Why some retail companies are not successful with e-negotiation programs or actually most programs they implement.

April 30th, 2010

The most important element missing from these programs is the recognition that effective e-negotiation like all successful programs requires strong support from the highest level of executive management.

Most companies understand that lowering their cost of goods and services provides the greatest potential benefit or impact to their bottom line. However they face significant roadblocks in doing. At this point, one might ask why some retail companies succeed while others continue to implement program after program with no ongoing measurable benefit. As mentioned in the excerpt above, the first among these is the recognition that effective e-negotiation initiatives like any other successful program requires strong support from executive management. This is important because Retail as an industry lags well behind other industries in utilization rates of e-negotiation tools. So at a minimum in order to get off on the right foot, this means the CEO, CFO, CLO or CPO sponsorship is critical and mostly the first two. Once this directive has been issued, the next step is to identify savings targets across all corporate spend categories. Once these targets are identified and ranked, a category specific attack plan can be developed that best maximizes savings opportunities.

It is important to note, that savings alone does not create a successful e-negotiation plan. What can not be sacrificed in the name of cost reduction are quality, safety improvement and environmental support programs that enforce your Corporate Social Responsibility (CSR) goals.
 
A key challenge for any procurement organization directed to implement e-negotiation tools across all of their unique spend categories, is to not over complicate the process into something that you can’t maintain. At a high level, the following steps will insure that you are headed down the right path.

1. Indentify business owners
2. Identify all spend opportunities by owner
3. Consolidate spends into a total corporate view
4. Aggregate like categories
5. Rank spend by category and owner
6. Develop a total company strategy
7. Research and Source additional qualified suppliers
8. Collect detailed specifications
9. Prioritize events based on spend and Importance
10. Let your solution provider do their job
11. Hold e-negotiation events
12. Negotiate final terms
13. Award of business
14. Contract completion
15. Results Analysis

Most quality e-procurement solution providers have well developed e-negotiation strategy and plan templates that will aid you in implementing your best implementation while maintaining quality and supporting your CSR initiatives.

We look forward to and appreciate your comments.

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