#esourcing platform

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4 Steps to Make Supplier Performance Management Work for you

Why is Supplier Performance Management important?

Supplier performance management is important for a number of reasons:

It helps ensure that goods and services are delivered on time and meet quality standards. This is especially important in industries where timely delivery and high quality are crucial, such as in the manufacturing or healthcare sectors.

It allows organizations to identify and address issues or problems with their suppliers before they have a negative impact on the business. This can help prevent delays, reduce costs, and improve overall efficiency.

It helps organizations make better-informed decisions about their supplier relationships. By tracking and analyzing supplier performance data, organizations can determine which suppliers are the most reliable and cost-effective, and prioritize their relationships accordingly.

It can help organizations build stronger relationships with their suppliers. By working closely with suppliers to understand and address their needs, organizations can foster mutual trust and cooperation, which can lead to long-term partnerships.

Here are 4 steps to make supplier management services performance work better for your business.

1) Determine the right KPIs

While you establish the practice of monitoring supplier performance, the first step is to understand what you will measure. Determine the exact metrics you will use to evaluate and track supplier performance. This will help you make more informed decisions when evaluating and assessing supplier performance.

The metrics you use should be specific, measurable, and realistic. This will ensure that you’re able to accurately measure your suppliers’ performance and make changes when necessary. You should also take into account the impact each measure has on the overall performance of your business.

Typical performance KPIs include:

On-time delivery

Quality of product or service – SLA adherence or rejections on the assembly line

Pricing terms

Sustainability & Environment

Risk & Stability – Reputation, Insurance, Financial Stability

2) Communicate your expectations early and often

Once you’ve determined the performance measures for tracking supplier performance, it’s important to be proactive in communicating with suppliers. Make sure that suppliers are aware of the metrics that will be used to measure their performance and how their performance will be tracked. This includes communicating your expectations about quality, cost, delivery timelines, and other key performance metrics. Ensure that suppliers are given enough information to allow them to make the necessary changes to meet your goals.

This proactive approach to communication with suppliers will create a culture of trust and ensure that everyone involved in the process understands their role in achieving success.

Additionally, you should establish regular intervals for evaluating supplier performance and make sure the data is collected and communicated with all stakeholders at these intervals.

3) Set up a system for tracking and measuring performance

Keeping track of and measuring supplier performance is important. A supplier performance scorecard is a great way to track and measure performance over time and make necessary corrections.

When setting up a supplier performance scorecard, there are several factors you should consider. For each measure, you should assign a numerical value that corresponds to a certain level of performance. Then, at regular intervals, you should gather data about how your suppliers are performing against these measures and determine the overall performance score for each supplier.

Choose a method for storing and organizing data, such as a spreadsheet or specialized software. For smaller organizations, spreadsheets work great. For more complex needs, specialized software esourcing solution is available that can help with tracking and analyzing supplier performance data. These solutions may offer features such as automated data collection, real-time reporting, and the ability to track multiple suppliers and KPIs. By doing this, you can easily track trends in performance and make changes where needed.

4) Maintain corrective action and continuous improvement

Continuous improvement is a key part of supplier performance management. This means continually working with your suppliers to review current performance, discuss areas for improvement, and set new goals and objectives.

By taking necessary corrective action, you can ensure that your suppliers meet the standards you have set for them.

If a supplier is consistently underperforming, it’s important to have a plan in place to address the issue and take steps to improve performance. This could include reducing the order size, providing extra training or resources, or finding an alternative supplier.

For suppliers that consistently perform to set expectations, you need to put strategies in place to maintain their continued involvement with the organization; most often requiring one-on-one meetings with management personnel from both parties involved.

Original Source: 4 Steps to Make Supplier Performance Management Work for you

[krinatisol]

Why Suppliers Should Not Fear Reverse Auctions

Reverse auctions are a great tool for buyers to save money, but many suppliers tend to be apprehensive about participating in them. Suppliers do not like participating in reverse auctions because they are typically viewed as a race to the bottom in terms of pricing.

