All Retail industry leaders know for a fact that e-procurement improvements can directly improve their bottom line as well as positively impact shareholder and stakeholder equity. In many cases in upper tier companies significant strides have been made to this end.

In? mid tier markets, it?s an? unfortunate circumstance that? procurement departments or purchasing as it had traditionally been known has not evolved significantly beyond its traditional functionality in many cases. Many mid tier companies will introduce you to their category managers. However, it very quickly becomes clear that although many have strong backgrounds as product buyers; very few have been exposed to the most current e-procurement tools available today. This is in no way the fault of the purchasing department or of the retailer. Reduced staff counts and the aforementioned lack of attention from software and consulting providers as well as a lack of near by formal e-procurement training programs combine to make the transition to e-procurement tools difficult.

What can retailers in the mid tier markets do? The answer may be working with boutique software houses that have no where near the overhead of the largest companies in this space. The largest well known companies in the e-procurement space may dominate your web based searches because they can afford to pay for large numbers of key words used in web searches. It may actually pay to drill down a few pages beyond your original search to find companies that have unique e-procurement software offerings that are often developed by highly skilled entrepreneurs that know the retail procurement business and can offer e-procurement solutions for a fraction of the cost associated with the better known legacy providers. The risks associated with this approach are minimal as most offers in the e-procurement space are offered as a hosted service today. All that is required on the retailer?s part is internet access. You might even get treated more like a customer to boot.

We look forward to your comments.

This is a continuation of my last post where we began to discuss the importance of running a Request for Proposal/Information before a competitive pricing event is run.  The last post talked about being specific in the information requested and not being afraid to run an RFx on an existing spend.  Here are some additional details to keep in mind.

• More than a template.  To obtain truly great RFx results the process should involve more than a template off the internet.  Having a team that knows how to properly run an RFx will ensure the right formatting is used; answers will be collected quickly; full results analysis will be conducted; as well as an assurance that the right companies are invited to the process to provide a mix of leaders; innovators and up-and-comers.

• If you use an online tool, go beyond the basic survey providers.  Providers that give access for creating free or inexpensive surveys are good for basic questionnaires but often lack the flexibility and post-survey analysis that a company used to handling RFP/RFI responses can provide.

• Remove the bias.  If at all possible try to find an independent company that can handle the entire RFx process all the way through to the final results and analysis, ensuring your results will show the best company with no bias.

• Integrate with the Reverse Auction.  Having an RFx process tightly integrated with the initial quote gathering and final competitive pricing event means that your company as well as all of the suppliers can get comfortable with one system for everything and not have to go from one tool to another to deliver the information you need.

For more information about the SafeSourcing RFx tools and professional services, please contact a Customer Service Representative today.

We look forward to and appreciate your comments.

Most of the time when we present our solutions, the majority of objections come from buyers and category managers. This author has long held that this is not the correct audience for a first presentation to a company of any size. The correct audience is the CEO or CFO, or both. Procurement when looked at properly has the largest single impact on a company’s financial performance of any area of the company. CEO’s and CFO’s primary areas of focus are the financial performance of the company.

Here are the bullets I normally speak to at the beginning of a presentation as to what leaders will here from their teams relative to the use of these tools. All have very detailed rebuttals that cover the gamut of the procure to pay life cycle.

1. We already get the best cost
2. We’ve done business with this supplier for years
3. We don’t have product specifications
4. We don’t have time for this
5. Our switching costs will be to high
6. We can’t insure the same quality
7. We need to adhere to certain standards
    
Here are a couple of hints as to how to nip these objections in the bud. Get the CEO and CFO     involved early, and keep them involved throughout the process. If savings and cost avoidance are delivered as promised, you won’t have any problem keep their interest.

We look forward to and appreciate your interest.

More than once I have heard; “did we hit a home run?” Unfortunately less emphasis is placed on cost avoidance and sustainability and as such can often lead to less spend be assigned to these very effective tools.

In order to ensure that e-procurement results are sustainable; the strategies for all targeted categories require a consistent deployment or Standard Operating Procedure (SOP) across all departments of the host company. This is accomplished by utilizing a well planned repeatable process for category selection and discovery, supplier research and selection, and a solid category strategy that is well understood by all buyers and category managers through negotiation and award of business.

After a quality specification is completed and terms and conditions agreed upon, supplier selection and management is the most critical stage and requires the understanding and participation of all sourcing professionals within an organization. One small mistake by anyone with the procurement organization could negatively impact the potential results of an e-procurement event whether and RFI, RFP or RFQ. 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 new e-procurement program, and may even have potential legal implications.

If you are not having the results you would like to or have less than twenty percent your total corporate spend assigned to e-procurement tools, it may be time to ask your provider why?

We look forward to and appreciate your comments