When Does an eSourcing Platform Make Sense for Your Organization?
How many sourcing events do you need to have in a year to make it economically feasible to invest in an eSourcing platform? You may be very surprised by the answers which are based on direct client experience.
Let me start with a prominent hospital in the Midwest. Many hospitals are part of GPOs (Group Purchasing Organizations). These organizations do serve an important purpose in helping hospitals find needed goods and services. They can also provide buying power advantages in certain spend categories. However, hospitals and health care organizations that really want to take control of their purchasing will utilize a sourcing platform that goes far beyond a GPO. A well designed platform allows the organization to achieve cost savings at much deeper levels.
The hospital I mentioned uses a sourcing platform for large purchases like medical/surgical supplies that can exceed $1 Million per event. They also use it for purchased services with a baseline price under $30,000.
You are probably thinking: “I can understand why they are using it for million-dollar purchases but why would they spend time on a $30,000 purchase?”
The answer is simple – the sourcing platform provides a more efficient system for every purchase. The more items that you use it for the easier it gets because templates are already set up and can be quickly modified. By using the platform consistently you are making it easier for your suppliers too. They will appreciate knowing that they have an easy to follow format to submit a bid and will be motivated to work harder for your organization.
Next I will share the experience of another organization that currently issues 4 or 5 RFPs a year. They use Excel, Word and Email and a “3 bids” approach for these events.
They shared with me that it is a “pain” to do it this way and they realize they could probably achieve greater savings with a platform but are unsure how much they could save versus the investment. I suspect that they were also worried about the upfront time and effort to learn the RFP platform. This is a common issue for people that are overwhelmed – they don’t have time to explore something new even if it does promise time efficiencies.
I reviewed the following solution that would help them achieve time efficiencies and hard dollar savings.
The company that provides the RFP platform will work step-by-step with them to set up the initial RFPs. The sourcing platform can be utilized on an as needed basis or project basis.
The company was unaware that this level of service and flexibility was available and it is motivating them to move forward.
The final example is a private company where the majority of their expenses are salaries and benefits. Because of their spend makeup they never explored utilizing a sourcing platform. In a discussion with them I learned that they invest about $200,000 annually in mobile devices. They were unaware that using an eSourcing platform was an option on one-time purchases.
I reviewed the following solution that would help them achieve hard dollar saving without a significant time or financial commitment.
The company that provides the RFP platform will work step-by-step with them to set up and then run the RFP on a one-time project basis. This approach will provide time efficiencies since the project manager assigned to the project has significant experience in setting up and running events. The company will also benefit from the savings that competition brings to a properly organized RFP event.
So the bottom line is that a flexible eSourcing platform can help companies and organizations with widely different procurement needs to achieve their goals. One-time events, periodic RFPs or major ongoing purchase needs can all be met with the right tools.
Action Step: Finding the right system and tools for your needs can seem like a challenging process but it doesn’t have to be. If you are uncertain where to start, a procurement professional like myself can provide guidance and expertise to help your organization achieve the results you need.
If you want to explore a purchasing or procurement topic in greater detail, I invite you to request 30-minute discovery conversation. In my experience the next step will be apparent at the end of the call. I never assume that my recommendations will be right for everyone, so don’t expect a sales pitch. You can reach me at 973-936-9672.
Organizations of all sizes are reducing costs and increasing efficiency, without changing the way they conduct business. If you would like to know how, simply give me a call or send me an email with your contact information and the best time to reach you.
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Until Next Time, I Wish You Great Success in Your Business and in Your Life