There is generally more involved than switching cost when considering new suppliers, products and services at the conclusion of an e-negotiation event such as a reverse auction.
Today is a re-post from a long long time ago. What’s changed you ask? NOT MUCH!
It’s true that a reverse auction can create substantial low quote savings. However, much needs to be considered when tracking realized savings once the event has concluded and the award of business is ready to be made.
Lifecycle Costing is a procurement technique which considers operating, maintenance, acquisition price, and other costs of ownership in the award of contracts to ensure that the items or services to be acquired will result in the lowest total cost of ownership during the time the item’s function is required.
If a category is truly returning event savings, it should be able to be tracked from original delivery to contract termination on a companies detailed P&L. The trick is that many of the associated costs go to different departments on the P&L. If you don’t know which ones, your pre-event discovery was not complete and the odds of getting the actual savings reported are at significant risk.
So, give us a call. And ask us about our e-Procurement solutions and associated white glove services and our SafeSourceIt™ Global Supplier Database that includes over 557,000 vendor/suppliers. We can get you better pricing on about any category of product or service.