Supplier sourcing events are a great way to attract new and existing suppliers to bid for your work. However, they are often not used in the most optimised way. At Xoomworks we have helped 1,000s of companies gain the best value from their S2P implementations. We do this using our XoomTune optimisation service that we provide our customers from 6 months after go-live. Based on real customer insight from many organisations, it benchmarks how well you are delivering against your business goals and provides recommendations on where improvement can be made to maximise the benefits from your procurement systems.
Using these insights, this article focuses on how you can maximise the most value from your sourcing events. In particular:
- Are your sourcing events as competitive as they could be?
- Are you inviting the right number and type of suppliers?
- Are you getting the best number of responses to your invitations?
With this information you should be in a better position to plan, execute and achieve sourcing events success.
Get your copy of our latest procurement insights eBook. Our latest eBook outlines 11 core insights into ‘what good looks like’ in e-procurement to help you optimise your procurement function. Get your free copy here.
1. Target your invitations
Inviting the right number of qualified and competitive suppliers can make or break your sourcing event.
In our experience of benchmarking 1000s of companies we have seen that the average number of suppliers invited is 3, and our clients only get responses from 1 of every 2 suppliers invited.
To increase response rate, and ensure you are inviting the right organisations, market research and due diligence will answer some key questions, such as:
- Are suppliers still active? If you haven’t purchased from them in some time, they may have ceased trading.
- Do you have the right contact details for each supplier? Individuals may have moved on and you need to ensure the invitation reaches the right recipient.
- Are existing suppliers still competitive in the market? They may have been moved aside by new entrants to the market.
Do suppliers have a poor financial rating?
- Have the invited suppliers used the Sourcing system or will they need support and possible training?
You need to identify the optimum number of suppliers, engaging with them early to check your contact details for the event invitations, to generate the necessary volume of competitive responses. Only then will you be able to effectively review and assess, maximising the value of the event to your business. You should also consider the amount of internal effort in reviewing and rating responses from your supplier responses.
2. Always plan for success
Giving your suppliers sufficient time to respond will increase their willingness to bid for your business and to prepare quality proposals. Similarly, you should plan enough time and resources to review and assess each response. More notice will be required for complex requirements.
In our experience, sourcing events align with contract termination dates and financial years, which tend to happen at the end of the calendar year. To ensure events are as successful as possible they should be aligned with your business objectives. Consider timing events to coincide with contract renewals, rather than calendar dates, distributing events throughout the year.
You need time and resources to assess responses adequately. Plan carefully to ensure these resources are ready and qualified to carry out the work. Tailor resources to the complexity of the task, for instance some events may need fewer resources if bidders are narrowed down with pre-qualification questions.
Be aware, suppliers need time to review your requirements and prepare competitive responses. Giving them the time they need will increase the value of each sourcing event.
3. Achieve your required response rate
Too many and you’ll be flooded with responses that you can’t process, too few and you may only have one proposal to consider, reducing the event to a tick box exercise. Targeting the process to categories of spend is one way to size events to match your capacity.
Our insights indicate that businesses typically receive 1 response per2 invitations. So, base your invitations on a likely 50% response rate.
Engaging with suppliers up front will pay dividends in the response rate you achieve. Gaining an understanding of which suppliers would be interested in responding will enable you to better plan your sourcing events, and ensure you get the right number of proposals from the right suppliers. You may also identify suppliers who can offer additional benefits such as soft services.
Effort up front will focus events on suppliers who will add value to your business and raise response rates.
4. Prepare for review and assessment
The review and assessment of proposals will vary for each event, depending on the complexity of your requirements and the weightings applied to criteria such as commercial terms, and functional and technical needs.
You need to ensure you have the right resources in place to complete the reviews. You may want to consider dividing the responses between review teams to ensure that technical and/or functional scores are not skewed by commercial considerations.
Detailed preparation for reviews may seem onerous but in many cases these plans can be re-used for subsequent events as each spend category is dealt with.
A few final recommendations for sourcing success:
- Take time to plan your sourcing events, both in terms of their size and timing during the year
- Do research and due diligence to ensure you have the best suppliers involved.
