Make sure you conduct a detailed Category Discovery if you’re planning for a successful e-negotiation program?

December 14th, 2010

This author believes that too many e-negotiation programs fail because their strategies are not well thought out in advance of the execution stage.

The following are some practical thoughts that companies should consider which will take their e-negotiation program well beyond tactics to create a sustainable process going forward.

Category discovery is the basis of any quality implementation of an e-negotiation strategy. It is essential that this process begin with a company’s executive management’s sponsorship. This process will include working with all category managers, buyers and other procurement knowledge workers to uncover opportunities suitable for e-negotiation tools such as Requests for Information (RFI), Proposals (RFP) and Quotations (RFQ).

A fundamental requirement for any successful category discovery process is an adequate source of suppliers interested in participating in e-negotiation events regardless as to whether they impact cost of goods or the expense line. Suppliers can then be vetted against product specifications and CSR goals the during the discovery process. The success of this process may and probably should also include store visits, distribution center visits, supplier visits, product evaluations, contract reviews, spend data collection and other related information necessary to completely understand specific category dynamics.

Any process is only as good as its original goals. These factors may go well beyond simple price reduction such as impact on quality, finding secondary sources of supply, cost avoidance, safety and environmental goals. Analysis of these success factors and areas of improvement which have been properly benchmarked to the original goals included during the discovery and resulting category to market strategy will drive a sustainable process and as such may well be the most important step after an e-negotiation event has concluded.

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