery meetings of 30 minutes to an hour.
17. Investigate existing contract language.
18. Look for auto renewal (evergreen) language roadblocks.
19. Determine alternate sources of supply with your sourcing company.
20. Develop an event rules and instruction template and post with each event.
Although these steps are not all encompassing, they provide a general format for getting started that offers the best opportunity for price compression that results in the reduction in cost of goods, expenses and an immediate improvement in corporate earnings. Be sure to combine this with a business partner that understands your business.
As always, we look forward to and appreaciate your comments.