Primary success with e-procurement programs is ultimately measured by cost reductions that should drop directly to a company?s bottom line. More than once I have heard; ?did we hit a home run?? Less emphasis is placed on cost avoidance and sustainability issues which can often lead to less of a companies total spend be assigned to these otherwise very effective tools then should be.

In order to ensure that results are sustainable; the strategies for all categories require consistent tool deployment across all departments throughout the company. This can be accomplished by utilizing a well planned repeatable process for category selection, discovery, supplier selection, and strategy communication that is well understood by all buyers and category managers through award of business.

Supplier selection and management is a critical stage that requires the understanding and participation of all sourcing professionals within an organization. One small mistake by anyone within the procurement organization could negatively impact the potential results of an e-procurement event. 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 program. Not to mention the potential legal implications.

If you are not having the results you would like or have less than twenty percent your total corporate spend assigned to e-procurement tool?s that are offered in the form of? Software as a Service, ask your provider why?

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he role of e- procurement solutions continues to become more of a strategic each year. Driving cost of goods and services control is one of the most important above the line initiatives a company can undertake. But don?t forget the expense or indirect category

In order to successfully implement an enterprise wide e-procurement initiative, executive management must provide sponsorship and visibly promote these projects within their organizations. Executive sponsorship is required by the Chief Executive Officer, Chief Financial Officer, Chief Procurement Officer or Chief Logistics Officer. The potential impact to earnings regardless of Industry is so significant with a properly deployed e-procurement program that officer level executives require visibility based on the impact to stockholders and stakeholders alike. In fact Sarbanes-Oxley section 404 requires that companies 1. Demonstrate reasonable & consistent governance & compliance monitoring. 2. Assure proper use of tools that have been placed into practice. 3. Employ proper reporting & management oversight. Implementing e-procurement tools has the potential to offer significant earnings changes.?

Once executive management has sponsored these initiatives, some form of accountability must be implemented to ensure maximum participation in order fully realize organization wide savings opportunities. A company’s successful transition to e-procurement requires a transition from a cumbersome paper RFX processes to one that focuses on using the speed and efficiency of an electronic forum.? Successful change management professionals focused on sustainability realize that this shift must be a combination of the use of not only the latest software advances, but also reengineering of internal processes in order to drive sustainable results.

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There are several important elements that require clear understanding by both the host company as well as the invited suppliers to ensure that bidding is fair when using e-negotiation tools.

What constitutes the best overall bid is a bid that meets or exceeds the specifications in areas such as price, safety, environmental best practices quality and other areas as outlined in the product specification. The 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 the 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 while making the job easier for buyers and category managers. 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 Retailer.

As always, we look forward to and appreciate your comments.