Category Archives: Auctions

The UX One Should Expect from Best-in-Class e-Sourcing, Part II

Yesterday, as we continued our series on what makes a good UIX (which followed our posts on Smart Systems and Mission Control Dashboards), we went from generic Source-to-Pay system wide requirements to specific e-Negotiation, specifically e-RFX and e-Auction, requirements.

Specifically, in yesterday’s post, we noted that creating an RFX or Auction from scratch is a lot of work. From defining the need through selecting the suppliers through evaluating the responses to making an award, an average event typically consists of at least a dozen (or more) steps, each of which are arduous and time-consuming. That’s why the first core requirement we focussed on in yesterday’s post was easy template creation as a great template can jump start event creation, initiation, and execution over and over again (especially if it is work-flow enabled and driven by an underlying smart system).

But that’s just one core requirement. Another, as we dove deep into our follow up piece on What You Should Expect from Best-in-Class E-Sourcing User Experience and Functionality (Part 2) over on Spend Matters Pro [membership required], is easy starting bid population and validation. If there are a lot of products that need to be bid on, or a lot of bid fields that need to be filled out, and the data, or most of it, is already available in the system, or a connected system, it should be pre-populated for the supplier so that all the supplier has to do is make updates. This will not only decrease turn-around time, but potentially increase participation. If the event is run every six months, the buyer could pre-populate with the supplier’s previous bids or allow the supplier to pre-populate with their previous bids plus or minus a mark-up/mark-down and if an auction was preceded with a qualifying RFX, the starting bids can be automatically loaded. Either way, not pre-populating (or given the supplier the option to pre-populate) from existing data just doesn’t make sense.

And neither does not validating to the extent of data available. Bids can be compared to market rates and tolerances and suppliers or buyers alerted if the bids are outside of expected ranges and bids can be compared against each other and alerts given if a bid is detected to be an outlier which is off more than one deviation from the average, even if market data is available and it is within a normal tolerance. The bid might be right, and that’s okay, but buyers and suppliers still need to be alerted because erroneous bids lead to wrong awards (especially in optimization-backed events) and a lot of bad feelings in negotiations, especially if one side expects the other to live up to the bid.

These aren’t the only requirements for a great user experience, but they are additional core requirements that no modern platform should be without. For a deeper dive into this requirement as well as other core requirements, see the doctor and the prophet‘s piece on What You Should Expect from Best-in-Class E-Sourcing User Experience and Functionality (Part 2) over on Spend Matters Pro [membership required]. When combined with the rest of our series, it’s the best definition of what a modern e-Negotiation platform should contain that you’re going to find.

The UX One Should Expect from Best-in-Class e-Sourcing, Part I

As we continue our series on what makes a good UIX (to follow our posts on Smart Systems and Mission Control Dashboards), we go from generic Source-to-Pay system wide requirements to specific e-Negotiation, specifically e-RFX and e-Auction, requirements.

As the co-authors of this series, the doctor and the prophet, laid bare in our next deep dive on What You Should Expect from Best-in-Class E-Sourcing User Experience and Functionality over on Spend Matters Pro [membership required], creating an RFX or Auction from scratch is a lot of work. A lot of work. At a minimum:


  • Define the basic need that consists of products, services or bill of materials

  • Define the requirements for those products

  • Define the requirements for doing business with the organization

  • Define the information needed from the suppliers

  • Select (or define) the suppliers

  • Select (or define) the contacts

  • Set up the timeline (and milestones)

  • Send out the RFX invitations or launch the Auction

  • Receive responses back

  • Verify completeness and correctness

  • Evaluate, collaborate with teammates

  • Make an award

If all of this has to be done, from scratch, for every RFX or Auction, very few will get done. Considering that real benefits from these platforms only materialize if a lot get done, obviously this has to be as quick and easy to do as possible — and the platform will, thus, only have a good U(I)X if it is as quick and easy to do as possible.

So, what are the core requirements? Many, but in this post, we’re only going to focus on one of the core requirements — easy template creation. Given that the basic needs for a category don’t change much from event to event, the supply base doesn’t change much from event to event, the business and insurance requirements don’t change much from event to event, and so on. Thus, the ability to quickly and easily define templates that can be used over and over again is key. What should this template creation look like? Check out the doctor and the prophet‘s latest piece on What You Should Expect from Best-in-Class E-Sourcing User Experience and Functionality over on Spend Matters Pro [membership required]. (Vendors, this is the best description you’re ever going to get.)

Are We About to Enter the Age of Permissive Analytics?

Right now most of the leading analytics vendors are rolling out or considering the roll out of prescriptive analytics, which goes one step beyond predictive analytics and assigns meaning to those analytics in the form of actionable insights the organization could take in order to take advantage of the likely situation suggested by the predictive analytics.

But this won’t be the end. Once a few vendors have decent predictive analytics solutions, one vendor is going to try and get an edge and start rolling out the next generation analytics, and, in particular, permissive analytics. What are permissive analytics, you ask? Before we define them, let’s take a step back.

In the beginning, there were descriptive analytics. Solutions analyzed your spend and / or metrics and gave you clear insight into your performance.

Then there are predictive analytics. Solutions analyzed your spend and / or metrics and used time-period, statistical, or other algorithms to predict likely future spend and / or metrics based on current and historical spend / metrics and present the likely outcomes to you in order to help you make better decisions.

Predictive analytics was great as long as you knew how to interpret the data, what the available actions were, and which actions were most likely to achieve the best business outcomes given the likely future trend on the spend and / or metrics. But if you didn’t know how to interpret the data, what your options were, or how to choose the best one that was most in line with the business objectives.

The answer was, of course, prescriptive analytics, which combined the predictive analytics with expert knowledge that not only prescribed a course of action but indicated why the course of action was prescribed. For example, if the system detected rising demand within the organization and predicted rising cost due to increasing market demand, the recommendation would be to negotiate for, and lock-in supply as soon as possible using either an (optimization-backed) RFX, auction, or negotiation with incumbents, depending upon which option was best suited to the current situation.

But what if the system detected that organizational demand was falling, but market demand was falling faster, there would be a surplus of supply, and the best course of action was an immediate auction with pre-approved suppliers (which were more than sufficient to create competition and satisfy demand)? And what if the auction could be automatically configured, suppliers automatically invited, ceilings automatically set, and the auction automatically launched? What if nothing needed to be done except approve, sit back, watch, and auto-award to the lowest bidder? Why would the buyer need to do anything at all? Why shouldn’t the system just go?

If the system was set up with rules that defined behaviours that the buyer allowed the system to take automatically, then the system could auto-source on behalf of the buyer and the buying organization. The permissive analytics would not only allow the system to automate non strategic sourcing and procurement activities, but do so using leading prescriptive analytics combined with rules defined by the buying organization and the buyer. And if prescriptive analytics included a machine learning engine at the core, the system could learn buyer preferences for automated vs. manual vs. semi-automated and even suggest permissive rules (that could, for example, allow the category to be resourced annually as long as the right conditions held).

In other words, the next generation of analytics vendors are going to add machine learning, flexible and dynamic rule definition, and automation to their prescriptive analytics and the integrated sourcing platforms and take automated buying and supply chain management to the next level.

But will it be the right level? Hard to say. The odds are they’ll make significantly fewer bad choices than the average sourcing professional (as the odds will increase to 98% over time), but, unlike experienced and wise sourcing professionals, won’t detect when an event happens in left-field that totally changes the dynamics and makes a former best-practice sourcing strategy mute. They’ll detect and navigate individual black swan attacks but will have no hope of detecting a coordinated black swan volley. However, if the organization also employs risk management solutions with real time event monitoring and alerts, ties the risk management system to the automation, and forces user review of higher spend / higher risk categories put through automation, it might just work.

Time will tell.

Serex – Searing SRM into the CRM World

Serex was founded 23 years ago to help clients select, implement, deploy and effectively use CRM and marketing automation systems, something it still does to this day. However, a few years ago, during a routine meeting, a client asked if it had any systems to support buying because while it had its CRM and order management under control, and working like a fine-tuned oiled machine (their words, not Serex or SI’s), it’s Procurement organization was unable to keep up, and it was having to hire more and more buyers on a regular basis. Serex’s first response was, appropriately, why not use a social media platform to collect bids, and more specifically use a reverse auction and let the suppliers come to it? The answer Serex got was not the answer they expected — the organization had tried over a dozen auction platforms and not a single one met its need. Not one. (Sounds surprising, but when you consider the limitations of first generation auction platforms, it’s really not. And when you consider that marketing from these first generation platforms dominate the marketing airwaves, it would not be a surprise if only first generation platforms were tested.)

