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Posts Tagged ‘reverse auction’

The use of electronic auctions in procurement is not unpopular these days, though it is definitely more common in the direct materials area.  A few years ago my job was to promote the use of e-auctions and to illustrate how it could become one of the valuable tools for procurement professionals in Asia.  E-auctions in procurement is like the reverse of how we use eBay or any online shopping auction portals as regular consumers.  When we shop on eBay, we are facing a few days or even weeks of deadline to bid for the merchandise we love.  We have to check back often to make sure whether we are still in the lead or if not, keep bidding with a higher offer.  We now make use of the same theory and technology to bring all suppliers together (virtually) to compete for the buyer’s business volumes.  The only difference is that a lower bid will be more competitive, meaning the buyers will award business to the supplier offering the lowest price.   It’s that simple.

Some procurement clients are against e-sourcing.  They think that the suppliers are not ready.  They think that it will send a wrong message to the community saying they only care about price and nothing else.  They are worried about their relationships with suppliers being impacted.  They are also concerned over technological instability, as well as online integrity issues.  These are all valid concerns, but I would say 80% of these concerns are addressable by the procurement clients and executives themselves. These concerns are nothing unlike those already exist with conventional sourcing methods like RFPs, tenders, or face-to-face negotiations.

The technical aspects are easy to be picked up and training on that part usually takes less than a day, but it’s the game rules, pricing setup, supplier pre-qualification and online integrity that will need to be addressed and covered in most detail.  When I teach such topics, I always bring it back to the very basics when I am asked with the above questions.  What would you do if you have these challenges with conventional sourcing?  It’s exactly the same tactics and preparations that we need to do in e-sourcing.  It’s only the negotiation platform that is changed; the sourcing philosophy isn’t.

Sometimes I really have to give it to the Chinese.  We Chinese are very fast learners in general, and we pick up new technologies in a snap.  When I teach in mainland China, I am constantly challenged to keep my local clients fully engaged and interested.  They get the benefits of e-sourcing instantly.  It’s quick.  It leaves the negotiation from between each supplier and the buyer to between suppliers themselves.  It shows their bosses what the most updated market price is.   Although there are clearly constraints of e-sourcing, most local clients I introduced are truly amazed and excited over the 30-minute or so online bidding event.  The buyers clapped, pulled in their colleagues and bosses, and some even toasted with champagne. 

What I am afraid of are the REALLY smart adopters.  One Chinese client asked me to teach them how to register as a supplier so that they could join the event to “observe”.  I wasn’t born yesterday, and at times like this, I had to stop them right away so as to make sure they were only joking and not thinking of intervening an event unethically.  I felt that they understood it, but from the corner of my eye, I swore I could see a few of them plotting the possibility silently. 

I am all for innovation, but don’t step over the line, guys.

 

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The American dollar is so weak right now that it makes me think twice about traveling abroad.  Hong Kong dollar is pegged to the USD meaning that as long as I stay in between these 2 places, I shouldn’t be too less well off.  Wrong.  The recent quantitative easing round 2 by the Fed is pumping $600 billion artificial money into the US economy to stimulate business and creating jobs.  It however has a gigantic ripple effect to the global economies and I can already see huge inflation in this region ranging from grocery to property prices.  With all these uncertainties in personal purchasing power and a could-be volatile stock market, I better be more cautious about my vacation traveling plans.

Like most people I love to travel.  I particular have a thing for traveling on company trainings.  No I am not attending training seminars, but delivering them.  I never knew I had this passion of being a trainer until I was in consulting and a big part of my job then was to teach corporate clients how our reverse auction applications work.  Usually these are one to two-day workshops with not only technical transfer but also strategic procurement contents.  Then soon after I was asked to deliver purely knowledge courses specifically on the topics of strategic procurement, commodity and supply market positioning, project management and communication planning, negotiation skills, opportunity assessments, and the list goes on.  These trainings are by far the most fun and rewarding because they are highly interactive and engaging.

Conducting trainings is not all about getting messages across.  I see incredibly talented professionals who cannot present themselves or their ideas across precisely, not alone chairing workshops.  Making use of a room full of industry experts with varying levels of expertise and experience is exciting and challenging.  I love the challenge and I love to turn the floor over to get more participation.  It’s the sure-fire way to get everyone in the mood from just another boring seminar to one candid sharing and learning sessions which is about them and not about me.

