Cassandra Thomas, Business Analyst
Denali Group/Denali Sourcing Services
1. Introduction: The Importance of Understanding the Supplier Perspective
In this article, Denali Group presents research on an often overlooked, yet important, aspect of eSourcing: the supplier’s perspective.
Among the many aspects of eSourcing that deserve careful attention, we encourage Procurement professionals to take the time to consider supplier opinions and concerns with regards to eSourcing. The supplier’s perspective is important because their understanding of and satisfaction with each eSourcing event directly affects the quality of bid submissions and overall event outcomes.
Just as supplier knowledge and satisfaction can improve with good eSourcing events, it can also deteriorate with less-than-desirable experiences. Thus, it is advantageous for Procurement professionals, or buyers, to view eSourcing through the supplier’s lens. This perspective helps buyers identify supplier needs and brings buyers and suppliers closer to a "meeting of the minds". When a buyer provides suppliers with better information, the result is increased participation and bid quality. This, in turn, helps buyers achieve their goals for each eSourcing project.
This article presents information gathered from leading eSourcing tools, as well as feedback from interviews with suppliers. It reviews commonly touted eSourcing benefits and finds that suppliers reap only a few of these benefits. Additionally, it details suppliers’ requests, which savvy buyers can and should integrate into their eSourcing best practices.
2. The Unfulfilled Promises of eSourcing
Generally speaking, eSourcing tools commonly tout a wide range of benefits to encourage both buyer and supplier participation in eSourcing events. The most frequently promoted benefits of eSourcing are:
Reduced negotiation time
Access to new customers/suppliers
Ability to see market competitiveness and validate competitiveness
Lower sales and marketing expenses
Easy quote process
While buyers experience most of these benefits, the suppliers with whom we spoke stated that they rarely reap these benefits. In fact, many of the suppliers reported that they generally experience only two of these touted benefits: fair competition and an easy quote process.
Rather than encouraging suppliers to participate in eSourcing events, eSourcing’s unfulfilled promises can often discourage suppliers. Suppliers can be frustrated and dissatisfied, which begins a downward spiral of weakened communication and trust that eventually leads to weaker event results.
Since eSourcing has the proven potential to provide dramatically improved event results, this lost opportunity is disappointing. It is worth each buyer’s effort to ensure that suppliers are satisfied with their eSourcing experiences. The following section highlights common supplier requests that, when fulfilled, allow both buyers and suppliers to fully reap the benefits of eSourcing.
3. What Suppliers Want: A Best Practices Guide
In our interviews, suppliers reported that they would be more likely to reap the benefits of eSourcing and be empowered to provide better submissions to all events by being provided with certain elements described below. Buyers should consider incorporating these requests into their standard procurement practices to become more effective and efficient.
Detailed RFX Requirements
Our interviews with suppliers revealed the need for detailed RFX requirements ranks highest on their list. When requirements are accurate, detailed, and specific, suppliers are able to submit a more competitive bid. Rather than "guesstimating" what the buyer wants and the best way to respond to a bid, it allows suppliers to work efficiently on a quality proposal. Additionally, suppliers relayed that it is very frustrating to compete for business when they can sense that the buyer is under-prepared for the project. This can lead them to suspect that the project may ultimately fail.
When presenting requirements, buyers must strive to give suppliers accurate information, especially regarding the project scope and timeframe. From a supplier perspective, this builds confidence in the buyer’s goal and leads to stronger participation.
Second to requesting more detailed RFX requirements, suppliers most often asked for additional post-bid feedback. Suppliers stated that more specific feedback would help them to provide better bids in the future. Buyers should provide timely feedback to both winners and losers. Feedback gives winners an idea of what they did well and assists them in replicating the good work in the future. It also allows non-winners to gain feedback on how they can improve and provide more competitive future submissions. Suppliers also stated that post-bid feedback would help them reduce costs and make participation worth the time invested because they would win more often. This also benefits stakeholders by increasing the quality of supplier participation in future events.
Suppliers expressed great appreciation for RFXs that are organized, thorough, and precise because they boost confidence in the overall award process. Suppliers reason that if the buyer spent the time and effort to create a detailed RFX, he/she is more serious about the opportunity and awarding the contract. Thus, suppliers are more likely to also invest their time and efforts in the event and submit a thoughtful bid.
More Stakeholder Communication
While most suppliers agree that it is an advantage for all competitors to receive the same information communicated through the eSourcing tool, they also expressed the desire for more interactive Q&A in the tool because this produces better information. Furthermore, suppliers think that the opportunity to participate in a bidders’ conference is beneficial because they have the opportunity to hear directly from the buyer and ask questions in real time. Bidders' conferences should use selectively, based on project complexity and confidentiality requirements.
Opportunity to Provide Alternative Solutions
Suppliers feel that the option to provide alternative, innovative solutions would allow for more opportunities for the buyer to save money and reap a better overall value. Buyers state that RFXs are often too restrictive in how the supplier may respond.
Finally, suppliers show great interest in learning how their bids will be evaluated. Provision of evaluation criteria allows suppliers to tailor their proposals and highlight the areas that are most important to the buyer. In addition, evaluation criteria eliminates time and effort spent to provide additional requested information after an event closes. Ideally, the buyer asks for the all information needed in the initial submission requirements.
Here, buyers should strive to strike a fine balance with suppliers. Certainly, it is not prudent to divulge all information, but buyers may consider providing pieces of information that can be of benefit to suppliers.
eSourcing outcomes can be dramatically improved with the integration of supplier needs into the eSourcing process. Adjustments will help propel a positive cycle from which both suppliers and buyers can benefit. More, and more competitive, high quality, and accurate bids from suppliers is the goal. Denali Group recommends that buyers take the time to develop and implement eSourcing best practices that acknowledge the supplier’s perspective and input.
Learn more about Denali Sourcing Services' best practices and insights and how they can help your eSourcing program.