I have had close to 30 reader responses to my recent posts on the utilization of the RFP or e-tendering process for the acquisition of goods and services.
While there have been successful demonstrations of its utilization relative to MERX (MERX: An Evolution to a Broader Market), and of course the Commonwealth of Virginia’s eVA program (Yes Virginia! There is more to e-procurement than software), the majority of respondents do not view the current process has being effective. (Note: links to the above referenced articles are available through the Web Resources section at the conclusion of this post.)
And while there are strong proponents of the RFP/e-tendering platform, the chasm between supporters and detractors remains wide.
This of course begs the question, “can improved collaboration between buyers and sellers be achieved through intelligence synchronization?” Specifically, can a coordinated technological initiative in which key stakeholders are working from the same page overcome the obstacles of miscommunication and misunderstanding?
Based on 16 years of front line experience (and the resulting expertise this affords their organization), QStrat Managing Director Steve Wargalla believes that they have the answer.
By the way, I think that it is important at this stage to emphasize the fact that I am not a voice piece for the sponsor – in this case QStrat. As I had stated in all previous profiles, assessing the viability of a sponsor’s value proposition for your organization is entirlely up to you to determine. While I will direct you to the Sponsor Presentations section of the PI Blog to invistigate the QStrat value proposition in greater detail, and at your own convenience, my role is to introduce a sponsor’s offering in the context of current market sensibilities and conditions. In essence, leverage my extensive research and experience to provide the lens through which you can view a particular product or service outside of the framework of that with which you are most familiar, and likely most comfortable.
The Mortar of the Collaborative Process?
As indicated at the beginning of this post, the general consensus of the readership that have submitted their comments is that the electronic RFP process is inherently flawed. While I will provide an overview of these responses in a future post, what is interesting about the QStrat offering is its focus on becoming the focal point for effective intelligence collaboration.
In an excerpt from their web site, the company reports that “Every day, thousands of users, representing a wide spectrum of industries in 20 countries around the world, use QStrat’s industry leading applications to send winning quotations to their customers and to receive competitive quotes from their global supplier base.”
From the supplier perspective, the QLM Sales module “will help you speed your quote preparation process with configurable workflow, advanced reporting and a straightforward web browser interface.”
From the perspective of the buyer, the QLM Sourcing module “using advanced Adobe® Acrobat® eForms capability, revolutionizes the way you handle your own quotes.”
In and of themselves, these two distinct but interwoven modules speak to QStrat’s recognition of the different elements associated with the preparation of, and response to an RFP. That said what is the key differentiator of the QStrat offering versus those of the myriad other RFP (RFx) solution providers?
Perhaps the answer resides in their QLM Costing module? While it is a given that one would look at the operational ease of functionality of the supplier and buyer modules, it is in the area of statistical insight and the timely application of the derived intelligence that might very well be the predominant differentiator in the QStrat technology. In essence the mortar that holds together the bridge of both buyer and seller functional imperatives.
The KPI Illusion and other Cost Savings Myths!
I am often asked the question, how do you reliably calculate the savings associated with an existing or contemplated e-procurement/supply chain initiative. The basis for this question is rooted in the fact that 85% of all initiatives fail to achieve the expected results.
My extensive research, which was partly funded by the Government of Canada’s Scientific Research and Experimental Development (SR&ED) Program identified two distinct “commodity characteristics” – Historic Flat Line and Dynamic Flux. The identification of these two commodity characteristics led to the eventual discovery of what I refer to as the Point of Ideal Price Viability. While I have provided the links to three of the many papers and articles I have written on the results of my research in the Web Resources section of this post, the intent of this disclosure is to provide insight into the current disconnect between critical stakeholders relative to savings calculations. And in particular the finance and purchasing departments.
Referencing an earlier PI post titled “Bridging the Communications Gap Between Finance and Purchasing,” I highlight the findings from a May 4th, 2006 article (and corresponding statistics from a subsequent 2007 CFO study) which reported that “Too often, finance executives in Corporate America simply don’t believe that purchasing departments are really bringing in the savings they claim.” And that this may be due to the fact that “finance and purchasing don’t speak the same language.”
This observation, which to many purchasing professionals is both shocking and offputting, is demonstrated by the aforementioned study’s finding “that of the 11.9% of average identified savings presented by the purchasing department, only 3.2% actually gets booked by the finance department – a difference of 73% from identification to realization.”
How is this relevant in terms of RFP/e-tendering effectiveness, and in particular today’s post? Quite simply, if the savings targets and subsequent “results” are not clearly understood and accepted by key stakeholders within the buying organization itself, the ability to structure an effective RFP becomes an extremely difficult if not impossible task.
Based on the multitude of comments I have received from the PI readership as well as conference attendees, it is clear that the ambiguity of most RFP’s relative to buyer objectives and the means by which they can be achieved eludes the majority of suppliers. Or as one professional put it, “I have done over 200 proposals for legal services in the last 5-6 years, and I would have to say that very few of the RFP’s are well prepared. Some are way too ambiguous, some are minutely detailed in relatively unimportant areas but silent on much more important ones, and some are so restrictive that the bidder has no opportunity to demonstrate . . . why it would be worth hiring them.”
Certainly the procurement of services can be considerably more complex, but even commodity-centric RFP’s can be ineffectual if they fail to reflect realistic objectives.
The key question then becomes “how does an organization understand and incorporate the seemingly disparate objectives of diverse stakeholders (from both within and external to the enterprise) into an RFP?” From where can one extract the necessary intelligence that establishes points of commonality that maximizes supplier participation in a truly fair and open process?
Why QStrat?
Once again, and keeping in mind my ongoing commitment to objectivity, the QLM Costing module would be my first point of evaluation. From here, the gathering, analyzing and application of intelligence will lay the foundation for the effective utilization of both the QLM Sales and QLM Sourcing modules.
If the QLM Costing module is as effcient a tool as QStrat claims (and keep in mind that the software business is a very demanding and unforgiving business – so to be around for 16 years means that they must be doing something right), QStrat will have gone a long way towards justifying the reasons why “thousands of users, representing a wide spectrum of industries in 20 countries around the world,” use their Quotation Lifecycle Management (hence the QLM acronym) solutions.
Web Resources:
MERX: An Evolution to a Broader Market (MERX Profile): https://procureinsights.wordpress.com/2008/08/27/merx-an-evolution-to-a-broader-market-merx-profile/
Yes Virginia! There is more to e-procurement than software (Part 1): https://procureinsights.wordpress.com/2007/09/12/yes-virginia-there-is-more-to-e-procurement-than-software-part-1/
Yes Virginia. There is more to e-procurement than software (Part 2): https://procureinsights.wordpress.com/2007/09/20/yes-virginia-there-is-more-to-e-procurement-than-software-part-2/
Dangerous Supply Chain Myths (Part 7) – Enabling Technology: https://procureinsights.wordpress.com/2007/07/04/dangerous-supply-chain-myths-part-7/
Double Marginalization and the Decentralized Supply Chain Revisited: https://procureinsights.wordpress.com/2008/07/16/double-marginalization-and-the-decentralized-supply-chain-revisited/
Double Marginalization and the Point of Ideal Price Viability: https://procureinsights.wordpress.com/2007/08/10/double-marginalization-and-the-point-of-ideal-price-viability/
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Posted on August 29, 2008
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