Does your company’s sourcing of products and services resemble a frantic trolley dash — or a laborious trip to the shops where someone always comes back with the wrong thing, or at the wrong price? Sourcing should be simple. But it’s easy to waste time, talent and money.
Every year, organisations spend millions on products and services for their own needs. Businesses need laptops, mobile phones, leased cars, hotel rooms, temporary staff, legal services and countless other items.
But think back and you’ll probably recall some horrendous corporate purchases from your own experience. There’s the kit that always kept going wrong, the professional service with unexpected hidden costs and the suppliers that promised much but let you down every time. That’s not to mention the sky-high prices paid for some items that bizarrely slipped through the net.
Sometimes ‘best value’ is achieved, sometimes it’s a vague aspiration, remote from the real world.
So why does this happen? In broad terms, bad sourcing is often caused by a mixture of a lack of time for procurement staff, fiendish complexity and an inability to have visibility and fully control the process in a timely fashion. But there are more specific reasons why failures keep happening.
Five typical reasons why sourcing goes wrong:
Reason #1: It can be difficult to capture requirements from end users and organize these into an effective ‘expression of need’ in the form of a supplier questionnaire, such as a RFI, RFP, or RFQ (RFx).
Reason #2: Evaluating supplier responses in a traditional tendering process can be paper-intensive and extremely time consuming. Often, selecting a supplier becomes too subjective.
Reason #3: Auctions can deliver great results. But they need to be planned, managed and ended effectively and openly — so everyone can see they are fair.
Reason #4: Defining the process required for a sourcing event through to completion and tracking its progress can be tricky, especially if you’re reinventing the wheel every time.
Reason #5: Company policies, compliance rules and legal requirements are constantly changing — making them hard to remember. This means they can be frequently ignored or inadvertently bypassed, putting an organisation at risk.
What can be done?
It’s easy to blame procurement staff when sourcing goes wrong — when instead, companies should be arming staff with the right tools to manage an extremely demanding process.
What’s needed is a framework that provides the most appropriate sourcing methods for each situation, from strategic multi-stage tenders to auctions. In other words, something that works just as well, whether you’re purchasing a sophisticated professional service, or a paperclip.
Visibility, fairness and savings
Such a framework must provide a way to structure, streamline and track the entire sourcing process. This should apply to the requirements specification, to publishing of RFx (RFI, RFP, RFQ) documents, evaluation of responses, execution of an interactive auction or management of a simple competitive bidding process. Everything should be consistent, visible and repeatable.
Ultimately, such a system will be trusted by employees, managers, partners and suppliers. You put in your requirements and out come ‘best value’ products and services, every time.
What’s more, significant savings are possible, thanks to the latest eSourcing methods.