There are more apprehensions which we will articulate in this article. We will also take a look at the remedial measures a buyer must take to ensure auctions are competitive and the best bid is placed by the most capable supplier.

Understand suppliers’ apprehensions about participating in reverse auctions

When it comes to participating in a reverse auction, suppliers are wary about who else will be in the pool of participating vendors. Suppliers fear that they will be pitted against unqualified or inexperienced vendors who will try to undercut their prices, compromising the quality of the product or service.

Incumbent suppliers may also worry about the fairness of the auction. They may feel that their knowledge of the buyer’s needs and the standing relationship they have with the buyer are not given enough consideration. This can make them feel devalued and uncertain about the outcome of the bidding process.

Large and established suppliers may further worry that a reverse auction only takes into account price, and does not measure their ability to deliver on the project or meet customer needs. They feel the auction does not adequately differentiate between different companies, especially if one has more experience or resources than the other.

Finally, suppliers will be wary of poor buyer behavior while conducting reverse auctions. Buyers tend to place phantom bids, not award business as per prior commitment or tend to negotiate further with the supplier post-auction. Such buyer actions demerit the effort and cause mistrust among the suppliers.

Communicate the benefits of reverse auctions to the suppliers

While supplier apprehensions have merit, the truth is that reverse auctions offer several benefits to the participating suppliers. Buyers need to ensure they inform suppliers of these benefits as well as other insights important to them.

One of the biggest benefits of reverse auctions is the level playing field it creates for all participating suppliers. They can see their competitive positioning vis-a-vis other suppliers and place further bids accordingly. They can trust the system instead of the words of a buyer! In other words, all suppliers have an equal chance of winning the business.

Reverse auctions open up new opportunities for several suppliers. The auction process allows suppliers to reach a much wider audience of buyers than they normally would have access to. This can lead to more business and larger contracts for many suppliers, reducing their sales costs.

Also, while winning the auction is often the primary goal, there are other benefits to participating in reverse auction sourcing. If a supplier does not win, they still gain insights into what their competitors are offering and the market value of their products.

Effectively manage every apprehension of the suppliers

Supplier apprehensions must be proactively addressed. If suppliers feel that reverse auctions are detrimental to trust-based relationships with the buyer, this needs to be managed on priority.

Communicating the award scenario to the suppliers prior to the auction and adhering to it builds trust. How many suppliers will be awarded the business? How much share of the business can the best bidder expect? Would there be any further qualifying steps for a new supplier? Greater the clarity on the outcome, the higher the competition from suppliers.

Explain to suppliers that you are not on a mission to find the ‘cheapest’ supplier. On the contrary, past performance and better capability are valued and factored into the auction. This ensures that the most capable supplier wins, not the cheapest on price alone.

If you have done a pre-qualification of suppliers prior to the auction, go ahead and communicate this to all the participating vendors. This will demonstrate the integrity and seriousness your company has when it comes to reverse auctions.

Summary

In summary, buyers must acknowledge that suppliers are wary of participating in reverse auctions. Their prior experience with other buyers, perhaps from the same industry, also set their perception regarding the process. These apprehensions are critical to be addressed because supplier participation is critical to the success of any online auction.

Krinati offers Program Management Services tailored to assist you in executing a successful eSourcing solution program. To do this, we focus on communicating the right message to suppliers and addressing their apprehensions. We also train users on the dos and don’ts of eSourcing as well as providing event management for sourcing events.

Original Source: Why Suppliers Should Not Fear Reverse Auctions

[krinatisol]

How To Build Credibility With Suppliers For Your Eprocurement Initiative

It is up to the buyers to enforce practices in their sourcing process that build trust with suppliers. These practices assume greater importance when companies resort to eProcurement.

Companies that have been successful in building a credible eSourcing initiative tend to adopt the following practices. These practices have been shown to encourage suppliers to participate in a fair and competitive manner.

