Part 1 Why eSourcing? Speaker... · Procurement Maturity vs eSourcing Maturity Reactive Proactive...

Proprietary & Confidential

eSourcing Presentation for:

Part 1 – Why eSourcing?- What is eSourcing- Best-in-class- eSourcing Maturity- Increasing eSourcing Maturity

Part 2 – Next Level eSourcing- Auctions: A Brief History- eAuction Types- 3C Model- Scanmarket Stats Analysis

Dan GianfredaSales Manager UK and Italy

[email protected]: +44 7766 746196


verview of eSourcing…at it’s best


Full eSourcing cycle


eSourcing


Aberdeen Group: Fact based insights

5

MILLIONS OF BUSINESS PRACTIONERS READ ABERDEEN GROUP PUBLICATIONS THAT INFORM THEIR STRATEGY AND IMPROVE THEIR PERFORMANCE WITH FACT-INSIGHTS

ABOUT ABERDEEN GROUP

Since: 1988

What: Publish content that educate and help businesses improve performance

How: Primary research across industries

Why: Drive smarter decisions and improve business decisions

DEFINITIONS:

▪ BEST IN CLASS: TOP 20%

▪ INDUSTRY AVERAGE: MID 50%

▪ LAGGARDS: BOTTOM 30%

▪ ALL OTHERS: INDUSTRY AVERAGE + LAGGARDS = 80%


Best-in-class

Total respondents, N=115, Source: Aberdeen Group

26%

37%

21%

26%

47%

39%

46%

49%

58%

67%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Contract repository

Supplier portal / network

Sourcing optimisation

Spend analysis

eAuctions

How do Best-in-Class use eSourcing?


Best-in-class: Use eSourcing more and achieve better results

Run more eSourcing events… …. and achieve greater benefits

Number of events per year


eRFx: Process Optimisation - Best-in-Class vs All Others

Use of Automation - DIRECT

Use of Automation - INDIRECT

59% vs 26%

50% vs 25%

Automation and supporting tools:


Procurement Maturity vs eSourcing Maturity

Reactive Proactive True Spend Management

• Unmanaged/ad-hoc/undocumented• No defined goals• No standardised approach• Transactional/placing orders• Little visibility

• Partially managed/planned/documented• Vision/goals defined• Partially standardised approach• Savings generated

• Fully managed/planned/documented• Detailed goals defined• Highly standardised approach/Cat Man• Resource allocation/projects planned• Aiming for best practice • Reporting and optimisation• Adding value through innovation


Reactive

• Excel and emails • <30% eRFx (few users)• <20% eAuctioned (only reverse)• “Only commodities can be eAuctioned”• 20-50% Spend visibility • <40% Spend under management• Expensive file sharing system

eSourcing Maturity

• 50-70% eRFx (majority users)• 20-40% eAuctions (mainly reverse)• “Where else can we use eAuctions?”• 50-70% Spend visibility (no tail)• Spend Analysis or CM • 40-60% Spend under management

• 70-100% (whole team + cross functional)• eAuctions default (all types)• “Where can’t we use an eAuction?”• 70-100% Spend visibility• 60-100% Spend under management• Spend Analysis, CM, SBM, PM• Clear benefit tracking (Finance dept)

True Spend ManagementProactive


How to maximise adoption and increase eSourcing

Go Full Circle

Buyers – clients –stakeholders.

Full circle stakeholder

centric approach critical

Dispelling Myths

Breaking new ground and

dispelling the myths early

absolutely key. If required, bring an

audience…

Platform Selection

Separating the ‘want’ from the

‘need’. A flexible, customer centric and progressive

tool key

eSourcingNetwork

Regional or cross-category eSourcing

champions vitally important to

sustained adoption growth

cross; geography, time-zone and

business cultures

Bringing the best in-house

Through round-table events,

eSourcingworkshops or

leveraging consultancy expertise –ensure best

practise is bought in-house early

Innovation

The need for innovation forms

as key underpinning

strategy. Internal training events, event creation,

eSourcingprocess

development and communication

all benefit.


eSourcing Presentation for:

Part 2 – Next Level eSourcing- Auctions: A Brief History- eAuction Types- 3C Model- Scanmarket Stats Analysis

Dan GianfredaSales Manager UK and Italy


Auctions: A Brief History

500 BC – Babylon190 AD - Roman Empire1670s - Sweden 1600s – Dutch Auctions 1700s – London: First Auction Houses 1780s – London: Common place1990s – First eAuctions


Which type to use

Correct type of eAuction must be used and set up correctly

English Reverse

Japanese

Dutch

42

eAuction Types

...an eAuction is an eAuction is an eAuction – NOT TRUE!


