Retailers; is your sourcing transparent enough?

April 29th, 2010

This is really an important question? If you are not using e-negotiation tools, the answer is most likely no.

If you are not sourcing at least 30% of your cost of goods and services with e-negotiation tools, you are lagging the leaders in your industry and well behind other industries. Resultantly you are not getting the best costs and not driving the best margins for your company.

The e- negotiation process and in particular reverse auctions since their inception over a decade ago haven driven healthy competition amongst competing suppliers. As such the results of an e-negotiation event can provide a great benchmark for both the buyer and suppliers. For buyers the results can be used as a tool to evaluate how to best source other products and services. For suppliers that don’t end up as the low  bid, have the opportunity to evaluate why that is and what they need to do in order to improve or to be more competitive in the market place. This of course is all happening without the need to collect, collate, compare or negotiate during the process. In other words it is happening transparently to the normal sourcing process.

E-negotiation events provide the opportunity for suppliers that are outside of your business area or knowledge base to bid for your business. That is if your solution provider has access to a large number of retail suppliers.

Possibly the single largest  benefit to  using e-negotiation tools outside of price compression  for  procurement professionals  is that it offers  a significant opportunity for process improvement since most solution providers offer a standard process for hosting e-negotiation events. Everything is done in one place using standard processes to build the event to the analysis of the bids collected. All information is then available for immediate evaluation and archived for easy access in the future. This reduces the overall procurement life cycle time, eliminates or reduces the opportunity for human error, and provides a standard way to award business.

We look forward to and appreciate your comments.

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