Category Archives: RFX

Strategic Sourcing Requires Strategic Suppliers Selected Through Strategic Sourcing Events

And this will generally mean you have to deal with a lot of pushback from those individuals in the company that don’t want to deal with anyone but their preferred supplier (which can be due to bias, laziness, or, in some cases, legal bribes). There will be a lot of reasons given, of various levels of validity, but you will need to bust through them all. To help, here are the standard categories of push-back and how you tackle them.

Our Process is Approved Suppliers Only

This is usually the first response because the individual knows the new supplier approval process is typically an onerous one and not one anyone typically wants to deal with and, thus, has a great chance of working (on anyone except a dedicated buyer). However, a response of “we know, that’s why we’re going to do a multi-round qualification RFI first and we simply need your input on the core requirements so we can get the right suppliers approved” will typically do the trick with this one. Of course, the stakeholder who wants the same (set of) supplier(s) will just move onto the next excuse, but you need to take ‘em one by one.

The Supplier Couldn’t Meet our Requirements Last Time

If the supplier was invited, or even considered before, and the conclusion was the price was too high, the product unsuitable, or the overall capability to meet total organizational demand insufficient, the stakeholder might like to use past performance to simply deny the supplier again, even if it’s been two or three years and the supplier might have improved (due to a lean effort they mentioned they were starting last time, new equipment and processes, or other factors). Plus, this doesn’t consider the fact that the supplier (if there were cultural/language barriers) might not have appropriately understood the requirements and put the wrong foot forward.

The answer here is “we understand, but the supplier has been doing X plus we are going to force them to go through the pre-qualification RFI that all new suppliers are going through to make sure they are actually capable of performing better this time before inviting a bid from them“. This will elicit a “grumble, grumble”, but you will be able to press on.

The Cultural / Language Barriers are Too High

Cultural and language barriers are often high, especially if you are going to new countries, but if both parties want to succeed and are willing to work together to succeed, they are not insurmountable, as long as both sides make the effort. You can’t just through a spec in English over the wall and say “you translate and give us your best effort on your own” and expect great results. You need to engage one or more product/service experts who are bilingual (or even trilingual) in the native language(s) (and who has some cultural understanding) for each geography you want to do business in.

This effort will go a long way into getting new suppliers in different geographies who speak different languages to put their best foot forward. The best suppliers will appreciate and reciprocate your efforts and put their best effort into their proposals and might even surprise you. The answer here is “we know, and that’s why we’ve engaged these individuals to be our interpreters and relationship managers — it might not work, but if it does, it could open us up to a whole new array of cost-control and innovation capabilities“.

We Don’t Have the Bandwidth

Once you get through the knee-jerk responses above, a belligerent stakeholder who really wants that preferred supplier will resort to rationalizing that there just isn’t the time to evaluate too many suppliers or re-create all the requirements in a supplier-neutral fashion. This will be hard to dismiss, as chances are the stakeholder doesn’t have the bandwidth and you will need some input from that stakeholder. This is where your negotiation and reasoning skills will be put to the test.

You will need to start by indicating we know you don’t, that’s why we in Procurement are taking on the majority of the workload — all we need is your input and expertise and review before each key document goes out. We realize that there might be some extra work for you, but if this works, we will help you identify new sources of supply (which will increase stability in the event of a disruption or customer demand surge), potentially new sources of innovation, and keep your costs — and your budget, under control. And if it ends up that the best choice is the current supplier, at what appears to be higher than market average costs, you will be able to say in confidence that you made the right choice with all of our efforts to back you up next time the C-Suite decides someone budget needs to be cut. You’ll have hard data while your counterparts, who chose not to work with us, won’t. And since the CFO says all arguments must be data driven … .

In other words, while you might feel the urge to thump out the stupidity, if you take a rational approach, use your negotiating skills, and demonstrate that you are going to take on as much of the extra work as you can, with time, you will be able to convince most of the stakeholders that your way is the right way. (And we say most because if the incumbent supplier is paying for the stakeholders yearly Hawaiian vacation in exchange for a single “talk” at their user event, well, there’s no way you can counter that as it’s completely unethical to source for the best favours. But, fortunately, this will be a very small majority of stakeholders.)

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.

ScoutRFP – Spreading their Silicon Sunlight from the Western Shore

When we last covered
ScoutRFP back in 2014, they were hoping to help laggard Procurement organizations leave the dark ages (Part I and Part II) and enter the modern age. Launching with nothing more than an easy RFP solution (which was a 15 year old solution at the time), ScoutRFP has taken off like a rocket in those organizations that needed an easy, lightweight, solution for everyday events with a price tag they could afford.