When to use eAuctions

Use of eAuctions should be limited to commodities

only… Not True!

1) Scanmarket’s 3C model:

Compelling Spend

Competition

Clear Specifications

40

3C Model

SavingsCost avoidancePrice compressionRisk avoidanceIncrease/decrease # of suppliersTrue market value

eAuction aim can change depending upon category


Scanmarket: eAuction Statistics


Savings are compared to current price

eAuction Statistics by year

14.47%

9.29%8.45%

15.26%

12.76%

10.01% 9.69%

12.37%

10.87%

8.66%

12.28%

8.63%

11.06%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Average savings in % compared to current price per year

Savings in % per Year (auctions) Average saving

2006-2017Q3


2014 2015 2016

1. Construction & Repair (Flooring, Damage Control, Engineering, Rebuilding etc.)

17,57%1. Freight & Transportation (Sea, Land & Air)

8,27%1. Iron and Metals (Tools, Spare Parts, Cables, Screws etc.)

22,08%

2. Marketing Materials (Brochures, Advertisement printing, Promotional items)

11,29%2. Ingredients for food production (Additives, Flour, Sugar, Vegetables etc.)

5,44%2. Ingredients for food production (Additives, Flour, Sugar, Vegetables etc.)

3,88%

3. Ingredients for food production (Additives, Flour, Sugar, Vegetables etc.)

6,26%3. Construction & Repair (Flooring, Damage Control, Engineering, Rebuilding etc.)

10,42%3. Freight & Transportation (Sea, Land & Air)

7,12%

4. Retail - Food (oil, dressings, cereals, bread, rice, pasta etc.)

5,23%4. Retail - Food (oil, dressings, cereals, bread, rice, pasta etc.)

3,47%4. Construction & Repair (Flooring, Damage Control, Engineering, Rebuilding etc.)

12,57%

5. Packaging Materials (Cardboard, Foils, Tape, Pallets, Labels etc.)

14,48%5. Packaging Materials (Cardboard, Foils, Tape, Pallets, Labels etc.)

12,12%5. Service agreements (Temporary Labour, Cleaning, IT & Security Services etc.)

17,36%

6. Freight & Transportation (Sea, Land & Air)

8,49%6. Marketing Materials (Brochures, Advertisement printing, Promotional items)

18,98%6. Packaging Materials (Cardboard, Foils, Tape, Pallets, Labels etc.)

20,09%

7. Service agreements (Temporary Labour, Cleaning, IT & Security Services etc.)

17,19%7. Service agreements (Temporary Labour, Cleaning, IT & Security Services etc.)

8,69%7. Electrical and Telecommunication Equipment

19,69%

8. Fuels & Lubricants (Natural Gas, Oil, Electricity, Fuel, Lubricants etc.)

12,43%8. Fuels & Lubricants (Natural Gas, Oil, Electricity, Fuel, Lubricants etc.)

19,61%8. Retail - Food (oil, dressings, cereals, bread, rice, pasta etc.)

7,91%

9. Iron and Metals (Tools, Spare Parts, Cables, Screws etc.)

7,34%9. Chemical Products (Glycerine, Acetone, Toluene, Chlorine, Heptane etc.)

8,49%9. Marketing Materials (Brochures, Advertisement printing, Promotional items)

23,81%

10. Office Supplies and furniture (Paper, Prints, Toner, USB Sticks etc.)

20,08%10. Iron and Metals (Tools, Spare Parts, Cables, Screws etc.)

7,38%10. Fuels, Lubricants & Electricity (Natural Gas, Oil, Electricity, Fuel, Lubricants etc.)

