” 8 % Average Costs Savings on Direct & In-Direct Purchases “
… Is what Our Clients Are Claiming To Be Saving
How Would That Impact Your Bottom Line?
“Procurement Power Bidding By Serex … A Magnificent Optimisation between Simplicity and Functionality for both Buyers and Suppliers”
Squeezing the last reasonable margin out of your suppliers is tricky and is considered an art. It is a fact, when purchasing, suppliers are not always giving you the best price. It is always a cat and mouse game of how margins are dispersed between your pockets and the suppliers’. Best price, among other things, is a function of how much the supplier wants your business and/or is worried about losing it. But how does one illustrate that fact vividly & quickly ?
Procurement Power Bidding by Serex
Procurement Power Bidding creates a very quick and easy environment where suppliers bid against each other and see their relative bid positioning very clearly, ultimately leveling the playing field.
Many fortune 500 companies have realized the power of this type of purchasing and have been forcing most of their suppliers through one type of an auctioning system or another for a number of years.
It is a fact, any purchase has associated costs. These costs typically vary based on the item being purchased, amount of negotiations required, quantity, frequency and delivery.
When one purchases a variety of products from several vendors, particularly commodities, there usually is a great deal of back and forth communication regarding price, delivery and exact specifications.
This process is highly inefficient and can easily be stream lined by using our Procurement Power Bidding Solution … Here is how:
The Procurement Power Bidding Solution turns purchasing into a social media play, allowing buyers to post all items required for purchase up on a private and encrypted request for price purchasing web page, where among other criteria
- Starting prices are set
- Required delivery options are specified
- Exact product descriptions & specifications and even pictures are posted
The buyer then sends an email to one or more of the approved suppliers with a link directing them to the request for price web page where each supplier can enter an encrypted price for the requested items. Optionally the buyer is capable of creating a reverse auction that would start a bidding process. When the post or the auction has expired, the buyer will receive a notification and will decide which supplier will be awarded the purchase order and voila …. “Bidding Process Simplified”
Is Your Company A Candidate ?
Procurement Power Bidding ROI is realized when these few basic criteria are met:
- Does your company buy more than 500 different products?
- Does your company have an average of 3 or more suppliers for each products?
This applies whether you’re purchasing inputs for manufacturing, products for reselling, or products/services for internal use.
If you answered YES to both questions … You are definitely a candidate!
Why will total cost of purchasing be lowered?
- Significant reduction in all communications between buyer and supplier
- Total Simplification of the buying process
- Vividly and instantly, puts into perspective how any one supplier can either win or lose the business, encouraging serious competition among suppliers
- Allows for cloning of past auctions making the re-purchase of a product or BOM very easy
- All purchase details (including pictures, logistics, shipping, delivery details, delivery formats, financing, and etc.) can be posted then downloaded / printed by suppliers, again reducing unnecessary back and forth communications
- Allows buyers to spend more time researching new sourcing strategies and product sources
- Encourages transparency
- Facilitates “JUST in Time” purchasing
Features & Benefits
- The system does not try to replace already established processes found in the ERP or Accounting System, it simply compliments the existing systems
- Web Based Auction … No software required
- Cost of system mainly based on savings
- Non Auction Mode … Allows buyers to decide if they want suppliers to see their respective bidding positions
- REVERSE or REGULAR Auction Modes … Allows buyer/users to choose REVERSE (when buying) or REGULAR auctions (when selling)
- Includes an import utility for easy importing of all products, suppliers and users
- Attach pictures, delivery formats, delivery instructions and even specification documents to every product
- Create Product, Supplier & Bill of Materials Groups
- Adjust bids based on Landing Factor rules for foreign suppliers
- Adjust bids based on Shipping and Brokerage fees
- Clone previous auctions
- Mobile friendly interface for both buyers and suppliers
- Allows for suppliers to message buyers on availability, back order dates and possible replacement parts for each product directly from within the bidding panel
- Allows suppliers option to download and print all specifications
- Allows buyer to set terms & conditions for each auction
- Buyer Dashboard shows progress of live and historical auctions on a per product basis
- Increases competitiveness
- Lowers overall cost of purchasing
- Making the buying process more transparent (no more Super Bowl tickets & trips)
- Giving the buyer and management better control of the purchasing process
- Best pricing is obtained very quickly
The Process
- Export all raw material product SKU’s and suppliers from the ERP, CRM or accounting system into a spreadsheet
- Import suppliers & product SKU’s with descriptions, specifications and even pictures into Procurement Power
- Create an Auction with a start and end time
- Add the products needed to procure from a list
- Select the APPROVED suppliers
- Email suppliers a private link that takes them to the bidding site.