The RFP solution was, and still is, 100% SaaS and designed to work with minimal inputs. It guided the user through a minimal workflow to create the RFX, select the suppliers, evaluate the responses, and make a decision. It was very flexible, allowing the user to create the RFX to the level of detail they wanted, or keep it high level (and cut and paste the instructions and questions from Word). And it gave the organization visibility into, and some control of, spend. The CPO could define a hierarchy and see what everyone was doing, the directors could see what their teams were doing, and the buyers would see their events — and all the reports could roll up as well. It was simple, but it hit the suite spot of low complexity and low price for organizations trying to crawl out of the unlit Procurement dungeons.

It was such a hit that, based on this capability and reception alone, ScoutRFP was able to secure $2.75M of funding in 2015 (from NEA, Zapis Capital, and Google Ventures) to extend the platform and raise an additional $9M of funding this summer in a series A funding round. And move west (to San Francisco).

Since then, ScoutRFP has added basic e-Auction capability, project management and savings tracking, Supplier Information Management, and an improved Supplier Portal.

The platform now has the ability to track all requested, current, and upcoming sourcing events and their associated status; categorize the events using any desired organizational categorization scheme; quickly initiate new events (RFX or Auction) from the pipeline; and even auto-include re-sourcing events when contracts are set to expire. Requested events can come from any organizational stakeholder with budget or spending authority, and all spend can be placed under (minimal) management.

In addition to this new project management capability, the savings tracking capability can sum up all savings for a period of interest, in real-time, based upon (negotiated) price differentials and (expected/purchased) volumes, or savings numbers (to date) provided by appropriate Procurement or AP reps. The data is tracked in a drillable fashion and a manager can quickly see how the totals compare across categories, departments, and employees. This allows the manager to ensure that high-value categories get sourced first and that buyers who aren’t delivering value get training (or replaced).

The SIM functionality is basic. It allows the organization to track all supplier information of interest, tag the suppliers with key-phrases of interest (for quick selection by category capability, geography, performance, etc.), and build lists for quick selection in sourcing events. There’s no scorecarding or performance monitoring, but it can be used as a supplier master and it’s easy to get data in as supplier data can be loaded from existing platforms, and updated data can be pushed back out to existing platforms, using the API. And the platform makes it easy to track supplier activity — events they participated in, questions they asked, bids they made, and so on.

In the current version of the platform, suppliers can have their own portal where all of the bids they have been invited to by all of their customers are accessible through a single log in, or, if the supplier prefers [or customer(s) demand(s)], they can have a separate portal for each customer. The suppliers also have the same collaboration features available to the buyers and can invite their peers to collaborate on bids and survey responses.

The system is shaping up nicely and for an in-depth dive on ScoutRFP, and the platform, including its strenghts and weaknesses, see the recent Pro series [membership required] over on Spend Matters (Part I, Part II, and Part III) [membership required] by the doctor and the prophet.

marketdojo Opens the Dojo to Suppliers as Well

When we last checked in on MarketDojo with our posts on how you could walk your own way and plan your own path, they were a relatively new UK company that offered a basic e-Negotiation suite with category guidance. Not much, but when you consider you could:

  • try before you had to commit to a buy with their open sandpit,
  • pay per event, on your P-card and
  • see what suppliers see with toggle view

It was a good entry point for a mid-market Procurement organization that was stuck in the Procurement dark ages and unable to obtain budget for a modern suite (because the C-suite needed to have a guaranteed ROI).

While it was a good start, MarketDojo realized that is all it is — they needed that and more to conquer the mid-market, even in their native homeland. Once a lean, agile, over-tasked, and under-resourced mid-market Procurement organization gets their hand on a tool, they want to advance fast, learn faster, and apply it fast and furious — and they want to be as effective and efficient as possible.

For many companies, this means four things:

  • minimize data re-entry
  • minimize unnecessary supplier interaction
  • track relevant documents and sourcing artifacts
  • identify suppliers with potentially innovative capabilities

That is why MarketDojo has rolled out a full-featured supplier (information) management portal, called, obviously, SIMDojo and included innovation management in their primary offering (the InnovationDojo corner).

With their new SIMDojo offering, which can be used as part of the platform or standalone, which supports supplier self-identification and self-registration, buyers can create the appropriate questionnaires, have suppliers upload the appropriate documents, and lock supplier data (from updates). When suppliers change data, their profile is invalidated until reviewed by an appropriate sourcing professional, insuring only valid and validated suppliers can be included in sourcing events. The platform is simple to use on both sides, and some customers are buying it to augment other platforms they already have.

InnovationDojo is built on the RFX/Survey functionality in MarketDojo, but allows a buyer to issue innovation challenges, collect and score responses, include that information in RFPs, and track and manage innovation projects and responses separately. It’s basic, but it works quite well for the mid-market.

