Tuesday, 31 October 2017

5 Top Tips to no longer fear


In honour of Halloween, this article is to help you overcome what seems to be a very scary concept to organisations - the reverse auction. Too many procurement people, or perhaps your stakeholders, the mere mention of the word ‘reverse auction’ can install huge pangs of anxiety, or even terror. There is a misconceived notion that reverse auctions are complex beasts, that only the most experienced, battle-hardened procurement professional is capable of running.

There is a common saying that “People fear what they don’t understand” so we’re here to help you and your stakeholders overcome your fear of reverse auctions. These 5 top tips are designed to tackle any feelings of fear you have towards reverse auctions, and hopefully, teach you that they are something to embrace.

Top tip 1 - Pick your initial categories strategically and prove the value

Our study into reverse auctions showed that 90% of respondents thought stakeholder buy-in was the major barrier to running reverse auctions, (Read our barriers to reverse auctions blog here). If possible, try and choose some non-sensitive categories to run reverse auctions on, to begin with. Office Supplies is a great choice for this (apologies to those of you who are very precious over the type of pen you have). Invite stakeholders to view the auction, showcase the value you can offer and hopefully it will be a springboard for success to attack some other categories.

When it comes to choosing which category to run a reverse auction on, look for those which are easy to define, has savings potential, and high liquidity (high number of capable and interested suppliers).

Top tip 2 - Sell the benefits to all parties

This tip applies to both your stakeholders and suppliers. For suppliers, in what other scenario do they have an opportunity to receive some live feedback on their competition and where they sit in the market. Typically, the only feedback suppliers will receive is what the procurement lead offers them, and this can be hard to come by.

For stakeholders, the obvious benefits to reverse auctions would be price, but there are much more. It can offer insights into bench marking as well as true Market Price. We’ve seen some reverse auctions where 5 suppliers have been within £100 of each other for a £million contract - that is true market compression. It is also a much more efficient negotiation method where you can involve multiple participants over short timescales, and with no geographical constraints.

Top tip 3 - Seek guidance from your solutions provider

Your solutions provider should have seen a wealth of eAuctions completed across their client base, across a huge selection of categories too, and are in an ideal position to help you with construction and strategy for your eAuction. Don’t be afraid to pick their brains, they’ve probably seen your category put through a reverse auction, or something very similar. At Market Dojo, we’ve seen over 10,000 eAuctions across more than 150 categories run through our tool. We want to see our clients succeed, so we offer lite strategic advice included within our licence cost, to maximise the likelihood of success.

Top tip 4 - Communication is key - get your suppliers bought into the process

I cannot reiterate the importance of communication throughout the reverse auction process.  Communication needs to be clear and consistent from start to finish and will help with any objections you have from suppliers. Explain to your suppliers why you’re looking to do a reverse auction, hold a session with all the suppliers to give them the opportunity to raise any concerns they have and take the time to give them feedback to alleviate those concerns. Inform them about the award criteria you’re going to use (see Tip 5), and ensure that your award method is consistent.

Some suppliers will have a negative perception of reverse auctions, but the way that you communicate will go along way to changing their opinion. Please do not change the award criteria at the last minute, as it will completely undermine the entire process.

Top tip 5 - You are not obligated to go with the lowest price

“We’re not an organisation which buys purely on the lowest price”  - Good because you don’t have to! There is absolutely no obligation to go with the cheapest quote within the auction. More often than not, reverse auctions are run under what’s called a ‘buyer's choice’ meaning you have free reign to award the business to whatever supplier you see fit.

Furthermore, you can actually run weighted reverse auctions, therefore combining the quality aspect to your tender with pricing in the reverse auction. This works in exactly the same way as if you were to run a weighted RFQ, but with live rankings based on a combination of price and quality scores. There is no reason to not run a reverse auction based on the objection of a price.

Don’t forget the importance of communication to your suppliers - make sure you follow through on your actions.

For more information on barriers to reverse auctions click here.

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Tuesday, 10 October 2017

New Release - October 2017

Autumn is definitely here, and we have been busy improving Market Dojo. This month we have released two features that our customers have requested. We have also made a whole bunch of improvements which are less conspicuous, but let’s focus on the headlines.

Market Dojo - More than five questionnaires
We have increased the limit on questionnaires in Market Dojo from five to ten! For some of our customers, this is really important so that they can gather more information about the participant's offers. This additional feature is now live so just add more questionnaires to your event as required.

