e-Sourcing in Action: How Global Brands Manage Their Digital Transformation Journey
Overview
Author: Lewis Barnard – Head of Business Development, Market Dojo | Read time: 8 minutes
Following on from my previous blog eSourcing in Action: Customer’s Stories You Can Learn From, let’s take a look at how some of the world’s leading companies began their digital transformation journey with eSourcing platforms.
There is much talk about digital transformation in procurement but, in our experience, progress is slow with many companies experiencing one of the following scenarios
- eSourcing software is perceived as too expensive for low volume tendering or smaller teams, so processes are heavily reliant on emails and spreadsheets
- A legacy system provides a ‘one size fits all’ functionality which is not user-friendly and teams revert back to emails and spreadsheets
- The procurement function exists to reduce company expenditure not spend money!
Let’s take a closer look at these scenarios to demonstrate how eSourcing platforms can add value.
eSourcing solutions are too expensive for us
We often hear this objection as there’s a perception that eSourcing platforms are expensive as many S2P vendors hide their prices and will only provide a quotation on request. As a result, companies are trapped using emails and spreadsheets to manage suppliers and tenders but this method is not scalable and data can be difficult to retrieve or worse, lost.
This was the case with Adler & Allan, a leading supplier of spill response, technical, fuel and environmental risk reduction services in the UK. The team had managed their supplier onboarding and management via phone calls, emails and spreadsheets.
As the business grew, and the supplier numbers increased, it became a challenge to manage the information and be proactive. For example, having to manually track where suppliers were in the onboarding process, which suppliers were fully onboarded, and whether supplier insurances were still valid. On top of this, the ability to report as a team was a time consuming process and some information could not be reported.
Adler & Allan adopted Market Dojo’s supplier onboarding solution, Supplier Onboarding, to overcome their challenge. The solution was set up and ready to use within a few weeks, with Market Dojo supporting the specific category questionnaire builds.
At Market Dojo we believe in transparency in everything we do and this includes listing our prices on our website which we have done from day one. All companies have access to a free trial version of Supplier Onboarding where users can draft onboarding events, create questionnaires, design workflows and define approvals.
By using Supplier Onboarding, Adler & Allan estimate that they have cut the amount of onboarding processes by 40%. Plus, their supplier compliance levels have increased and therefore risks reduced. Read case study
Logitech is another customer who Market Dojo helped move away from emails and spreadsheets. Having brought procurement in house, the team was lean with just ten members managing $400 million of spend. But with no technology in place, they struggled to manage their spend and data, and there was a clear need for the team to improve their eSourcing efficiency in terms of the time associated with running RFPs.
Logitech’s head of procurement recognised the need for an eSourcing platform, and with the need for urgency, Market Dojo Sourcing’s on-demand functionality really stood out for the team. The flexibility to use the solution as and when they need it, without any significant start-up costs or training removed any perceived barriers for Logitech.
An example of the type of tenders that the team ran through Market Dojo Sourcing is global compliance tenders, reaching out to agents across the globe to sign off their products as compliant across different countries.
The team had previously run these events manually using spreadsheets and emails, which was a time-consuming process and difficult to manage. By using Market Dojo Sourcing the team were able to generate an impressive £300k saving, cutting their total spend in the category by a third. Read case study
We have a legacy system but no one uses it
The other frequent challenge that customers face is that there is an incumbent, legacy ERP system in place that is too complex for many RFx requirements. These behemoth systems rarely seem to achieve the ROI originally promised.
Africa’s leading entertainment company, Multichoice, found themselves in just this situation. They had tried using their ERP system for tenders but spent many hours trying to get the system configured due to its complexity. In fact, they had to close down two RFPs before the deadline as they were so unsuccessful.
Multichoice were using a number of methods to manage their processes, including the use of printed spreadsheets as well as running an existing ERP Solution. As a company they were keen to start sourcing efficiently by streamlining their various processes into one distinct method, however, the existing ERP solution wasn’t working, due to the complexities of the tool.
Multichoice’s IT category manager wanted to adopt eSourcing and saw Market Dojo Sourcing as an opportunity to streamline their processes. Their RFP process was completely transformed with the time taken reduced from 4-6 months to 5 weeks. An additional benefit was that all RFP documents are now centralised into one manageable online system, with the ability to archive older documents. Read case study
Another nuance to the ERP scenario is the requirement to run reverse auctions, alongside a legacy system, which was the challenge posed by WOQOD, a Qatari downstream oil and gas company.
Having previously used an ERP system to control all their procurement processes, the team at WOQOD were looking to add transparency to their sourcing process by implementing an easy to use eSourcing platform.
The procurement team at WOQOD were intrigued by Market Dojo Sourcing’s reverse auction functionality, having felt there were savings to be made on their current costs.
They wanted an easy-to-use tool that could be adopted alongside the current ERP system, and were impressed by how simple Market Dojo Sourcing made the process of running reverse auctions. By using the tool, the team has centralised all their negotiations with new and existing suppliers and streamlined the tendering process”saving a lot of time.
And the verdict from the customer? “We were aware that there were savings to be made in many of our categories, however, some of the savings have exceeded our expectations.”
“Market Dojo Sourcing is a great tool for any organisation looking for a quick return on investment. The functionality is extremely user-friendly and takes no time to learn. I would recommend Market Dojo Sourcing to procurement professionals looking to save on company costs and improve their sourcing process.” Read case study
Our job is to save money, not spend it!
The final scenario that we often see is that of procurement not feeling justified in spending money within their own department. Although they are adept at negotiating prices, obtaining savings and avoiding unnecessary costs, procurement professionals can find it difficult to quantify the full potential of eSourcing solutions, especially the return on investment (ROI).
At Market Dojo, time and time again we see the huge ROI that can be realised through digital transformation of sourcing processes. For example, the OEM for automotive industry who bought a single user, single month Market Dojo Sourcing licence to source non-metallic fasteners and saved £40 million on a five year contract.
Or the premium property developer in Dubai ran over 30 eAuctions over one month and saved £1.5 million in total and the consultancy company that ran a 60 minute auction and saved 60% on their annual stationery spend, equating to over £200,000.
A US-based for-profit, global thrift retailer Savers who, through using both Market Dojo Sourcing and Supplier Onboarding, have run 120 eSourcing events including 54 reverse auctions with an average saving of 18.8% from an average of 22 suppliers attending each event.
And one final reference is with eCommerce service provider, CommerceHub, who experienced a 30-40% discount on RFPs, or as the company’s Director of Procurement says, “What we can save is between 20 and 50 times the cost of Market Dojo Sourcing. Ultimately, you guys pay for yourself numerous times over.” Read case study
On top of the tangible savings, there are many soft benefits of eSourcing, such as
- Better supplier management and visibility of performance
- Recognition of procurement / sourcing teams as a strategic function, not a ‘barrier’ to spending through better stakeholder engagement
- Ability to make sure spending is aligned with wider company standards
- Creating competitive advantage and market differentiation through strategic sourcing
To learn more, take a look at How much ROI can eSourcing really bring? and Seven ways that eSourcing can save time and money.
If you would like help to build the business case for eSourcing in your company, please book an exploratory call and demo with the Market Dojo team.
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EXTRA READING
To learn more about e-auctions, here is some bonus material that you might find interesting.
February 21, 2023