14,73%

Average Savings for all categories 10,87% Average Savings for all categories 8,66% Average Savings for all categories 12,28%

eAuction Savings 2014, 2015 and 2016 – Product Areas

Savings are compared to current price


2017*

1. Iron and Metals (Tools, Spare Parts, Cables, Screws etc.) 17,11%

2. Freight & Transportation (Sea, Land & Air) 5,92%

3. Construction & Repair (Flooring, Damage Control, Engineering, Rebuilding etc.)

11,86%

4. Service agreements (Temporary Labour, Cleaning, IT & Security Services etc.)

13,58%

5. Ingredients for food production (Additives, Flour, Sugar, Vegetables etc.)

2,58%

6. Electrical and Telecommunication Equipment 20,80%

7. Household and Industrial Appliances (Coffee Makers, Dishwashers, Generators, Production Machines, etc.)

12,30%

8. Packaging Materials (Cardboard, Foils, Tape, Pallets, Labels etc.) 11,65%

9. Retail - Food (oil, dressings, cereals, bread, rice, pasta etc.) 2,67%

10. IT equipment 8,88%

Average Savings for all categories 8,63%

eAuction Savings 2017 – Product Areas

Savings are compared to current price* 2017 statistics is based upon Q1-Q3 statistics


eAuction Types: Usage & Average Savings

Average saving compared to current price across all auctions = 10.19%.

75.79%

6.91%

17.40%

71.16%

5.13%

23.71%

10.72%

5.32%

8.35%

0%

2%

4%

6%

8%

10%

12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Reverse Dutch Japanese

Ave

rage

sav

ing

Usa

ge

Usage (all eAuctions) Usage (eAuctions with savings) Average saving

This data excludes forward eAuctions

2010-2017Q3


All Auction Types: Average Savings & Number of Suppliers

1 2 3 4 5 6 7 8 9 10

Reverse 5.11% 7.48% 7.91% 8.50% 9.95% 9.29% 13.75% 17.20% 14.02% 18.95%

Japanese 6.60% 6.75% 10.94% 8.54% 12.04% 10.75% 6.90%

Dutch 7.37% 3.71% 1.05% 4.29% 3.46%

Average 5.42% 6.12% 7.03% 6.99% 8.17% 5.88% 7.97% 15.73% 12.81% 15.22%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Savi

ng

Trendline

2010-2017Q3

On average 1.11% extra savings per extra supplier


Participation Rates for the different auction types

7.52

3.23

3.99

5.62

1.98

2.76

0

1

2

3

4

5

6

7

8

Reverse Dutch Japanese

Average number of suppliers invited Average number of suppliers participating

2010-2017Q3


Best day of the week

2010-2017Q3

Monday Tuesday Wednesday Thursday Friday

% of all eAuctions 15.26% 18.30% 20.66% 21.89% 23.91%

Average saving 9.44% 9.12% 10.43% 11.81% 10.02%

0%

2%

4%

6%

8%

10%

12%

14%

0%

5%

10%

15%

20%

25%

30%

Savi

ng

Usa

geSavings by weekday


Best month of the year

2010-2017Q3

January February March April May June July August September October November December

% of all eAuctions 6.04% 7.75% 7.69% 8.56% 8.47% 10.48% 7.71% 7.31% 10.46% 7.29% 9.30% 8.96%

Average saving 11.26% 10.49% 9.53% 7.73% 9.43% 12.54% 9.64% 11.77% 10.77% 7.62% 10.27% 10.46%

0%

2%

4%

6%

8%

10%

12%

14%

-1%

1%

3%

5%

7%

9%

11%

13%

15%

Savi

ng

Usa

geSavings by month


In Summary

ScanmarketDan Gianfreda

[email protected]: +44 7766 746196

For further information please contact:

• Best-in-class companies are utilising eSourcing to a high degree

• Increasing eSourcing usage will help your organisation’s growth on the procurement maturity model

• Engage and consider all parties

• eAuctions just plain work – across most categories

• Use price and none-price factors to replicate real-life scenario

• Feel free to contact me for any further info or advice

Part 1 Why eSourcing? Speaker... · Procurement Maturity vs eSourcing Maturity Reactive Proactive...

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Transcript of Part 1 Why eSourcing? Speaker... · Procurement Maturity vs eSourcing Maturity Reactive Proactive...