Buyers agree to the following steps that establish credibility

Detail out the requirements clearly. While the incumbent suppliers understand even the unstated requirements, the new ones wholly rely on the RFP for clarity. So explain the specifications and service level expectations as clearly as possible.

Award only to the suppliers who bid online. Manage suppliers who don’t like to bid online with great urgency and importance. A handful of such suppliers can derail the entire eSourcing platform initiative.

If lots (containing multiple line items) have been created and suppliers are bidding at a lot level, then award at the lot level only. Do not attempt to optimize the award at a line-item level later. This is unfair to suppliers who tried their best to be competitive at the lot level.

Do not simply eliminate suppliers who tend to quote too high or too low. Give them a second look. Discuss the pricing with them. It is possible that they have misunderstood the specifications or requirements.

Communicate the award scenario clearly. When suppliers bid aggressively, they need to know what’s up for grabs. Buyers must state the number of suppliers that might get awarded and the share of the business that they can win depending on their competitive position.

Some additional best practices while conducting an online auction

Qualify suppliers before the auction. It is advisable not to have unqualified suppliers compete with qualified ones. It does not make a level playing field and will definitely cause issues during the award.

Award business at prices bid online. Do not negotiate offline with suppliers, especially with the best-bid suppliers. While it may seem rational to do so, every supplier will get to know of this practice and they will not honor future auction procurement.

Do not place phantom bids during a live auction. This is an unethical practice and can have serious ramifications. Buyers do this thinking that suppliers will not get to know. But when they do, they will refuse to bid online again.

Encourage suppliers to conduct themselves fairly. They must…

Respond completely and honestly. The qualifying questions have been asked for a reason that needs to be responded to in its entirety. Do not shortlist suppliers that have provided incomplete documentation.

Submit all bids as legally valid ones. Do not give lame reasons later as to why a submitted bid must not be considered.

Bid online and as aggressively as possible. Suppliers must understand that there is no scope to negotiate prices offline. They must bid online aggressively to win the business instead of using other means to convince buyers of their capability.

eProcurement does not mean that everything happens online. Supplier management is more important in this case. Understanding and proactively addressing supplier concerns to bid online is vital to the success of an eProcurement initiative. Spend quality time managing suppliers offline while the bidding happens online.

Original Source: How To Build Credibility With Suppliers For Your Eprocurement Initiative

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What Is An RFP And Why Is It Important To Digitalize It?

What is an RFP?

A Request for Proposal (RFP) represents a document or a sourcing stage where proposals are solicited from suppliers or solution providers.

The Buyer uses the RFP to state the requirements of the goods or service being procured, the terms and conditions of the engagement, the vendor evaluation criteria, and most importantly the bidding sheet. This bid sheet outlines the quantum of goods or services and suppliers need to quote the price for the same.

RFPs apply to all types of spend – indirect, direct and capex. Every sourcing process needs an RFP in some form or other; with varying complexity depending on the nature of the item being sourced.

3 key aspects of an RFP that underline its importance1. RFPs precede the ‘negotiate & award’ stage and hence need to be managed from that perspective

An RFP is followed by a negotiation process after which the business is usually awarded to the most competitive supplier in terms of price, capability and service.

In an online eSourcing platform scenario, RFPs precede auctions and hence set the basis for the starting price for every supplier. If multiple suppliers have responded within a narrow price range, the chances of a successful auction are high. Note that If prices are high, it is not advisable to rush into an auction without understanding the reasons behind high pricing received from the suppliers.

In addition, negotiation happens with qualified suppliers only. Hence the RFP must solicit all kinds of information for buying teams to achieve that.

2. Supplier Management is critical once RFPs are floated

Supplier responses to an RFP are the initial indicators of the supplier interest and eventual success of the sourcing project. While the buyer may think the business is exciting for every supplier, it may not be the case. A large steel furniture company put out a bid for USD 30M worth of fabricated steel. While this seemed a phenomenal business for any new vendor, it required many of them to invest significantly to meet this demand. The terms & conditions didn’t address this aspect and hence the RFP received a lukewarm response.

