Why Utilize Strategic Sourcing
Does your company experience the following situations?
Situation: Generate more competition
The company’s business improvement initiatives included cost containment efforts, along with plans to identify how "e-enabled" could improve efficiencies across the organization. The company considered using strategic sourcing projects to streamline its processes and find ways to improve purchasing efficiencies and performance with a strategic sourcing initiative. Additionally, the company wanted to generate more competition for purchases.
Challenges: Maintaining vendor relations and implementation
As a traditional company, they faced challenges in transitioning from conventional business methods to newer processes using technology. When the company first researched strategic sourcing, the initial impression was that the company would be forced to buy from the lowest bidder with no regard to service, quality and delivery. While the company wanted to find new suppliers, it also recognized the importance of maintaining its long-term strategic supplier relationships.
Solution: Procurex strategic sourcing services
The Procurex training dispelled the "lowest bidder" myth by emphasizing that the national retailer could limit vendor invitations to pre-qualified suppliers and that the company could award business based on more than just price. Specialists from Procurex worked with this organization to streamline its business processes. They provided vendor training and bid process support to ensure that their employees were comfortable with the process and to maximize supplier participation. Guided by Procurex, the retailer held its first project for $1 million worth of corrugated supplies. There were significant savings on this semi-annual purchase. "It was an educational process to get up to speed. It was a new concept to the majority of our group and the Procurex team helped us get there," said the organization’s Vice President of Fulfillment.
Additional Benefits
In addition to saving money, the national retailer found that using Procurex helps to avoid cost increases in vendor negotiations. Furthermore, their purchasing appreciates how Procurex improves processes and reduces administrative work.
Learn how to source more with less.
Situation: Process improvement
A Pennsylvania college, with a focus on maintaining fiscal stability, needed to reduce its costs and improve efficiencies. One of the main areas targeted for improvement was the school's procurement process. It was cumbersome and costly, with everything being done by sealed bids.
When a new executive director for business/auxiliary service was brought on board, he said he was "shocked to discover that negotiation was very limited in the higher-education procurement process." The executive director came from a background of high-volume negotiating and wanted to bring those advantages to this organization.
Challenges: Maintaining vendor relations and implementation
The personnel at this college first heard about e-sourcing and Procurex at the National Association of Educational Procurement Conference in St. Louis. Strategic sourcing projects were new to the college, and they had reservations about how embracing this technology would impact their vendors and existing procurement process.
"Initially, there were concerns that our vendors might not participate, and about how it would affect the quality of our relationships," said the director of purchasing. Additionally, the director was concerned about determining what categories and items would work best in a strategic sourcing project and give the college the best opportunity to save money.
Solution: Procurex identifies important process changes
A Procurex specialist addressed the school’s concerns and goals and assisted college personnel in understanding the e-sourcing process. Specifically, Procurex worked with the procurement personnel to identify the best categories and items to use in strategic sourcing projects.
Fears that the organization's suppliers would not participate in the auctions soon proved unwarranted. The director of purchasing said that they had learned "that if you create a good spec, and your suppliers are well qualified, everyone has the opportunity to earn the business; it's very competitive. We built into our bid package a question-and-answer element prior to the e-sourcing events to make sure the bidders had a clear understanding of the specifications and there were no assumptions."
All suppliers can receive training on bidding through Procurex and can access online help when needed. The executive director for business/auxiliary service noted that the "Procurex system was very easy to learn. Even our suppliers have commented on the excellent process and ease of the system. And that kind of feedback is important to hear because we strive to grant all competitive suppliers equal consideration while fostering fair, ethical and legal trade practices."
Using Procurex's strategic sourcing project solution allows the school's suppliers to quickly bid more than once in a dynamic environment. Plus, it improves upon the efficiencies of the bidding process while enabling suppliers to be more competitive. The benefit for the college has been a 10-20% savings on e-sourcing activity.
Additional Benefits
"At first I was skeptical of this type of bidding – converting our traditional bid process into an online competitive bidding process," said the director of purchasing. "In discussing this process with my peers, I soon discovered that some of the largest industries in the area, as well as some suppliers currently on our suppliers list, are actively using a strategic sourcing project process for their procurement needs. Now we have a very streamlined process. Using the tools of the system, we create definitive specifications and templates and can attach associated documents to the supplier invitations. We are currently using strategic sourcing projects to conduct 30-40% of our competitive bidding."
Additionally, by using Procurex's Publicly Advertised Event feature, the school has identified new suppliers and expanded their sources for key items. "We now almost always use this feature as means to expand our bid advertising efforts," said the director of purchasing.
Learn how to source more with less.
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