SRM Sourcing process includes every activity that revolves around identifying and assessing potential suppliers as well as selecting and engaging with an appropriate supplier who offers the best value. At the end of the SRM Sourcing process, usually an agreement is reached between your organization and your selected supplier on what is to be procured.
You, based on the type of goods and services that your organization intends to acquire, can decide to use Quick Quote, e-Tender or Reverse e-Auction in SRM to achieve your purpose. Quick Quote allows you to obtain multiple rounds of price information from a number of potential suppliers for your filtering purpose. e-Tender allows you to do Request For Information (RFI), Request For Proposal (RFP) or Request For Quote (RFQ) in a controlled manner. Reverse e-Auction allows you to drive down prices. Reverse e-Auctions are ideally suited for purchases of raw materials, processed goods, travel, printing services, capital equipment, components, and many other items. Reverse e-Auctions work best when the price is a key point of negotiation for your organization.
Quick Quote is an online quotation facility which allows the user to obtain quick quotes online from a selected list of suppliers. Quick Quote can be used as part of the procure-to-pay (P2P) process to obtain and compare quotes and then submit a purchase order. Or it can be used in the early stage of sourcing to obtain preliminary information from suppliers before sending out formal tender invitations. Both Quick Quote and e-Auction (see next section) are to be used online. But Quick Quote is typically used at the beginning of the sourcing process while e-Auction is commonly used at the end of the procurement process. The timeline of a Quick Quote cycle is usually set in number of days while the duration of an e-Auction is commonly set in number of minutes. Suppliers responding to a Quick Quote request usually need more time to understand the requirements and prepare their responses while suppliers participating in an e-Auction are usually crystal clear of the requirements and can make bid or no bid decisions in real-time.
Requirements and List of Suppliers
allows the user to state her requirements in the Quick Quote request and create a list of suppliers to send the request to.
allows the user to have multiple rounds of request–and-response so that she and the suppliers can adjust the requirements and responses incrementally.
Quotation Master is an online facility to keep track of all effective quotes (which are properly approved and haven’t expired). Suppliers’ responses to Quick Quotes can be automatically inputted to Quotation Master for future use.
Independent or Part of Purchase Request Process
Quick Quote can be used independently as request-for-quote (RFQ) for acquiring low-value products. Quick Quote can also be used as part of the purchase plan/request (PR) process for sourcing or purchasing.
e-Tender provides the highest efficiency, fairness and control in tendering. Control rules can be set upfront and the tender process will strictly follow the rules. Computer and network security is achieved via security token, one-time password, bidirectional communication encryption, role-based access control and audit trail.
The enterprise can define different tender natures and inside each tender nature the following rules:
The tender nature rules are the topmost level of control. The rules associated with the tender nature will be strictly enforced by the system for all the tenders of that nature.
The enterprise can define different experts for different areas for tendering purposes. The experts can be selected for different tender activities such as initial supplier selection, document preparation, response evaluation, negotiation and final selection. When the experts are associated with different tender activities, they will have different access privileges. Tender Expert Management will help to ensure that each tender activity will assign sufficient experts from different needed areas to do the job.
The enterprise can define different approval flows for different tender natures. Each approval flow can have multiple stages and each stage can have multiple steps and each step can have multiple mandatory or alternate approvers. The approval stages and steps can be set to be executed in parallel, seriously or combination. The tender amount can be used as the branch condition of the approval flow for the purpose of controlling certain approval stages that can or cannot be bypassed. The details of the current state of the approval flow can be viewed in real-time and exported for the reporting purpose. The system can be set to automatically send alert messages to remind people that the tender is pending their approval or their approval is overdue.
The system controls the minimum and maximum numbers of suppliers and whether they are selected totally by random, totally by manual or certain number by random and certain number by manual based on the tender nature. After the initial long list of suppliers is determined, the supplier selection team can convert the long list to short list in one or multiple rounds. In each round, the supplier selection team must input the selection criteria and score the suppliers accordingly. After the short list is determined, the supplier selection team must submit the short list for approval in order to become official.
can send e-Invitation to the selected suppliers to invite them to participate in the tender. Each invited supplier can accept or decline (with specific reason) directly. Once the invited supplier confirms its participation, it can start using the e-Tender Q&A facility to ask questions. The system will also automatically collect the data and provide the statistics on the number of participations, declines and winnings of each supplier.
allows the tender responsible persons to set the control on the tender document reviews and approvals. Tender documents and their amendments can only be sent to suppliers after the approval of the Issuing Committee. Tender documents can be sent to suppliers via supplier website, email, regular mail or hand delivery and issuing history will be automatically logged by the system.