Screen Shot 2017-10-09 at 12.40.02.png
SIM Dojo - archive and delete participants When onboarding suppliers, from time-to-time you want to remove someone from the process. This may happen because the wrong person is invited, or you are certain you will not require their services in the future.
Now, you can do this easily in SIM Dojo. When you are viewing the decision tab for a participant, there is a new option to move them to the recycle bin. Once they are in the recycle bin, they will not be counted in reports or sent any emails. If you change your mind, then they can be restored. 
recycle bin.PNG
We hope you like these two improvements, and we look forward to sharing more exciting news soon.

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Tuesday, 3 October 2017

CPO's first 100 days by Erik Van Kampen

Market Dojo continues its search into transforming procurement teams in the CPO’s first 100 days. This time our guest contributor is Erik Van Kampen.
Erik is an experienced and successful procurement professional with proven success and continuous progression gained within major blue chip companies, including heading up Procurement at Old Mutual Wealth.  Erik shares his view on the first 100 days as a CPO.
Procurement is common sense, right?  We all buy things every day, whether it’s shopping, holidays, cars or computers.  We become perceived experts in what we buy. It’s hardly surprising that when you join a new organisation, there may be differing opinions and expectations of colleagues and stakeholders about your approach and strategy.
What did you promise you could deliver during the multitude of interviews and what do you expect to achieve? How do you assess opportunities and when do you do it? A previous boss and mentor once said to me that the first 100 days was “your only opportunity to ask stupid questions” which made me laugh at the time, but I guess has its merits.
There is only a limited time for you to take stock before someone will ask ‘now what’. The ‘now what’ is what will shape your success, and from my experience, this is five ways to get there.
#1 Promises
Set the tone. Be clear about what you will and can achieve and what is needed from stakeholders to succeed. Procurement is not rocket science so don’t make it difficult for people to understand. Something that always helps me is to be clear, use plain English, and be accessible to your team, stakeholders, and key suppliers. Establishing an understanding of key contracts, areas of spending, policies and process as well as the systems that are in place would be one of the first stops.
My natural style is to focus on relationships. People need people and while technical skills are important, unless you can relate to other people and influence them then the outcomes will not be optimal. Lastly, be honest and straight up with people. The key deliverable may be a strategy paper or roadmap focusing on aspects such as Sourcing Execution, People, Systems & Tools, as well as Policy, Process and Governance and when things can be achieved.
#2 Leadership Team
The most successful teams I’ve worked in have a complimentary mix of personalities, skills, and experience. You shouldn’t hire in your own likeness, nor should you be intimidated by people with more experience or a different outlook. Provided everyone is working towards the same overall objectives and support one another then you’re halfway there.
Competition is healthy and can be good fun if you don’t take yourself too seriously.  Get to know people, their strengths, weaknesses and aspirations (personal and professional). Use the knowledge that is already in place and don’t rush into making wholesale changes just because you’re new, unless there are clear issues that need to be addressed, There are bound to be disagreements, but establish trust and respect early and avoid ‘public’ arguments when opinions differ.

#3 Policies
Look at what is in place. Are policies easy to understand and are they concise, or a source of frustration and to be avoided at all costs? Think about how you can make it easy for people to do business: with suppliers and procurement.  Different industries require/welcome different levels of compliance and control; use a flexible and risk-based approach.
#4 Systems
Procurement is evolving and technology platforms are becoming more commonplace so don’t be afraid to try things out and don’t believe that a single solution provider is the best route. Decide which aspects would benefit from integration (if any) which could mean not sourcing the best but something that does the job.
Personally, I don’t believe that full scale automation is going to be the answer to everyone’s Procurement woes, but I do believe technology has its place.  However, the business process and data behind it must be effective and mature.
#5 Data
Crap in = crap out! Data relies on the input source so unless the people putting the information incorrectly, you are off to a bad start and fixing will take a lot of effort. Make sure you have skills in place to drive adoption and manage ongoing data quality.
Data quality is key to any Procurement function. Whether the subject matter is spend data, contracts, etc. if you get it wrong you risk undermining the credibility of the function and individuals in it. Work hard to get it right and ensure resources are available to maintain it.  It is critical that sourcing and procurement teams know why it’s important and understands that they are pivotal to it.

Erik is currently working as an interim Market Data Procurement Consultant at Chain IQ Group, where he is engaging with key financial index providers to ensure compliance with the European Benchmark Regulation.  If you would like to reach Erik directly, you can find him on Linkedin.
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!