What constitutes a very complex e-negotiation event?

September 15th, 2015

And, are they difficult to host?

 

Todays post is from Ronald D. Southard, CEO at SafeSourcing.

According to Wikipedia, in general usage, complexity tends to be used to characterize something with many parts in intricate arrangement.

Definitions are often tied to the concept of a set of parts or elements which have relationships among them differentiated from relationships with other elements outside the relational regime.

So how does one define a complex e-negotiation event? On the surface it may be an event with a large number of line items within a particular product set such as MRO or Fleet Maintenance in the distribution space or raw materials used to manufacture components that require special handling, shipping and standards adherence. The amounts of the total spend for an event really has nothing to do with the complexity of the event. The complexity is determined by the data points requiring management in order to drive the best possible value to the buyer and the supplier.

This author would suggest that any event including multiple market baskets, thousands  of  SKU’s all with different specifications, order quantities, delivery locations, multiple suppliers not bidding on each line item, a split award of business and the size of the spend and optimization scenarios qualifies as a complex event. Adding to the complexity may be the overall strategy required when sourcing the right mix of suppliers to compress pricing properly and drive early and consistent bid activity. This can be further complicated by trying to determine the correct decile based sourcing strategies for the event and including product affinities where they make sense. And that sometimes means they may not make sense. Think of the old examples of baby diapers and beer sales going up on Saturdays and being purchased by men. Do you know why? It’s an old example of big data. Think sports?

The above example would qualify as organized complexity where there is a non-random, or correlated, interaction between most of the parts. In order to support  complex events, your e-procurement solution provider needs to have an understanding of the specific market place, practices and processes in place that allow them to drive these activities in order to bring complex events to market  in the shortest period of time. Generally this should occur within less than three to five weeks from event notification to event completion.

Last year, this author tried to define the relative complexity of the retail environment and its potential impact on the use of e-procurement tools. Specifically we identified the following areas of interlocking complexity.

1. Supply Chain complexity.
2. Rate of change in the global supply chain.
3. Long term inherited supplier relationships.
4. Lack of Accurate data.
5. Dysfunctional ERP systems
6. Lack of retail procurement staff.
7. Lack of time.
8. Multiple sources of supply.
9. Limited view of new sources of supply.
10. Confusion as to who’s the customer and who’s the supplier
11. Sales People
12. Third Party Providers
13. Collaboration complexity.
14. Lack of an integrated view of the category spend
15. Not understanding the relationships or affinities of your products and services.

Being comfortable that your solution provider understands your market place and has a well defined process for hosting Complex e-negotiation events insures that they are not difficult to host and drive a well summarized and optimized result set.

If you’d like to learn more about sourcing complex categories, please contact a SafeSourcing customer services account manager.

We appreciate and look forward to your comments.

 

 

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