- Ensure your criteria for assessment are clear and workable.
- Review all your spend categories to determine where effort will add most value. Which spend categories make up the majority of your spend? Invest in these areas.
- Prioritise categories for this year vs. next year.
- Review your contract renewal dates and time sourcing events accordingly. Look at fixed term vs. evergreen contract and assess whether they should change.
Contact Xoomworks, part of Accenture to discover how we can help to optimise your procurement function.
Supplier sourcing events are a great way to attract new and existing suppliers to bid for your work. However, they are often not used in the most optimised way. At Xoomworks we have helped 1,000s of companies gain the best value from their S2P implementations. We do this using our XoomTune optimisation service that we provide our customers from 6 months after go-live. Based on real customer insight from many organisations, it benchmarks how well you are delivering against your business goals and provides recommendations on where improvement can be made to maximise the benefits from your procurement systems.
Using these insights, this article focuses on how you can maximise the most value from your sourcing events. In particular:
With this information you should be in a better position to plan, execute and achieve sourcing events success.
Get your copy of our latest procurement insights eBook. Our latest eBook outlines 11 core insights into ‘what good looks like’ in e-procurement to help you optimise your procurement function. Get your free copy here.
1. Target your invitations
Inviting the right number of qualified and competitive suppliers can make or break your sourcing event.
In our experience of benchmarking 1000s of companies we have seen that the average number of suppliers invited is 3, and our clients only get responses from 1 of every 2 suppliers invited.
To increase response rate, and ensure you are inviting the right organisations, market research and due diligence will answer some key questions, such as:
Do suppliers have a poor financial rating?
You need to identify the optimum number of suppliers, engaging with them early to check your contact details for the event invitations, to generate the necessary volume of competitive responses. Only then will you be able to effectively review and assess, maximising the value of the event to your business. You should also consider the amount of internal effort in reviewing and rating responses from your supplier responses.
2. Always plan for success
Giving your suppliers sufficient time to respond will increase their willingness to bid for your business and to prepare quality proposals. Similarly, you should plan enough time and resources to review and assess each response. More notice will be required for complex requirements.
In our experience, sourcing events align with contract termination dates and financial years, which tend to happen at the end of the calendar year. To ensure events are as successful as possible they should be aligned with your business objectives. Consider timing events to coincide with contract renewals, rather than calendar dates, distributing events throughout the year.
You need time and resources to assess responses adequately. Plan carefully to ensure these resources are ready and qualified to carry out the work. Tailor resources to the complexity of the task, for instance some events may need fewer resources if bidders are narrowed down with pre-qualification questions.
Be aware, suppliers need time to review your requirements and prepare competitive responses. Giving them the time they need will increase the value of each sourcing event.
3. Achieve your required response rate
Too many and you’ll be flooded with responses that you can’t process, too few and you may only have one proposal to consider, reducing the event to a tick box exercise. Targeting the process to categories of spend is one way to size events to match your capacity.
Our insights indicate that businesses typically receive 1 response per2 invitations. So, base your invitations on a likely 50% response rate.
Engaging with suppliers up front will pay dividends in the response rate you achieve. Gaining an understanding of which suppliers would be interested in responding will enable you to better plan your sourcing events, and ensure you get the right number of proposals from the right suppliers. You may also identify suppliers who can offer additional benefits such as soft services.
Effort up front will focus events on suppliers who will add value to your business and raise response rates.
4. Prepare for review and assessment
The review and assessment of proposals will vary for each event, depending on the complexity of your requirements and the weightings applied to criteria such as commercial terms, and functional and technical needs.
You need to ensure you have the right resources in place to complete the reviews. You may want to consider dividing the responses between review teams to ensure that technical and/or functional scores are not skewed by commercial considerations.
Detailed preparation for reviews may seem onerous but in many cases these plans can be re-used for subsequent events as each spend category is dealt with.
A few final recommendations for sourcing success:
Contact Xoomworks, part of Accenture to discover how we can help to optimise your procurement function.