eSourcing technology has been around for years but many companies who would benefit greatly from implementing an eProcurement strategy are still not embracing the tools. We take a brief look at the benefits and some of the perceptions in the marketplace that may be limiting the uptake of this technology. Why Use eSourcing?
If you haven't looked at eSourcing or eProcurement technology before then the first thing to note is the numbers:
- eSourcing tools deliver 16% savings on average over and above traditional negotiation methods
But there are many benefits other than pure cost savings:
- Simplified compliance, governance and control
- Easier access to a wider market of qualified suppliers
- Transparency and a fair playing field
- Reduced admin through automation and standardisation
- Quicker time to value
Broadly speaking there are two parts to eSourcing:
- eRFX: The electronic collection of information / quotes / proposals etc. - a replacement to the traditional methods of issuing tenders
- eAuction: The online negotiation where suppliers submit their pricing and proposals in real time in an open market
These tools make it so much easier to engage with the market, drive the desired behaviour from well qualified suppliers and get the results you want. Using a web-based platform eSourcing greatly simplifies the process for suppliers as well as the business issuing the tender, supports a collaborative approach both internally and externally through super-efficient information flow. So Why Aren't More Companies Using It?
If you have ever laboured over a lengthy tender document, or been involved in bid responses, qualification questionnaires and so on, whether from a customer or supplier perspective, you know how arduous the process can be. Managing multiple suppliers and responses, information gathering and qualification is time consuming and can become a hugely complex and costly exercise if not kept under tight control.
Given the benefits of eSourcing it seems odd that more companies aren't harnessing the power of these relatively simple yet very effective tools. Andrew Walsh, PEPCO's Commercial Director and eProcurement specialist, shares some thoughts on why the technology is still relatively underutilised. PEPCO's experience of running esourcing
PEPCO has been helping clients realise the benefits of eSourcing technology for over 10 years, running hundreds of eAuctions to drive savings and efficiencies.
In conversations with clients we often come across similar objections at the outset. But as we share our knowledge and experience of the platform we are able to help businesses understand where and how these tools might work for them.
- "It's Not All About Price"
When we first approach people to talk about eAuctions we often hear this, and we couldn't agree more. We know this, and if we tender in the right way it actually ensures quality. The tools just make it quicker and easier to achieve that through a more robust and efficient process. Cost savings are an important part of the process, but not at the expense of quality.
Another common response we hear is, "we don't always want to just go for best price"
. Again we understand that lowest price does not necessarily mean contract award so the business always retains control of award. But the outcome of an eAuction will be a range of clear commercial proposals to support an informed choice.
- "It's Not Fair on Suppliers"
There is often a feeling that one of the primary objectives of running an eAuction is to "beat up" existing suppliers over price. Again, used properly, these tools actually give more opportunity to suppliers to engage in the commercial discussion. You can't make 400 phone calls to discuss a price or proposal but you can manage 400 bids, and you can do that in 15 minutes through an eAuction. It's also "apples for apples", rather than bespoke offers, so a well-managed eAuction process provides a much more even playing field for all suppliers.
- "Our Requirement Doesn't fit an eAuction "
This is a common misperception. If you are buying it, you know what you want with clearly specified requirements, and there is more than one supplier in the market, you can run an eAuction. And this goes for products and services. And if you aren't sure about suppliers then part of PEPCO's support process is to assist with supplier identification.
- "We Don't Have the Resource"
We understand that some companies have limited procurement resource and that focusing on these events can distract from "the day job", but with our templates and predefined processes, plus the support of our in house experts, make it easy to get started with eProcurement. We are also quick to point out that these tools are not a replacement for the skilled procurement resources you DO have. This technology is not designed to replace people, rather to assist them in their roles and make life easier.
- "Costs are Prohibitive!"
Cost of technology is probably one of the biggest perceived barriers to eProcurement. These tools can be expensive to purchase and implement with a dedicated team and full time resources etc. A large corporate might have a team of around six people and have invested hundreds of thousands of pounds in a system and tools. PEPCO's eSourcing solution is offered as a shared service, and can be run on an ad hoc basis making it a great midmarket solution; World class eSourcing technology without the corporate price tag. Why Work with PEPCO?
- A safe pair of hands - we have supported hundreds of eAuctions across multiple categories (both products and services) so we can help you get the best out of the tools for your business.
- Access to experts - we have considerable experience of the technology backed by solid procurement skills to CPO level, and category / market experts with specialist knowledge to support the process.
- Honest feedback and advice - we are well respected for our approach and will always be clear on suitability and provide an honest steer on projects.
- Flexible pricing - we offer a flexible commercial model ranging from one off events to a fully managed service. We can run trial events for you where we guarantee a 3x return on investment or there will be no charge.
- Support - as part of the service model clients have unlimited access to the tools and specialist support from the PEPCO team.
- Progression and management - we also have access to other tools such as Contract Management and Supplier Information Management to support you after award.
"PEPCO has provided us with the tools and support to implement eProcurement across key regions within our organisation which has supported us to generate significant savings. AHT appreciates PEPCO's commitment to the Asian and South American market by adding Chinese and Portuguese as future language packs to their eProcurement solution. AHT trusts that this will open further opportunities. We are delighted with the support received along with the value delivered through PEPCO's assistance." Thomas Hardt, Procurement Director - AHT Cooling
"The eAuction system has shown to add value to the PRET procurement process, driving additional rate savings following traditional price negotiation. The team are always responsive and have supported me to turn around events with little notice. The advice, experience and recommendations of the team have proved extremely valuable in driving the best results from the events." Amy Head, Head of Procurement - PRET