The participating suppliers can use the Q&A facility to ask questions and the question-answering can be viewed by all suppliers for transparency reasons. The Q&A facility allows the user to post a question or discussion topic and multiple parties can respond to the questions or ask additional questions.
The Tender Opening Committee can be composed of different people from different external and internal organizations. The Tender Opening Committee controls when the tender can be opened and the responses from suppliers can be viewed. No supplier’s tender response can be opened and viewed until the full approval of the Tender Open Committee.
For Request for Quotation, the Tender Evaluation Team can choose having the system to do the automatically scoring. For Request for Proposal and Request for Information, the Tender Evaluation Team can use the Question & Scoring Tool to design the Questionnaire which will be automatically scored after each participating supplier fills in its answers. The Tender Evaluation Team can also choose to manually score each tender response by entering the criteria and their weights into the system and then do the manual scoring. In any case, the system will summarize the total score for each supplier and rank all the participating suppliers according to their total score. After knowing which participating suppliers have the passing score and which ones don’t, the Tender Evaluation Team can then decide to do the negotiation next or skip the negotiation process and directly recommend a number of top ranking suppliers for the final selection.
If the Tender Evaluation Team decides to conduct the negotiation, the team members can use the Multi-Party Negotiation Tool to discuss with each supplier individually. The negotiation can be done in real-time or post-and-wait-for-response. All discussion information will be logged and can’t be deleted.
After the negotiation is done, the Tender Evaluation Team can update each supplier’s scoring and then recommend a number of the top ranking suppliers for the final selection.
The tender responsible persons can set the rule to mandate the Tender Evaluation Team to do the risk assessment for the recommended suppliers. The Final Section Committee can review the scoring details of each recommended supplier, its associated risks and other business factors such as other business partnerships and then make the final decision.
In some situations, the Final Selection Committee can also make the final selection very simple such as the supplier that has the highest total score will be the winner.
After the final selection is done, the system will automatically send out notice to the winner and the losers based on the pre-defined notice letters defined by the enterprise. The tender responsible can also modify the letter on the fly.
An e-Contract can be automatically generated from the e-Tender after the final selection is complete. The user can specify price, deliverable, due date, Service Level Agreement (SLA), penalty, payment term and renewal information in the e-Contract. Once the e-Contract is set up, the supplier can start delivering according to the deliverable milestones defined in the e-Contract and delivery will automatically trigger review and acceptance on the enterprise side. The e-SLA results will be automatically captured and calculated in real-time based on the preset criteria. If an e-SLA result triggers a penalty, the penalty amount will be automatically aggregated and reflected in the Profit & Loss of the e-Contract.
can automatically collect all the tender statistics such as supplier’s participation rate, winning rate, successful project completion rate, late delivery rate, return rate etc. These fields can be made available in the Point-and-click Report Generator to generate multi-dimensional reports, bar charts, pie charts and trend graphs.
provides tools such as Spend Analysis, Purchase Plan/Request (PR), Quick Quote (RFQ), Formal Tender (RFI/RFP/RFQ), Contract Management, Purchase Order Management and Supplier Management for sourcing and procurement processes. Reverse e-Auctions play a key role when it comes to ensuring that you are being quoted the current market price for the goods and services you are procuring and also improve supplier relationships due to increased transparency. Mainly used for procurement spend related to indirect goods and services, auctions can play a critical role for potential buyers in streamlining the bidding process, increasing transparency and compliance between the buyer and suppliers involved. Additionally, sourcing goods or services using the Reverse e-Auction bidding format can generate significant cost savings, thereby adding bottom line value to your overall procurement spend.
Reverse e-Auction can be a useful tool for spend management in many industry verticals such as:
The following is the common Reverse e-Auction process:
Savings generated via Reverse e-Auction are only good if those savings are realized. To ensure that you capture the savings generated by implementing the Reverse e-Auction procurement strategy, be sure to follow through on your award as well as proactively track all purchases made, to fully realize the reverse auction supply chain benefits.
There are many benefits of Reverse e-Auction as listed below: