Archive for the ‘Online Reverse Auction’ Category
Friday, February 18th, 2011
Competitive bidding is the process of inviting and obtaining bids from competing suppliers in response to documented specifications, by which an award is made to the best overall bid that meets or exceeds the specifications in areas such as price and quality. There are keys to understanding and making your bidding competitive and successful when using e-negotiation tools.
One of the most important elements and most overlooked is that of incumbent supplier communication once a bid has been authorized. This means that your entire company is on the same page. That page is agreeing to not setting any false expectations with your incumbent suppliers. Because you already have a relationship with these companies you will most likely receive calls, emails, IM’s and texts wanting to know what is going on. Your company line has to be that “We value our relationship and encourage you to use this process as it is the only process by which we will review bids”. Do not indicate that everything will be ok or that things will work out just fine or any similar language. If you are using a 3rd party, instruct your incumbent supplier or suppliers to provide any questions or communications they have through the third party only.
To make it simpler, be honest, be thorough and don’t set any expectations. Keep this in mind and all suppliers will feel like they were treated fairly and want to bid to win your business again.
We look forward to and appreciate your comments.
Posted in E-procurement, Online Reverse Auction, Reverse Auction, Reverse Auction Procurement
Wednesday, February 9th, 2011
If you are looking to break out all of the other costs associated in a product bid, just asking to have freight included or free freight within a certain radius or other similar language will not accomplish net landed cost or allow you to manage it going forward.
Quite often the terms net landed cost, haul back, FOB and others come up during the logistics portion of a sourcing event. Some times they are bid on separately and or delivered by a third party. When a company says they want a net landed cost what they are referring to is the cost of a product or products plus all of the relevant logistics costs, such as transportation, warehousing, handling etc. In other words, what’s my cost when it gets here or where we want it?
If you want to drive the best pricing and service possible you need to understand the terminology and make sure it is clear in your specifications and terms and conditions.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, Online Procurement, Online Reverse Auction, Procurement Auctioning, Procurement Purchasing
Tuesday, January 11th, 2011
Competitive bidding is the process of inviting and obtaining bids from competing suppliers in response to documented specifications, by which an award is made to the best overall bid that meets or exceeds the specifications in areas such as price and quality. Probably one of the most important elements and most overlooked is that of incumbent supplier communication once a bid has been authorized. That is not setting any false expectations with your incumbent suppliers. As you already have a relationship you will most likely receive calls, emails or texts as to what is going on. Your answer has to be that we value our relationship and encourage you to use this process as it is the only process by which we will review bids.. Do not indicate that everything will be ok or that things will work out just fine or any similar language. If you are using a 3rd party, instruct your supplier to provide any questions or communications through the third party only.
The e-negotiation process contemplates giving potential bidders a reasonable opportunity to bid, and requires that all bidders be placed on an equal playing field. Ideally each supplier must bid on the same documented specifications, terms, and conditions for all items. However breaking out individual line items that a specialty supplier can provide bids for can help to reduce the opportunity for suppliers to manage the overall gross margin of their bids and drive higher savings. The purpose of competitive bidding is to stimulate competition, prevent favoritism, and secure the best goods and services at the lowest possible price, for the benefit of the host company. Competitive bidding cannot occur where specifications, terms, or conditions prevent or unduly restrict competition, favor a particular supplier, or increase the cost of goods or services without providing a corresponding tangible benefit for the host company.
The above message needs to be communicated to any and all associates that are involved in the process and may have a reason to communicate with suppliers.
We look forward to and appreciate your comments.
Posted in E-procurement, Eprocurement Auction, Global E-procurement, Online Procurement, Online Reverse Auction
Monday, November 29th, 2010
As you might imagine, each of the steps I offer below can easily be expanded to include a great deal of detail. However, since the question came from a senior executive who was really looking for an elevator ride type of answer I offer the following as a simple guideline.
1. Select customer & provider project leads
2. Conduct detailed category discoveries
3. Rank categories and findings by category
4. Develop a and prioritize a category strategy
5. Select lead category items
6. Conduct supplier discovery & research
7. Select suppliers
8. Train suppliers
9. Conduct online e-negotiation
10. Deliver online e-negotiation reports
11. Analyze e-negotiation results
12. Request samples if necessary
13. Award Business
14. Sign contract and begin delivery
15. Report ROI.
We know these steps return results quickly.
We look forward to and appreciate your comments.
