A customer asked us recently if they were actually getting all of the savings from the low quotes in their eRFX process.
Todays post is a favorite from the SafeSourcing Archive
This is actually a great questions and a tough one to answer if in fact it has not been planned for during the strategy process. We all know that there are all sorts of saving figures quoted in the e-procurement industry for just about any product or service available.
Here are 12 areas of focus to consider when trying to figure out not only your ROI on these projects, but more importantly how much of the savings made their way to the bottom line and what is your leakage percentage.
1. How clean was your GL data?
2. How clean were your specifications?
3. How long did it take you to award the business?
4. How long did it take you to test samples?
5. How long did it take you to sign a contract?
6. How long did it take you to accept your first delivery?
7. Was the first invoice for the exact price you contracted for?
8. Was the shipping and handling exactly as bid?
9. Were there any SOW change requests that raised pricing?
10. What P&L period are you reporting against?
11. What was the budget for this product or service?
12. Can you trace the spend to a specific P&L line item?
It would not be too hard to add another dozen items to this list. The answer here is that proper planning helps eliminate savings leakage. Don’t plan and it will hurt or erode some or all of your potential savings.
We look forward to and appreciate your comments.