#RFP esourcing platform

[krinatisol]

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]

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

[krinatisol]

What Is eSourcing And How Can The Companies Benefit From It?

What is eSourcing?

The process of Sourcing involves looking for new suppliers, assessing their capability, comparing their products and their offerings with the demand or with the incumbent supplier’s offering, uniting with all suppliers to receive marketable bids, researching 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 more importance, say brainstorming sessions to decide on cost reduction regulators, inputs from manufacturing and quality teams on issues faced and framing an approach that addresses them.

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

eSourcing result generally delivers 3 functionalities viz.

1. Request for Information( RFI)

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

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

Then the specifications, quantity of the particulars or goods being sourced along with the terms & conditions are transferred to the suppliers. Suppliers give marketable bids for the same. Collaboration with internal stakeholders and addressing supplier queries are done online

3. Online Auctions

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

What are the benefits of eSourcing?

There are 5 crucial benefits of any eSourcing solution. It’s important for every association to articulate the benefits they seek or the problems they need to break and ensure the same is attainable using the result they’ve shortlisted.

1. Higher Compliance

Conducting the sourcing process on a common online platform rather than through emails, spreadsheets, and phone calls ensures advanced compliance. Strong inspection trails help the audit team to understand the number of suppliers participating, which suppliers declined to participate and why, who approved the award scenario, who handed what evaluation to a supplier response, etc.

2. Lower Cycle Times

There are two aspects to sourcing cycle time. One, the time is taken to produce an RFI or RFP, and two, the time is taken to award the business post-releasing the RFP. eSourcing tools allow the customers to produce and exercise templates that speed up the RFX creation process. Buyers should be able to analyze bids as soon as they’re entered and connect with suppliers immediately 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 association 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 good suppliers competitively.

Competitive RFPs also display the Rank/ Best Bids to suppliers, which helps get multiple bids from a supplier without any 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 results because they trust a system further than what the buyer verbally informs them. Supplier operation is easier. The result needs to be user-friendly not just for the buying teams but also for the supplier to log in and share in the sourcing event.

Original Source: What Is eSourcing?

[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?

[krinatisol]

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