Posted in E-procurement, Online Reverse Auction, Reverse Auction, Strategic Sourcing
Thursday, November 4th, 2010
What is strategic is entirely up to the person using the tool, whether or not they have used it before and if it returns the results they require as part of their strategic plan. So can a reverse auction be strategic. Of course it can. The overlying strategy might in fact be to simply get costs under control as quickly as possible. I shudder to think that this would be a company’s entire strategy, but in these times of economic survival it may well be. I can envision the following. The economy is kicking a companies ass and the CEO calls a staff meeting and says we have a new strategy and for the time being everything else will take a back seat in order to get our costs down. Come back in a week and tell you how you are going to do this immediately.
Now for the English lesson.
The word strategy is a noun that has several definitions. According to Wiktionary, 2 of those are.
1. A plan of action intended to accomplish a specific goal
2. The art of using similar techniques in politics or business
The word strategic is an adjective which we know is a word that modifies a noun and can also me modified by an adverb. So think of strategic as meaning of and pertaining to strategy and can be used comparatively as in something that is more strategic or less strategic.
So can a reverse auction or auctions be strategic. Of course they can and one example would be if your strategy was to simply reduce costs immediately. They can also be more strategic as part of a going forward strategy as well as provide other strategic benefits such as cleaning up your specifications and reporting as well as providing new sources of supply.
We look forward to and appreciate your comments.
Posted in E-procurement Tools, Online Reverse Auction, Sourcing Strategy, Strategic Sourcing
Friday, September 10th, 2010
On demand software or SaaS (Software as a Service) by its nature is an internet based application and as such is accessible from wherever you happen to be as long as you have a network connection. With today’s broad band offerings that literally means anywhere. So the first rule of thumb is that it provides easy access. In addition, since most of the newest versions of SaaS applications are native web based applications, they integrate very nicely with most office infrastructures. With Microsoft being the most deployed environment, data is easily exported or imported to formats that comply with their standards. In many cases these tools can also be made 100% available to you within days of contract signature
Most of us have horror stories about when our PC, Network, Application etc. went down and we were not able to complete tasks at work. When we call our internal service department, the response is normally less than what we would like or hurry up and wait. With a hosted software application, it is the responsibility of the SaaS provider to maintain the application. They know up front that if they don’t do a superior job of support and availability, that you the customer can go somewhere else to find a provider that will. This is not the case with internally installed corporate applications.
Your data at a SaaS provider is also often more secured than the data at your corporate office. Since this is the core business of a SaaS provider, the architecture of the application normally has multiple levels of redundancy, failover recovery and is backed up regularly.
Typically, SaaS applications are easier to change than traditionally installed corporate applications. There are not as many feature upgrade charges with every point release in a SaaS environment because the provider needs to provide these features to continue to attract new customers and to keep up with the pace of the industry.
Finally, the total cost of ownership is much quicker in a SaaS environment than traditional application software installations. Often as much as 100% faster. In fact there are many stories of breakeven ROI’s with your first series of e-procurement events. The biggest question you have to ask of your future provider is are you a true SaaS environment with the newest technologies available or are you a reengineered ASP provider. I’ll comment more on that later.
We look forward to and appreciate your comments.
Ron
Posted in E-procurement, E-procurement Solutions, E-procurement Tools, Online Procurement, Online Reverse Auction
Thursday, September 2nd, 2010
I was reading a blog post from the Doctor over at Sourcing Innovation today titled “A Hitchhiker’s Guide to e-Procurement: Terminology” and I thought it was great as well as very timely.
Ultimately it is up to practitioners and solution providers of these tools to educate their customers as to what the proper terms are for the tools they are using. As an example E-RFI, E-RFP, E-RFQ. I have numbers of customers that have used other solution providers and not only are the definitions different by customer; they are actually different within a specific company. In some cases everything is referred to as a reverse auction and in other situations the companies have made up their own name for the service or tool.
This author uses Wikipedia and Wictionary quite often as a source and in this case, they have a very good definition that covers most of the terminology in the entire e-procurement space as well as related B2B and B2C internet based or private network based functions. As your company moves in the direction of a computerized supply chain management solution for your company understanding what you are asking for and what you are using will make both your job and that of your solution provider easier.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, B2b Supply Chain, E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Eprocurement Auction, Online Procurement, Online Reverse Auction, Procurement Auctioning, Procurement Outsourcing, Procurement Purchasing, Procurement Solutions, Procurement Tool, Product Procurement, Reverse Auction, Reverse Auction Procurement, Supply Chain Procurement
Monday, August 16th, 2010
Further more; your buyers can not save you as much as you might save if you used these types of tools. So when and if you do, make sure you measure and understand the true savings.