Supplier participation is key. If an RFP is floated to 15 vendors and only 2 of them respond, it’s a cause for concern. Either the specs are wrong or over-designed or the suppliers have misunderstood certain aspects of the RFP. Reaching out to them proactively and addressing their concerns is vital.

3. Standardization of RFPs helps to lower cycle times

Studies show that companies spend 30% of their sourcing cycle time in drafting RFPs. Many times, sourcing teams tend to recreate RFP content rather than reusing content from previous RFPs.

In addition, standardization helps in reducing time-to-publish and also allows teams to proceed with greater clarity.

Standardization of pricing bid sheets (computation of activity costs or landed costs), terms and conditions, qualifying questions, etc. help a great deal in speeding up the process.

What are the benefits of digitalizing RFPs?

It is common for many sourcing teams to only adopt online auctions as part of an esourcing initiative. RFIs and RFPs continue to be manual though. At Krinati, we believe this is a sub-optimal approach and greater value could be realized if RFPs are digitized and executed online too.

Online RFPs help sourcing teams achieve the below.

1. Reduced time to create and publish RFPs

Templates help in creating and publishing RFPs in minutes.

Say there is a qualifying questionnaire used to purchase chairs for a new office. This questionnaire can be saved as a template and reused for the next sourcing event. Let’s assume that the team made some omissions in the previous sourcing cycle – they forgot to ask for after-sales support for the chairs and the time for resolution. Since questionnaire templates can be modified on-the-fly, the event content remains updated and available at the time of publishing the sourcing event.

2. Improved supplier management and collaboration

Supplier bids should be analyzed as soon as they are submitted online. How does one supplier fare vs the others? Have suppliers responded to all the line items? Are there any line items that haven’t received any response? It is critical to evaluate the RFP when it is still live because all the analysis done post the response due date does not serve the same purpose.

3. Greater Savings

Suppliers tend to trust a system more than the words spoken by a buyer. Competitive RFPs display the rank and/or leading bid to suppliers as soon as they submit their response. As a result, this sets in some competition and suppliers submit several bids while the RFP is live.

This works great when items are bought for the first time or when there is an auction procurement to follow. RFP responses tend to be in a narrow range which sets up an auction very well.

4. Compliance and audit-friendliness

We all agree that this is one of the most audited processes in any organization. Auditors need to know — Were 3 bids were sought? Which suppliers did not participate? Why did they decline? Who approved the award? Who qualified the supplier (evaluation scores)?

Online RFPs provide this much-needed compliance that keeps the internal audit team happy!

Original Source: RFP eSourcing Platform

[krinatisol]

What Is eSourcing And How Do Companies Benefit From It?

What is eSourcing?

The process of Sourcing involves finding new suppliers, evaluating their capability, comparing their products and offerings with the requirement or with the incumbent supplier’s offering, collaborating with all suppliers to receive commercial bids, analyzing the bids, and negotiating for the optimum price & capability mix.

Depending on the strategic nature of the goods or service being sourced, some stages of the sourcing process assume greater prominence, say brainstorming sessions to decide on cost reduction levers, inputs from manufacturing and quality teams on issues faced, and framing an approach that addresses them.

eSourcing helps to digitalize the entire Sourcing process through an online platform that is accessed by both the buying team and the suppliers.

eSourcing solution typically delivers 3 functionalities viz.:

1. Request for Information (RFI)

A questionnaire that suppliers respond to. Given the strategic nature of the sourced category, the questions can be weighted and the supplier responses scored by a cross-functional team in order to arrive at a net weighted average score per supplier.

2. Request for Quote (RFQ) or Request for Proposal (RFP)

Here the specifications, quantity of the items or goods being sourced along with the terms & conditions are sent to the suppliers. Suppliers provide commercial bids for the same. Collaboration with internal stakeholders and addressing supplier queries are done online

3. Online Auctions

The 3 basic types of online auctions include Reverse Auction for suppliers, Forward Auction, and Dutch Auction. Online auctions help a buyer negotiate with multiple suppliers across multiple categories in an effective manner making the negotiation process more transparent to the supplier.