I travel to many cities of Mainland China, Taiwan, Singapore, Thailand, India, Vietnam, Philippines and Korea to deliver trainings and I get excited every single time.  The people are different every time and if you add-on the different industries and cultures to the equation, I have to constantly adjust myself to make sure the scale is even.  It’s about playing the part well and playing the part based on people and circumstances that you can hardly prepare for until you are at the training hall at 8am.  It’s like waiting for the curtains to open and you have no idea whether the audience is a bunch of 80 year olds or die-hard heavy metal rockers.

Put yourself in my shoes for a moment.  What would you do if you find your training audience:

1. Dozing off

2. Seemingly bored and kicking himself thinking why he was forced to come in the first place

3. Extremely argumentative and outspoken which is interrupting  the progress of the class

4. Stone faced and authoritarian, maybe even feeling insulted from listening to a younger trainer

5. Fiddling with his blackberry or laptop the whole way through

6. Receiving and making calls as he pleases

Sounds fun huh?  Remember these are not school kids.  They are on average in their 30s to 50s and rank high in their organizations.  They usually come together as a team so the leaders may want to exert their authorities throughout the training.  Similarly the subordinates are shy to speak up with their bosses in the room. 

I’ll let you ponder over the above scenarios for a while and please share your comments with me.  I shall continue with my stories of each of these scenarios in my later posts.  So stay tuned…

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It’s not like we are devious.  Yes we get measured by how much cost savings we achieve for the company, and that’s what the company hired us for in the first place.  Some people, however, are just plain reckless.  Just because it does not come out of their own pockets, they would just spend it out on anything imaginable, perhaps as compensation to their perceivable below market pay or uncalled-for bullying by their bosses.  If only everyone treat the company’s money like their own, we would be jobless.  Oh yes, thank goodness we have you guys around.

So if you come to me complaining about worsening business traveling perks, I hate to break it to you, you are just so behind the times.  In this day and age of diminishing revenue and profits, top management has already been cutting traveling and operating expenses long before any procurement people was born.  It’s all top down.  It’s all policies.  They want to take away your printers.  I don’t even give a damn.  We are just so lucky to be the ones executing the policies to keep our jobs, and so stop complaining about how underprivileged you are.  Grow a pair and stop whining.  At least you get paid.

Those who protest against procurement people having special treatments and getting themselves upgrades or even freebies, get proof and report them to management.  Don’t let them get away with it.  They are the ones who hurt our brand and community and I don’t want any of them smearing my name.  Procurement people should assume the highest ethical standards because aside from technical skills and subject matter expertise, credibility, impartiality and ethics are the only pillars of who we are.  I fight for my company and my users / stakeholders.  Despite drastic budget cuts by top management, I strive to get the best value for the diminishing dollar.  If I am not doing my job right, the matter could be a lot worse.  In today’s markets of ever-increasing inflation, avoiding price increases or maintaining buying power is as important as getting discounts.

I hate to break it to you, these are challenges of procurement perhaps 10 years ago.  Every major company is done with cuts in traveling expenses, IT budgets, or office equipment spend.   In order to keep meeting ongoing cost savings targets summing up to millions of dollars per year, we have to continue looking for new and un-ventured areas for cost savings opportunities.  Business process outsourcing, recycling, above-the-line marketing buy, consulting, transportation, training, headhunting, health coverage, energy and utilities, professional memberships, private clubs, event planning, leases, corporate cards, and the list goes on.  I even once led a project in India selling company owned condos using reverse auction tools, for cash.  In another scenario I sold off tens of millions of dollars worth written-off customer debts to investors for immediate cash benefiting the company.  I go where the money is, period.

So you now get a better picture of how I am measured.  Like any salesmen, I need to deliver a set upon ROI (Return of Investment) to my employer.  Hypothetically, if I am paid a million dollars, my job is to help the company save at least 7 million.  In this case, the ROI is 7 fold.  Of course, there are procurement colleagues whose jobs are to process purchase orders and ensure timely receipt of goods and services.  They are equally important and they shall be measured a bit differently.  I am, however, more specialized in running projects that require more strategic planning and the collaboration of multiple stakeholders, and more often than not, extremely powerful suppliers.  I need to make sure my project outcomes are implementable across the region, but I am expected to keep building a cost savings pipeline to meet my targeted ROI.  That means I also need to convince my fellow procurement colleagues to support my initiatives and in turn help me implement the change in respective local markets.

If you look at it this way, I am very much a sales person as well.  I need to be humble, open, a good listener, resourceful, efficient, a good communicator, and entrepreneurial.  Better yet, my results are completely measurable.  In my opinion, these skills and attitudes will soon become the pre-requisites of strategic procurement professionals everywhere.

Next time when you have the honor to run into a procurement person, try to see which breed they are. 

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