Ten Tactics to Come Out on Top in eSourcing Events

By Patrick Furey, Senior Category Manager

A growing number of today's buying organizations are using electronic sourcing tools to find and obtain quotes from qualified suppliers. As these events become more popular, knowing how to capitalize on the opportunities they offer can make a big difference to your business–and your bottom line. The following ten tactics can help you get started on the road to eSourcing success.

1. Pick the right opportunities
2. Obtain complete information
3. Know your bottom line ahead of time
4. Give yourself the right tools to react fast
5. Pay attention to the auction format.
6. Emphasize every asset you bring to the table.
7. Develop a position-based strategy
8. Support your team with a good environment
9. Stay on top of technical details
10. Press for follow-up information on both wins and losses

1. Pick the right opportunities. Before deciding to participate in an eSourcing event, make sure the opportunity matches your abilities and strategy and that you're the right fit for that particular customer. Don't get carried away and pursue business for which you lack the capacity or capability–you could end up hurting your business and your reputation in the market.


2. Obtain complete information. Do the bid documents provide sufficient information for you to prepare an accurate and comprehensive quote? If not, take the necessary steps to get it before submitting a bid. Read all materials supplied by the buyer, fully understand the requirements, and don't hesitate to ask questions.


3. Know your bottom line ahead of time. Enter every competitive quoting project with clear awareness of your desired price and your break-even price. The last thing you want to do is jeopardize the financial health of your company by taking business at a loss, so know when you simply have to get out of a bidding process. This is especially important in eSourcing events, which can move rapidly–making it crucial to have certainty about financial parameters up front.


4. Give yourself the right tools to react fast. During online sourcing events you will often be bidding on multiple line items within a lot, so you'll need to react quickly to respond to the competition. Do your homework and use a spreadsheet or database so you can immediately update your pricing.


5. Pay attention to the auction format. Buyers can choose from among multiple auction formats, each with its own unique pricing, timing, and feedback mechanisms that control how information is distributed and received. Before auction day, learn what format will be used and the rules that apply. Is it a standard reverse auction where you see the other bids in the market? Is it a blind auction where you only see your rank against the competition? Is it a Dutch auction where you can win business as a whole or in parts at different price levels? By familiarizing yourself with the auction parameters, you can properly plan your strategy and avoid unpleasant surprises in the middle of the event.


6. Emphasize every asset you bring to the table. Buying decisions are rarely made on the basis of price alone. You need to provide full information in any request for information (RFI) and insure that you accurately convey all your capabilities. Buyers generally make the best total cost decision, and factors like quality, delivery, terms, logistics, and overall market reputation come into play. If you have more to offer than just a low price, make sure the buyer knows what makes you unique.


7. Develop a position-based strategy. Following a well-thought-out approach based on your position with the buyer can play a key role in determining your success. If you're the incumbent, these steps can help you defend your current business:
   
   
   • Understand the market players; anticipate who will be competing against you and position yourself accordingly.
   • Capitalize on your relationship by gathering insight into what the customer values (e.g., service levels, costs, quality, delivery, reputation, technology).
   • Feature your strengths in a unique way that discourages the customer from awarding the business to another supplier.
   • Rely on your history of demonstrated service.
   • Highlight the total cost of doing business (e.g., switching costs, critical timelines, and other requirements you already meet for your customer).
   
   If you're the challenger, these steps can demonstrate that you offer the best solution:
   
   
   • Know the customer; understand what drives the company to employ this particular approach.
   • Research which supplier(s) currently service the business.
   • Illustrate how your unique strengths and capabilities fulfill or surpass the valued characteristics of the current relationship.
   • With your proven experience, identify process and/or product improvements that will position you as the lower-cost, higher-quality supplier.


8. Support your team with a good environment. Before the auction, gather your team and make sure all stakeholders are aware of the strategy and are on standby in case additional input is needed. Next, reserve your "war room"–a dedicated space where your team can gather and monitor the activities together, with limited distractions. Finally, be sure to refer back to your plan and act on it as the auction occurs.


9. Stay on top of technical details. Seemingly minor glitches can sometimes make the difference between winning and losing an eSourcing event. Follow these recommendations from auction support experts:
   
   
   • Know all key information, including the exact start date and time; how to contact the buyer, support desk, and key decision makers; and steps needed to access the auction.
   • Stay at your computer until you know bidding has ended, or rotate your position with another colleague if you need to leave the auction.
   • If you experience a technical error or lose your connection to the auction, contact the help desk or buyer immediately.
   • Make sure the buyer has your correct contact information for bid day in case of any urgent messages.
   • Pay attention to the auction web page to look for error notices on your screen, which will instantly tell you if the bids you submit have any problems.


10. Press for follow-up information on both wins and losses. If you didn't get the business, ask the buyer why and what you can do differently next time to improve your chances. If you did win the contract, find out what considerations drove the buyer's decision. This gives you access to valuable benchmark information that can help you streamline your operation and become more competitive in the long run.

Find Out More: Gain the Inside Advantage with Ariba Education
Ariba offers an online course that provides comprehensive information about effective eSourcing strategies. Read curriculum details and to sign up.