….. And voila !! Now wait until the auction ends. No more back and forth communications, the vendors fight it out until the auction expires and the buyer ultimately decides if the lowest price wins.
The Business Cases
ROI is realized in a number of different ways. First by forcing the suppliers to aggressively price their offerings and secondly to reduce the administrative load the buyer is typically responsible for. Take these two examples:
Case #1: Incumbents Never Lose !
The buying team is mandated to purchase a years worth of ingredients that are used in the production of their frozen foods products. The buyers have any where between 2 and 5 suppliers for each ingredient. In some cases multiple ingredients are supplied by the same supplier. The buyers go through the regular request for pricing and with all things equal obtain the best pricing for each ingredient from the 20 plus suppliers bidding for the business.
Normally the supplier who can supply the ingredients at the best price will win the bid. However, instead of issuing the purchase orders to the best priced suppliers, the buyer will use the best price obtained for each ingredient as the initial bid price and start an auction for the supply of those same ingredients. This will effectively demonstrate how much more of a bottom line saving can be realized from the traditional buying process.The incumbent, who may not have given the best price originally, visually and immediately realizes that his competitor is about to win the business and will usually seriously sharpen the proverbial pencil in order to not risk losing the business / account.
This usually translates to a bottom line savings of anywhere from 5 to 15%. On a $1M buy that could translate to a $150K !
The other productivity factor is that auction setup (and bidding) can be done via a mobile device from anywhere with an internet connection. Hence auctions can now be created from a cottage or on a business trip using any mobile device … Yet again, buyer productivity in increased .
Case #2: Typical Buyer Workflow
If the buying team is purchasing 10,000 SKU’s of product to feed the production line that are purchased on average 4 times a year and each product has an average of 5 suppliers. In 1 year the buyer needs to send approximately 200,000 emails just to tell the suppliers they need product. Factor in the back and forth interactions and that number can conservatively be north of 500,000 emails, at a conservative 2 minutes per email, the buying groups needs to find over 1 million minutes per year to deal with purely administrative emails! Now let’s look at the alternative.:
- Create an auction
- Select products required
- Select suppliers & invite them
So now in 10 minutes the buyer has created an auction with a start and end time. They have 10,000 SKU’s that are being purchased 4 times a year, so worst case scenario there are 200,000 email that go out to an average of 5 suppliers for each product request. The suppliers are directed to a private bidders page where they have access to all the product details, which may include quantities, delivery dates, pictures, landing factors, shipping information, shipping formats and where they can even download a full specification sheet on each product. When the bidding is over the buyer may have a handful of communications to finalize details and will then issue a purchase order. This process has effectively reduced the email communications numbers by 100+%.That is 200,000+ emails that have been eliminated, at a couple of minutes per email the ROI numbers are obviously going to translate into bottom line savings.
Apollo Health and Beauty Care – Testimonial
Reviews
We were recently reviewed by Sourcing Innovation, a research site focused on providing unbiased and independent advice and consulting for procurement professionals worldwide. Below is a link to that review, and an introduction to Serex:
We were also reviewed by Spend Matters a membership research site focused on the various elements of the procurement industry. Below is a link to the three part review which gave Serex a very high rating.
One needs a Spend Matters membership to see the entire article but the summary introduction help gives a flavor.