E-negotiation events such as reverse auctions have been around since the late 1990’s and are also referred to as E-RFX’s depending on their overall goal.
These sessions can from time to time also run as forward auctions in order to reduce over stock conditions and reduce shrink or event to discard of old properties. Regardless of the naming convention used there are certain rules which if followed will create higher quality E-RFX’s for the retailer and their suppliers? 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 E-RFX 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.
Here are twenty to begin with. I’m sure you can add others or refine these for your use.
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 E-RFX 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 E-RFX rules and instruction template and post with each event.
Although this list is not all encompassing, it provides a format for getting started that offers the best opportunity for reduction in cost of goods, expenses and improvement in corporate earnings. Be sure to combine this with a business partner that understands your business.
We appreciate and look forward to you comments.