There are all sorts of e-procurement companies. Not all focus only on retail. However, all of them have web sites and all of the web sites tout savings that are all over the map. The question is what type of savings are they talking about. Following are some of examples.
1. Total low quote savings.
2. Total low quote company savings.
3. Total savings awarded companies.
4. Total realized savings.
5. Total savings versus budget period to date.
6. Total category savings.
7. Total savings year to date.
8. Total annual realized savings.
9. Total potential savings.
Companies really have to be specific as to what they ask each company relative to savings opportunities and make sure they have a formula in place for calculating savings over the course of the contract period for which the products are being sourced. There are all sorts of missed opportunities associated with actual event based low quote savings that can be created by lengthy review periods, delays in sample evaluation, extended award time periods, delays in contract dates, switching costs within the finance department, delays in shipping, specifications not being matched and specification creep that results in adding more expensive non specified items.
The bottom line is that you may have had low quote savings of 28% and that’s great. You may have had net realized savings of 18% and that’s great too. However if you don’t have a plan as to how you will measure savings you won’t know what caused the leakage and it can’t be fixed.
We look forward to and appreciate you comments.
Posted in B2b Reverse Auction, E-procurement, E-procurement Solutions, E-procurement Tools, Eprocurement Auction, Online Reverse Auction, Reverse Auction, Reverse Auction Procurement
Thursday, August 5th, 2010
Just because you need to buy a product or service does not mean that you will receive the optimal price for that product. For certain products there are better times to run e-procurement events and if you miss that opportunity by even a couple of weeks the lost savings could be astronomical.
Some consumers give this considerable thought when they buy products like cars, computers, televisions, furniture and even certain food products. Retail buyers should be doing the same. If you are the poultry buyer planning for Thanksgiving, you do not want to be buying your frozen turkeys in July and quite frankly if you buy them in March you are probably going to miss out on some savings. The same could be said for just about any type of fresh produce. You can certainly get everything in today’s world at any time of year, but there are better times to do it than others.
A couple of tangential examples that require careful thought would be landscaping services and snow removal services for store parking lots and distribution centers. The services for the most part may be provided by the same suppliers. The optimal time to source landscaping may be the month of March while the optimal time for sourcing snow removal services may be September. These months also mark the beginning and end of the respective service seasons for each service. Even though you may get the service from the same provider, keeping the services separate leaves the leverage with the retailer when you source the other service for the upcoming season. This is also the time when the suppliers are looking for business that will sustain them through the upcoming season as another winds down.
Make sure you ask your e-procurement solutions provider to assist you with the apropriate timing to source your goods and services.
We look forward to and appreciate your comments.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools, Online Reverse Auction, Procurement Auctioning, Reverse Auction, Reverse Auction Procurement
Monday, August 2nd, 2010
My wife went to lunch at a restaurant she has never been to before with 7 of her friends the other day. One of her friends called in advance and asked to speak with the executive chef. She told him she was coming for lunch with 7 of her friends and wanted to have the chef prepare a sampling of their best appetizers for the group and would like the restaurant to comp the expense for the group. Are you kidding me that is incredibly ballsy? Here’s the kicker, the restaurant did it. In addition the chef came to the table and explained the selection and what would go well with it for lunch. He also bought each attendee a glass of wine. Most of you are smart enough to figure out the benefit to the restaurant. I can guarantee you we will go there for dinner.
Here’s the tie in.
I always suggest to retailers that there is more to be gained from reverse auctions and other e-procurement events than just price concessions. With that said, cost still tends to be the primary driver or motivation for most retailers. The question always comes back to me; like what? My answer is that you have to use your imagination. Take a look at your product. Ask yourself what more would you like?
1. A better price?
2. An extended warranty for free?
3. Free shipping?
4. An onsite account manager?
5. Premium club membership?
6. One free night for every three nights stayed in a hotel chain?
7. One car grade upgrade from your standard contract for free?
8. 100 free meals for every $10K spent at a specific restaurant chain?
9. Free installation services
10. A donation to your frequent shopper program gifts catalog.
This really becomes a brainstorming or whiteboard event. Once you come up with an idea relative to a certain product, just ask for it in your specification. You’ll never know if you don’t ask.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, E-procurement Tools, Online Reverse Auction, Strategic Sourcing
