Right or wrong, primary success in e-procurement programs is ultimately measured by cost reductions that drop directly to a company’s bottom line.
More than once I have heard; “did we hit a home run?” Unfortunately less emphasis is placed on cost avoidance and sustainability and as such can often lead to less spend be assigned to these very effective tools.
In order to ensure that e-procurement results are sustainable; the strategies for all targeted categories require a consistent deployment or Standard Operating Procedure (SOP) across all departments of the host company. This is accomplished by utilizing a well planned repeatable process for category selection and discovery, supplier research and selection, and a solid category strategy that is well understood by all buyers and category managers through negotiation and award of business.
After a quality specification is completed and terms and conditions agreed upon, supplier selection and management is the most critical stage and requires the understanding and participation of all sourcing professionals within an organization. One small mistake by anyone with the procurement organization could negatively impact the potential results of an e-procurement event whether and RFI, RFP or RFQ. Historical long term relationships that drive behind the scene comments like; “don’t worry we’ll be fine” to a long term supplier may drive inappropriate bid behavior and lack of ongoing credibility with your new e-procurement program, and may even have potential legal implications.
If you are not having the results you would like to or have less than twenty percent your total corporate spend assigned to e-procurement tools, it may be time to ask your provider why?
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