I was surprised to hear a Sales Manager, tell me that they had refused to bid on a piece of work, because the client wanted to use ”eSourcing” as a method for supplier selection. I asked the person in question “was this not a normal practice?” It turned out that the person in question was “Old School” and could not see the opportunity, using digital skills amd techniques in reality he avoided the conflict of eSourcing because he was a relashionship guy.  I became intrigued by the issue, as a Procurement professional I have been using eSourcing as a tool, methodology and discipline for over eight years. I very much believe that e Sourcing is a “end to end” process and has a dominant role within the sourcing cycle. The issue that is been infuriating me now , for months is this idea that eSourcing is only useful for buying “Products” it does not work for buying services.  This is not the case and anew model is emerging that enables the value to be captured from eSourcing while driving the relationship model to new dimensions.

I started to see the opertunities a few years ago when we  we ran a eSourcing project to Source some 200meuro of service related spend, across a number of European countries. We did our ground work, we formed a empowered Sourcing Committee, we engaged with the engineering departments to develop complex SOW’s ,we worked with legal to agree pre release the Contracts, we managed all of the tasks within the eSourcing platform. This enabled us to keep everyone engaged within the project including the Steering Committee.

Using the eRFI tool we ran a complex review of market conditions, capabilities, financial as well as quality. We developed a evaluation criteria for Supplier Selection. This enables us to get a good view of existing and emerging suppliers across the Field of Operations. We started with some 20 suppliers and recommended to the Steering committee to go forward with 6 pre approve suppliers who met all of the requirements for doing business with our company.

We released a comprehensive eRFP Package to the chosen supply base, this included an overview of the process, detailed log-in instructions, a timetable for a supplier open day, all the SOW documentation. The Supplier Open days were critical to the success, as they enabled each supplier to have a whole day with the engineering teams who had developed the SOW. Once all the communication activities were completed the eRFP was opened. The suppliers had two weeks to complete the process.

What became very clear during the open eRFP process was that this was the opportunity to ensure that the supplier had indeed understood the SOW’s, it was the chance for us to focus on  harmonization, no more open Word documents trying to understand the response and match pricing within excel. We were able to harmonize the eRFP inreal time, as supplier entered responses into the pricing grids, we would realize almost immediately if the SOW had not been understood, we would issue a corrective notice to all suppliers if we detected something out of the ordinary. Once the eRFP was complete we did our analysis understanding that the baseline had been taken down by 29%

On the Monday morning we flipped the eRFP into an eAuction, one supplier later told me it was like being “cockroach and having the lights tuned on for the first time”  the baseline was taken down a further 8%. after 7 hrs of active bidding.

What did we learn during this process….

1. We only provided the Steering Committee with facts, this was great and we made it very clear from that moment on we would be the Fact Base Souricng Department.
2. The role of the Procurement Professional during this process. to being much more of a conductor a Project manager of different disciplines.
3. The Sourcing cycle was compressed into 8 weeks for a complex Service related event, in the old days it would have taken nearly six months, we did allow each supplier to come in and present their strategy and thier pricing.
4. You can do Service Related spend using these techniques and it works very well.
5. The Sales man was correct his role was  reduced to setting up meetings and getting the correct people involved during  the cycle, the relashionship role changed it did not go away. You can not beat Face to face and a firm commitment and a gentleman’s handshake still helps!
6. Letting suppliers fight with supplies to win our scope became key to our ongoing Sourcing waves