Why buyers go ‘electronic’
Posted by Jon on 9 August, 2006 under Processes & best practice, Purchasing insights | 
2 Comments
BJ commented recently on tactics for submitting proposals via electronic systems (sometimes known in the trade as “eRFP” or “eRFX” processes).
With my purchasing background, I was given to ponder what the buyer is trying to achieve by using one of these systems, as that might inform the debate. Perhaps sales teams have ultimately scored an own goal here – much of the drive to using the technology is caused by frustration with the quality and compliance levels of the proposals that buyers have seen in the past.
So, whist goals will vary from organisation to organisation (and from individual buyer to individual buyer), I guess it’s some or all of:
• qualify potential bidders (less serious players might not bother bidding, hence pruning the field straight away to a more manageable number of proposals to evaluate)
• ensure that all vendors provide the necessary information
• ensure that proposals are easy-to-evaluate (all answers appearing in the same order and format)
• makes it easier to compare proposals (e.g. “answer 25 from Vendor A vs. answer 25 from Vendor B”)
• bring more of a focus onto price (the “written stuff” can be compared and contrasted to make sure all vendors reach the baseline, before we look at the costs)
• making sure that timescales are adhered to rigidly
• reducing timescales (“it must be quicker for them to fill in boxes than format a huge document, surely?”)
• making it easier to circulate the relevant sections of proposals to the relevant evaluators for scoring, and (potentially) helping to collate their scores and evaluation notes in a consistent manner
• makes the process more efficient (debatable!).
There’s possibly a degree of corporate purchasing muscle-flexing here:
- we’ve bought (or been sold?!) a new system and we’re sure going to use it
- we think the system will help us get focus internally from colleagues across our business on the RFP process
- (perhaps increasingly in the future) making it easier to charge bidders for bidding (making sure that only serious suppliers bid – perhaps more than a desire to make money to offset the cost of their procurement exercise).
I guess my starting point for responding to an eRFX might be to understand why this particular customer is using a new process!
Now, all of that is fine, PROVIDED the system achieves these objectives AND doesn’t inhibit bidders from producing the best possible solutions/proposals:
- forcing them to spend more time concentrating on the technology (e.g. getting to understand the system, copying data into this new electronic format) at the expense of developing great content
- a poorly-designed set of questions and/or poor structure, that stops a supplier from “painting the big picture” and describing their best possible solution coherently
- imposing a format that restricts bidders from offering creative options.
And, of course, if you go back to purchasing theory, there’s certain categories of supply arrangements that might lend themselves to this sort of approach better than others. A “Strategic Critical” purchase (few vendors, hard to change, high spend, less price sensitive, security of high-quality supply being key) would potentially suffer more from a lack of creativity than a more commoditised purchase.