MarketDojo has also made functionality and usabiity enhancements to their platforms across the board, with template management in particular being noticeably improved. With few e-Sourcing companies left serving the mid-market, MarketDojo provides a solid offering, especially to those companies without (a modern) e-Sourcing solution that need to start quick, and keep it basic (to maximize efficiency and SUM [Spend Under Management]).

EC Sourcing: Getting Ready to Take the Mid-Market by Storm

When we last checked in on EC Sourcing, they had recently released an updated version of their basic e-Negotiation suite, Flex RFP, and their Supplier Corrective Action Reporting (SCAR) solution. Their e-Negotiation suite had straight-forward RFX, auctions, and a basic contract repository that was the 80% solution at the time. It couldn’t compete in the big leagues, but that wasn’t the focus — the focus was the majority of the market that the big players were ignoring (by selling overkill solutions the market didn’t need at a price point the market couldn’t afford).

The platform also had basic project management built in to allow customers to define projects — which include suppliers, users, RFXs and/or Auctions; message with users and suppliers — through integrated message boxes and e-mails; and define notifications in addition to standard project management features — such as timelines, state tracking, and document management. It also supported 4 languages, multi-currency, and formulas in auction and RFX weighting, it was a solid solution, which is further evidenced that about 1/3 of their client base are actually Global 3000s that realized that they didn’t need an overkill solution at an absurd price point to meet their daily sourcing needs.

Since we last checked in a few years ago, they have been developing steadily — improving both the base solution and adding new modules and capabilities, including some not found in the majority of e-Sourcing platforms (even when the big guys are included). They have added supplier management and workflow management and improved everything across the board (including, but not limited to, their internationalization with support for a dozen languages so far). The three biggest changes are:

Supplier Management

Their new supplier management module contains everything you would expect, including, but not limited to, self-registration, deep supplier meta-data management and search, and out-of-the-box Big ERP Integration. The supplier management module supports self-registration. When a supplier self-identifies, it will be presented with the default questionnaire(s), and upon initial review, the buyer can select the supplier for on-boarding, generate a full profile, and request that the supplier complete it. The buyer can define as many fields (across questionnaires) as they want, and each field can be tagged, filtered, and searched. Plus, the module, like the rest of the platform, integrates with JDE, Oracle, and SAP out of the box.

Workflow and Configuration

EC Sourcing has moved well beyond basic project management and now includes procurement request functionality (which can kick off a workflow outside of Procurement), deep approval and routing capability, customizeable status information associated with each task, and custom workflow definitions that allow a user to define a complete workflow for any sourcing project, with direct links into the relevant parts of the platform. All of these workflows are 100% configurable by the user, who can create them as templates, copy them, and customize them as needed for each sourcing project. Very few sourcing platforms have this capability, and no other mid-market solution has Procurement project management at this level of configurability and completeness.

e-Sourcing Automation Capabilities

It might sound trivial, but EC Sourcing’s new capabilities that allow the platform to:

  • automatically identify and invite all approved suppliers for a product/category
  • automatically attach specifications to an RFX on a line-item basis
  • automatically calculate advanced weightings and scorings (when the event is created from a template using advanced lots)

is extremely powerful, especially for large events and junior buyers.

Some categories (like office suppliers, MRO, etc.) have hundreds of line items and, for national (and international operations) that are collectively provided by thousands of suppliers. Even if each product or service specification (document set) can be located, uploaded, and attached in 2 minutes, for 210 items, that’s 6 hours of manual labour. And if there are 5 potential suppliers for each item, and no supplier can supply more than 50, it’s easy to conceive that there may be 1,000 different, pre-approved, suppliers. The manual time it would take to identify those 1,000 suppliers and then identify the lots they are allowed to bid on and configure that could be days.

However, with EC Sourcing’s auto-identification and auto-association capability, all approved suppliers in the SIM database can be automatically identified and invited to just the portion of the RFX/e-Auction they have been qualified to bid on and, if the documents follow a naming convention, all of the specification documents can be uploaded in a single zip file and the system will automatically extract the documents and associated them with the line, lot, or event as appropriate. This, as we noted above, can save days of a buyer’s time.

With the recent acquisition of classic mid-market leaders like Iasta (by Selectica, now Determine) and MarketMaker4 (by Xchanging), there are few providers that have been around since the noughts, fewer still with as mature a platform, and even fewer still with almost 2 decades of strategic sourcing advisory and consulting (which is how EC Sourcing started out before it realized that an organization could be much more effective powered by a proper platform as opposed to just a crack sourcing team with limited bandwidth). As a result, EC Sourcing is poised to make a big splash in the mid-market, and with the recent release of its newly upgraded solution, is sure to make one in the years to come.