So, how can we drive better returns and possibly avoid these results without wasting time by evaluating everything to death?
The fact is that retailers particularly the largest ones have been using enegotiation tools. The rest of us however and that includes some pretty large companies are not and if we are, we are not doing it across a broad enough range of categories. The adoption rate within retail is low for a number of reasons such as poor supplier participation and buyers and category managers that continue to resist change.
The 1st area of poor supplier participation can be solved by working with the right solution provider that can continually invite new sources of supply to your reverse auctions and sustain that process for years through the size of their supplier database. The 2nd area can be addresses by CEO’, CFO’S and CPO’s telling their organizations that this is the way we are going to be doing things. Yes it does require senior level executive involvement to drive this.
To begin with senior executives should review their overall sourcing strategy and ask why their company is not using hosted eneogtioan tools for RFI”s, RFP’s and RFQ’s. If you are, you should ask what percent of total spend is going through these tools. Any thing under 30% is unacceptable. So the directive is to grow usage.
You should ask if the tools you are using are offered in the form of software-as-a-service or SaaS. If not, your tools are probably not the most current. This model allows you to find a new provider and it literally takes all of about one day to launch…
One reason that local suppliers don’t care to provide pricing to you ( and there is a good chance they may not have even been asked to) in a historical purchasing formula is because you might not even know they exist or because they do not believe you will do business with them because of your incumbent relationships.
Reverse auctions and other enegotiation tools are a completely non confrontational way of doing business which allows all suppliers to put their best price and services on the table at minimal cost to them. A job that can take category managers and buyers weeks and sometimes months to do when looking for new sources of supply can be accomplished in days. Multi product auctions or multi line item auctions are much easier for buyers to sort through in order to come up with an optimum bid that than when using traditional methodologies.
It’s a shame when a company has to declare bankruptcy. Consumers suffer, employees suffer, suppliers suffer, and in fact all stake holders suffer. There are tools and company’s out there to help you possibly avoid this result.
We appreciate and look forward to your comments.