eAuctions. Savings. I have the weird impression I have covered this topic in and out already (Read my 30 posts about eAuctions) but still needing to share about it, as if I was feeling it was not well understood by everyone. As a matter of fact and as I was reading with interest the commercial brochure of Trading Partners– a eSourcing provider founded in 2000 by Chirag Shah, now CEO, and Sirish Reddi who left in 2003 – I enjoyed their saving track record and especially their 64% top score on temporary staff (see below). Nothing outstanding there – well, at least for me, as I already reported on this blog savings of 65% and as I conducted an auction with Eutilia saving 75% on caps – but the confirmation that being able to run reverse auctions is an incomparable competitive advantage, a lethal weapon, whatever your perspective is.
Hypnotised by those figures as any CEO or CFO would be, thrilled by the impact it means for their bottom line, I was wondering why it takes so long for competitive bidding to become mandatory (kind of) in the sourcing process of big enough companies, as long as the product/service bought is neither strategic, neither a bottleneck: prices are low, methodology is clear, results impressive… so what? Indeed, how many companies have acquired a 5 or 6 digits licence to run competitive bidding while not doing any, almost, even with a well trained staff to manage their sourcing events? I would say, based on the ~100 companies I know, a majority.
From my perspective, no doubt: mandatory auction makes sense when applicable, i.e. for Commodity or Standard products/Services (where competition exist, by definition).
I can see different rational to explain why eAuctions are not as popular and used as they should be, but to make a long story short I would mainly underline as the main reason a lack of preparation from buyers and successful vendors making their product ‘unique’.
Ask a buyer in which quadrant (CSSB) he is categorising his purchasings, which strategy/tactics he/she is applying? Guess what, it happens more than rarely that he/she doesn’t know, claiming lack of time to justify the situation… Whatever the reason is, without a clear understanding of the ‘problem to solve’ and without a proper categorisation in particular, it becomes obviously improbable to invite the right suppliers and to define the right strategy and tactics to use. Without preparation and proper SG profiling (the basics) the product/service to be bought tend to be naturaly categorised as Strategic or Bottleneck (so specific that only one company is able to comply to your needs). From there, you’re stuck.
By the way, what about you? Is your company running auctions daily or weekly? Are you aware of this level of savings as published below by TradingPartner? If so, congrats, sincerely!
(click to enlarge)