Spend Matters welcomes this guest post by James Martino, CEO of Avotus.
According to the Purchasing & Procurement Center, an organization that provides comprehensive information for purchasing and procurement professionals, the advantages of e-sourcing are becoming more evident as a wider understanding of its many uses and benefits becomes apparent. Establishing an e-sourcing process that can truly realize these benefits is tricky at best and counter-productive, time-intensive and cost-prohibitive at worst. This is where establishing a partnership with an experienced vendor that uses the latest technology puts the user’s interests ahead of the suppliers.
Reverse Web Auction: Case Study
One such technology that has proven to be extremely effective is the online reverse auction. In this scenario, sourcing is entirely automated and replaces the inefficient paper-centric process for procuring global network services such as; voice, data, wireless, cloud and Internet (IP-based) broadband services.
The e-sourcing auction replaces a legacy RFP creation and issuance process with an automated online reverse auction, which allows service providers to bid against one another, in real-time, on rates, terms and quality metrics. This environment creates a buyer-enhanced playing field, where bidders compete aggressively on both quantitative and qualitative contract components and respond with bids and concessions that align to purchaser requirements.
The chart below shows how an e-sourcing platform, in this instance Avotus’ Intelli-Sourcing platform, drove bidder behavior to achieve aggressive pricing for a large utility customer. Note that in this example, an early stalking horse bid set the tone. Late in the process a major supplier broke from the pack to effectively outbid the competition and ultimately win the business – a win-win for both the provider and the end-user. As the chart shows, the key is to engage a broad range of bidders and provide them with visibility into how they rank against all other competing bidders, both qualitatively and quantitatively. “We know from running $1.3 billion in events like this that one or two bidders are typically going to break from the pack and contribute the lion’s share of the overall savings,” explained Hugh Shannon, director of business development at Avotus. “What we don’t know is who that bidder will be. Therefore, a platform that can manage a greater number of bidders without creating linear workload is of a great advantage. It’s almost impossible to create this dynamic outside of e-sourcing.”
Tagged: Telecom, Broadband, Pricing, Trends, ICM