So Serex said that if they really wanted a useable solution that worked, they would build one, under an appropriate agreement. First of all, the solution would be designed under the guidance of the CPO, who had a lot of cross-vertical industry experience at Global 3000 companies. Secondly, the buying team would engage in regular review sessions, assist in UI design, and begin to use the beta as soon as it was ready. Third, the company would commit up front to use, so that the system would be developed by buyers, for buyers, and be used from buyers day one. And while new, and basic in some respects, it is obviously an auction platform designed by buyers for buyers that is used by buyers and works. (Serex’s first customer saved over 6 Million in its first year. And since launch, its first few clients have achieved similar success to its first customer.)

But the real proof that the solution is useable, even it is still a point-based procurement solution, is that all of the ten plus companies it is in negotiations with following it’s inaugural ISM event are all Fortune 500 companies, many of which already have big sourcing and procurement implementations with auctions (like Ariba, Zycus, and Emptoris). This only goes to show that while the e-Auction market is crowded, there is always room for a useable solution that does exactly what a buyer needs it to do in an easy and obvious manner. So while the platform has miles to go, the miles it has crossed make it well suited for a certain market. Which market? For now, in SI’s view, the mid-size market with a need for an easy best-of-breed solution.

The platform is essentially an e-Auction solution built to enable buyers to quickly set up and run auctions through quick bidder search and selection, quick product search and selection, quicker selection of which suppliers can bid on which products, and default auction parameters (which can easily be overridden). Complete product specs can be defined or uploaded as attachments if needed. Suppliers can send detailed messages during the auction to request or offer alternate delivery dates or substitutions for quicker delivery, and a buyer can update the auction specs as needed. In addition, all auctions are saved and new auctions can be created as copies of old auctions, and then updated as needed, allowing repeat auctions to be setup in just minutes (which is valuable if a product sells better than expected and an auction needs to be repeated on short notice to meet demand). (The auction platform has a built in attachment viewer that displays standard web formats.)

The platform also has a product manager sub-component that allows a complete product database that can be maintained and uploaded into the auction platform using a standard flat file format with attachments. In addition, a complete bidder database can be uploaded and maintained into the auction platform with all relevant supplier information.

Serex is not an extensive e-Procurement platform, but it’s one that fledgling organizations need when they want to being their strategic sourcing journey.

For a much deeper dive, check out the doctor and the prophet‘s in-depth dive over on Spend Matters Pro [membership required]. (Part I, Part II, and Part III.)

On the Tenth day of X-Mas (2016)


On the tenth day of X-Mas
my blogger gave to me:
Standard Sourcing Posts
Direct Sourcing Posts
Risk Management Posts
Sustainable Posts
e-Procurement Posts
some SRM Posts
some CLM Posts
some Best Practice Posts
some Trend Bashing Posts
and some ranting on stupidity …

Yesterday we focused in on direct sourcing because most platforms, designed for indirect, weren’t up to snuff for direct sourcing and that needed to be pointed out before we launched into a more general discussion and review of (the best posts on) traditional strategic sourcing.

We’re going to start to explain it’s importance by pointing out that If One Wants to Avoid Cost, Then One Should Avoid Cost At All Costs! This is something most organizations don’t do.

When you realize this and go to market for a proper platform (upon which you can find much advice in the archives), remember that
SI Has Been Telling You Solution Provider RFX Templates SUCK for Years!
Solution Provider RFX Templates SUCK! What Do You Do?
So, Do You Throw Provider RFX Templates Out with the Packaging?

This is true whether they are templates to acquire a solution or acquire the products and services that you need to function as a business.

Then, when you get that platform, remember that
If You Are Going to Create RFPs, Avoid RFP Hell!

After all, you already have to contend with
Eight Reasons Best-in-Class Suppliers are Ignoring Your RFP
why give them more reasons to?

But don’t just switch your events over to e-Auctions, because it’s
Time to Remove e-Auctions from the Strategic Sourcing Toolkit.

There is a host of reasons for doing so. One reason is that
Bidding Flexibility is Important to e-Auction Success
but most e-Auction platforms don’t give you bidding flexibility.

Instead, what you get are
The Entanglements of e-Auctions.

In other words, before you put your faith in e-Auctions, ask yourself:
e-Auctions — Savings Machine or Inflation Nightmare?

Come back tomorrow for the eleventh day of X-Mas.