Top 5 Ways to Maximize Value in Addition to Savings
How to make sure value is as much a part of what you deliver as savings
18th May 2018
Savings matter. A lot. You are judged on them and probably even compensated based on the savings you deliver to your organization. The CFO and Finance are looking to your procurement team to help the bottom-line.
In the year-end push to meet savings targets, it can be easy to forget that your highest priority is delivering value to your customers. Your customers “inside the business” are counting on you to deliver what they need, when they need it, at the right price. Savings factor into only one of those three requirements.
That said, there are simple steps you can take to make sure that you are maximizing the value to your customers while also meeting your savings goals:
- Use multiple parameters to guide decision-making
- Ask suppliers for their input
- Involve stakeholders in award decisions
- Know the business
- Make it easier to bring in new sources of supply
1: Use multiple parameters to guide decision-making:
Unless you’re running a simple eAuction, you should be incorporating multiple objective, and even some subjective criteria into your scoring. One mistake that companies make is to conduct a price-only negotiation and then try to incorporate factors such as service and quality after. Your eSourcing system can do this work for you and, if you use Scanmarket, it’s easier than you might think. Recent improvements to platforms now make it even easier to incorporate large amounts of data from outside sources, IoT, third-parties and others to help inform your decisions.
2: Ask suppliers for their input:
One of the biggest changes we’ve seen recently is asking suppliers to provide specification and “solution” advice before, and even during, the RFP process. Gone are the days when most events would have specifications issued once by the buyer and without input from others. Remember that your suppliers likely have more expertise in most categories than you do and certainly have more data about the supply market. Make use of it. They might even have some ideas on how to better solve your business problem.
3: Involve stakeholders in award decisions:
This seems obvious but is often overlooked in the rush to get projects finished. Your stakeholders need to be deeply involved in both setting the evaluation criteria (see #1 above) and interpreting the results. If they have played a strong role upfront, making a decision that everyone can live with will be much simpler in the end. It also helps to cut down on potential disputes after the negotiation but making your decision data-driven.
4: Know the business:
You’ve heard this at every procurement conference you’ve ever been to. Procurement is about sales. It’s about understanding the needs and challenges of your customers, in this case internal customers. By definition, focusing on their needs brings value. As your systems become more automated and better at performing the rote tasks of legacy procurement, your team will be freed up to collaborate more with others.
5: Make it easier to bring in new sources of supply:
By streamlining your supplier registration, approval and on-boarding process, you can make sure that new suppliers and especially their new ideas, are readily available to your stakeholders. Innovation is the life-blood of value and new suppliers bring innovative solutions.
Thankfully, eSourcing platforms have come a long way recently in their ability to help you expand beyond “just” price negotiating. For example, setting up a multi-variate bid that incorporates non-price variables into scoring used to take weeks of time from an expert. No longer. Now, even novice users can set up and execute events that incorporate both price and non-price criteria.
For more information on these approaches or to learn more about how Scanmarket can help you achieve your business objectives, please send a contact request or contact your Scanmarket Account manager.
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