For better than 10 years the primary driver associated with reverse auctions or e-procurement events in retail has been a reduction in cost of goods. In large part, if a retail company saved money it was deemed to be a good event for the retailer and solution provider alike. What about the supplier? What makes it a positive for them?
Supply base management is the next major addition to strategic sourcing suites. All vendors do not offer this functionality today; in fact some have trouble describing what it is. Although elements of this functionality exist within a variety of surround type service offerings, no one vendor offers complete functionality in this area today. A significant reason for this is the suppliers concern with the thought of being managed in the first place. Additionally, retailers, suppliers nor e-procurement solution providers have agreed as to what the correct Key Performance Indicators (KPI’s) should be. As these tools are developed, the most successful supply base management tools will be those that can manage the largest supplier database to the continual benefit of both retailers and suppliers that participate in their events. In a best case scenario, high quality suppliers will get invited to more events, earn incremental business and save retailers both money and time on a continuous basis while also supporting other retail areas of interest such as safety and green initiatives.
This author believes that the most probable result of this process will be a set of automated robust supplier scorecards that monitor and report on supplier performance versus a range of KPI’S that are applied against well known quality guidelines such as Total Quality Management (TQM), Six Sigma etc. resulting in continuous improvement in e-procurement events and growth in the amount of spend under management by retailers.
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