Strategic Sourcing Process: Example Potential Suppliers Supplier Market Analysis (RFI) 35 Request for Proposals (RFP) RFP Responses Received Suppliers Selected for the Reverse Auction Recommended SuppliersР”РЋ3 Successful Reverse Auction Categories Generally speaking, categories with likely reverse auction success share these common characteristics: Compelling Spend Competitive Marketplace Credible Switching Threat Known Items, Volumes and Historical Spend Clear Category Definition Precise Requirements and Specifications Take advantage of macro-economic market dynamicsР”РЋ4 Success Criteria For auctions and other competitive processes to be effective over time, discipline must be maintained. Quality trade-off is an invalid concern when conducted correctly.Р”РЋ2 Success Criteria Auctions are typically one step within a more rigorous strategic sourcing process.

Request for Proposal (RFP): Complex proposal required beyond simply quantity/price Segmented requirements weighted scorecards Give us a price, implementation plan, defined milestones and deliverables, contract requirementsР”РЋ1 Reverse Auctions: Like ebay, but in reverse When market conditions and buyer requirements are right, a reverse auction can be used to negotiate additional cost savings from an initial quote or proposal.

Request for Quote (RFQ): Simple quantity/price specification Can be a preliminary step to a reverse auction Give us a price for X units of Y product/service.

9 $100M where does it go? Estimated unidentified/unclassified spend ~$20M(?) Facts: 8 suppliers make up 50% of total spend 45 suppliers make up 80% of total spend 512 known IT suppliersР”РЋ0 RFx: Request For? RFI, RFQ, or RFP? Does it matter? Each RFx type solicits different information from a supplier Rules of Engagement vary, depending on the activity being conducted Request for Information (RFI): 1-way request for information No customer requirements are provided Helps to incite competition, and used to inform subsequent sourcing processes (i.e., RFP) Tell us about your company and product/service, how it s sold, and who your competitors are.

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