SI Review: July 2011

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Straight Talk from the Customer

Up for Bid

Staffing suppliers should embrace e-auctions

By Beatrice Walker

Whenever I mention the E word (e-auction) to my suppliers, I can sense the anxiety, distrust or plain confusion about the process. Initially, I myself was skeptical about the concept. Yet I decided to keep an open mind and as a result have found it to be a beneficial process, even for the supplier.

Misconceptions

Auctioning is not about commoditizing services of different values. The number one push-back I hear from my staffing agencies is, “What I sell is not a commodity. What I provide is people and you cannot commoditize people.”

We don’t want to commoditize talent. An e-auction is one step in the entire selection process that enables the client to obtain competitive pricing. It is the pricing section of the request for proposal process.

An e-auction is not a process that only benefits the buyer. In fact, it has become a business intelligence gathering tool for staffing firms to understand how they fare in the marketplace.

Another benefit to the seller is speed of decision. As human beings, we find it interesting and fun to conduct conversations and negotiations. The e-auction is not going to remove these interactions entirely. What the e-auction process does, however, is accelerate the negotiation process and therefore speed up the decision-making process with a faster business award.

The Real Deal

The e-auction process forces both sides to normalize price elements and think logically through the pricing structure. By design, it provides a means to make an apple-to-apple comparison and remove elements of subjectivity in the decision.

E-auctioning is going to become a standard practice — even for services. Service providers that do not embrace this new technology will see their market share decrease.

Play Fair

Suppliers should never participate in an e-auction only to retract the pricing afterward. If the e-auction process does not allow for Q&As, be sure to request it to ensure you understand perfectly what you are bidding on. Retracting a pricing after the closure of an e-auction will damage your credibility and can cost you a potential client due to the lack of trust. Playing unfairly creates unhealthy competition. Any supplier that does so will find itself on a very small but unwanted D-list.

Preventing RFPs

Procurement and HR professionals look forward to RFP season. RFPs are lengthy and require significant internal resources to get the job done properly. So the big question for the incumbent suppliers is how can you prevent clients from deciding to go to RFP in the first place?

For starters, anticipate your client’s needs and the industry’s evolution and match the two.

Be creative and flexible with your pricing structure in a way that enables deeper savings for the client while maintaining your own bottom line. Too often, heavy corporate structure prevents suppliers from thinking outside the box.

Finally, be lean. No one wants to pay for overhead that does not provide value. Revisit your business process and drive further savings to your clients. Look at different ways to conduct business and reduce costs.

Quick Guide for a Successful E-Auction

RESPONSIBILITIES  
BUYER SUPPLIER
Embrace the process Embrace the process
Plan early Understand every detail prior
Set up clear selection criteria objectives Commit to pricing
Educate your supplier Be creative & flexible
BENEFITS  
BUYER SUPPLIER
Competitive pricing Business intelligence gathering
Apple-to-apple comparison Apple-to-apple comparison
Objectivity Force to rethink pricing structure
Faster award Faster award

Beatrice Walker is global procurement manager at Freescale Semiconductor Inc.

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