SafeSourcing Blog

click here to return to www.safesourcing.com

Archive for January 14th, 2010

What consitutes a complex e-negotiation event or reverse auction.

Thursday, January 14th, 2010

Definitions are often tied to the concept of a set of parts or elements which have relationships among them differentiated from relationships with other elements outside the relational regime.

So how does one define a complex e-negotiation event? On the surface it may be an event with a large number of line items within a particular product set such as generic drugs in the retail space or raw materials used to manufacture components that require special handling, shipping and standards adherence.

This author would suggest that any event including multiple line items each with different specifications, order quantities, delivery locations, multiple suppliers not bidding on each line item, a split award of business and the size of the spend qualifies as a complex event. Adding to the complexity may be the overall strategy required when sourcing the right mix of suppliers to compress pricing properly and drive early and consistent bid activity…

The above example would qualify as organized complexity where there is a non-random, or correlated, interaction between most of the parts. In order to support  complex events, your supplier needs to have an understanding of the specific market place and practices and processes in place that allow these activities t bring complex events to market  in the shortest period of time. Generally this should occur within less than two weeks from event notification to event completion.

In a two part post from October of 2008, this author tried to define the relative complexity of the retail environment and its potential impact on the use of e-procurement tools. Specifically we identified the following areas of interlocking complexity.

1. Supply Chain complexity.
2. Rate of change in the global supply chain.
3. Long term inherited supplier relationships.
4. Lack of retail procurement staff.
5. Lack of time.
6. Multiple sources of supply.
7. Limited view of new sources of supply.
8. Confusion as to who’s the customer and who’s the supplier

Being comfortable that your solution provider understands your market place and has a well defined process for hosting Complex e-negotiation events insures that they are not difficult to host.

We appreciate and look forward to your comments.