Just because thesourcing event you are running is complex in nature, it doesn’t mean that you should stray from your standard sourcing process. Steps such as supplier qualification, quality reviews and supplier reviews are all vital parts of the sourcing process and should not be skipped because your event can capture detailed data; this data should be used to assist and improve these steps. Align your normal process and change only as much as necessary.
Ensure total cost is used in the event:
At the end of the event, the winning suppliers must be awarded the business based on the assessment and awarding criteria defined. If not, you will lose credibility and struggle to gain buy-in from suppliers for future events. One of the benefits of complex sourcingis that you can capture all data to do this; including freight, assessing quality and even including the impact of cost of change. Remember that whilst best practice dictates a conceptual cost of acquisition, the complexity of the commodity could require large costs to change suppliers.
Use a user-friendly system:
System usability is essential from both your side and the supplier’s. If you cannot build the event in a reasonable time, you may end up not running it through the system, or revert back to a simple event. If suppliers struggle to enter a response, there will be many questions during the event with which to deal and potential opportunities missed if the supplier gives up. Once complete, the buyer needs to be able to quickly and easily view the results in the system. All the effort put into the event accumulates at this stage for the output.
A lot of thinking needs to go into the questions asked as part of the RFI Process – which could be exhaustive for the supplier to respond, but should be sensible. This makes the evaluation much easier at the end, and forces the buyer to properly articulate their requirements. Often, the problem is that the event is managed by a procurement person that may not understand the category / commodity – so best practice dictates that a Subject Matter Expert must be involved in the process, especially with complex categories/commodities. In addition, it is advisable to have questions grouped into relevant topics or areas. However with any grouping, relevancy needs to be kept in mind. Often, groups can be over-engineered and overly complex.
When implementing a new sourcing system, use a phased roll out:
When implementing any system getting the basics right first is highly important to obtain a good level of system adoption. Rolling out more complex functionality in future phases allows users to build up their ability on the system rather than being overwhelmed with large complex events straight away. Not all complex sourcing functionality will be appropriate for your business, and you can ensure only relevant functionality is rolled out.
In addition to exploring the best practices, our latest whitepaper covers much more about complex sourcing events including common pitfalls.
Train your internal users:
Complex events will typically be more difficult to setup in the system. Your users need to know what functionality is available to them and the best way to setup their event to properly utilise the functionality. Training material separated out for each type of complex event is useful, as often the buyer will only need to use that type of event once a year at the point of contract renegotiations. As new functionality is added by the software provider, or by phased rollout, it is important to keep your users well trained so the system is used properly and the users know what functionality is at their disposal.
It is important to be proactive and train suppliers before their involvement in a complex event. This not only reduces the number of questions you need to deal with during the event, but improves your relationship with suppliers by demonstrating that their involvement is valuable enough to provide a high level of support. Good supplier training reduces the risk of mistakes on an event which otherwise could have such an impact that the event needs to be re-run.
Support your suppliers during the event:
Suppliers can run into many types of problem when attempting to enter their response to an event. This can result in them giving up, and you potentially missing out on a savings opportunity or having to continually extend the event while the problems are resolved. Providing support to your suppliers during the event not only reduces the risk of these issues, but stops any damage to your relationship as their frustration is overcome by your high level of support.
Don’t neglect post-event supplier management:
The sourcing process often ends once the event winners have been informed that they have obtained the business. While it is best practice to always have a contract in place, this is even more important when complex pricing has been used. To ensure negotiated savings are achieved it is imperative that a contract is created in your P2P systemso that when purchase orders are generated the prices are correct. Obtaining feedback from suppliers on their experience provides valuable information that should be used to improve future events.
End the event at the planned time:
Extending your event does not make your business look good and frustrates suppliers that responded before the planned end time. To ensure suppliers submit their responses on time, set a firm end date and chase suppliers who have not entered their response by the day before the planned close. It is helpful to ensure your event does not end late on a Friday as suppliers often do not start their response until Friday afternoon.
And one for luck!
Always prepare and communicate: Complex sourcing eventstake time and effort for you to build and for your suppliers to respond to. Preparation is essential to ensure the event is built properly with the correct data and that all internal stakeholders agree with the process. There must be no question that the winner of the event is the winner. Part of this preparation is extensive communication with your suppliers so that they are aware of your process and timelines throughout the entire sourcing process.