What are the benefits of eSourcing?

There are 5 key benefits of any eSourcing solution. It is important for every organization to articulate the benefits they seek or the problems they need to solve and ensure the same is achievable using the solution they have shortlisted.

1. Higher COMPLIANCE

Conducting the sourcing process on a common online platform instead of emails, spreadsheets, and phone calls ensures higher compliance. Strong audit trails help audit teams to understand how many suppliers participated, which suppliers declined to participate and why, who approved the award scenario, who provided what evaluation to a supplier response, etc.

2. Lower CYCLE TIMES

There are two aspects to sourcing cycle time. One, the time taken to create an RFI or RFP, and two, the time taken to award the business post releasing the RFP. eSourcing tools allow users to create and reuse templates that speed up the RFX creation process. Buyers should be able to analyze bids as soon as they are received and collaborate with suppliers instantly to reduce the time to analyze and award business.

The use of templates also standardizes processes and enables sharing of best practices between buying teams spread across locations.

3. Improved COLLABORATION

Collaboration is important between the buyer and other internal stakeholders within the organization and externally with suppliers.

4. Lower COST

Auctions are proven to deliver 9-11% off savings for indirect spending. This is one of the best means to test qualified suppliers competitively.

Competitive RFPs also display the Rank/Best Bid to suppliers, which helps get multiple bids from a supplier without much effort. The time assigned to all suppliers to respond to the RFP say 3 days or 10 days, is more productive for the buyer.

From a supplier’s perspective, they tend to respond better to eSourcing solutions because they trust a system more than what the buyer verbally informs them. Supplier management is easier. The solution needs to be user-friendly not just for the buying team but also for the supplier to log in and participate in the sourcing event.

About Krinati Sourcing

Krinati Sourcing is an innovative solution that delivers the above benefits. Our solution is used by marquee companies globally across multiple industries. What makes us stand out from the competition is the ease of creating complex pricing sheets – be it Activity Based Cost Models or Total Cost of Ownership models. The ease of use ensures high adoption and our vaunted support services ensure every customer is successful.

Original Source: What Is eSourcing And How Do Companies Benefit From It?

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5 Reasons Why Customers Engage Krinati For Their eSourcing Requirement!

In the last couple of months, we have been successful in signing up new customers across 4 countries. These companies are from varied industries - Financial Services, CPG, Auto, and Energy & Utilities.

Here are 5 reasons why companies select the eSourcing services of Krinati to tide over the ongoing crisis.

1. Immediate Savings With Online Auctions

Conduct Reverse, Forward, and Dutch auctions for direct materials, indirect materials, and capital expenditures. Our customers also conduct online auctions for packaging and logistics spending. All of these are aligned with making the process more transparent for suppliers too.

2. Digitalization Of The Entire Sourcing Process

Automate RFIs, and RFPs, Analyze bids in real-time as soon as they are submitted by suppliers. Generate Note for Approvals. Buyers experience greater control they now have over a sourcing event, with critical information at their fingertips to execute activities much faster.

3. Highest Rate Of User Adoption & Spend Coverage

One of the easiest solutions to use while addressing every complexity of sourcing various categories. Our customers pass 100% of their spending through our solutions – either RFPs or Auctions.

4. Improved Team Collaboration & Knowledge Management

Krinati Sourcing leverages team collaboration & knowledge management at the core. Enhance stakeholder collaboration within strategic sourcing projects and reduce cycle times to release an RFP.

5. A Team Focused On Ensuring Customer Success

eSourcing platform is about balancing the needs of buyers, suppliers, and everyone in between to make sure they're all successful. With decades of experience behind us, we help best-of-breed companies find the right fit for multiple categories so that they can get the best price and service.

Original Source: eSourcing Solution