What do sourcing managers value when they evaluate sellers for new projects? To learn the answer, Supply Lines asked sourcing experts for the inside scoop on their peeves and preferences. Part 1 of the series included insights from Karen Sherrill at Ohio State University. Here in Part 2, Kory Manley, who has conducted over 1,000 auctions in his role as Director of Strategic Sourcing at Caesars Entertainment, explains how sellers can use e-sourcing technology to gain favor with their prospects and customers.
Ten Dos and Don’ts for Working with Sourcing Managers
#1: Don’t respond negatively to new solutions. “One of our major vendor management challenges is that suppliers jump to conclusions about new systems or programs before they even take the time to hear about them,” Kory says. For example, Caesars initially encountered some seller resistance when they first launched Ariba Sourcing™. “Vendors were worried about the potential for auctions and the new system getting in the way of relationships they had, and we heard LOTS of noise about it,” Kory says. Once sellers became familiar with the new solution, however, they realized it benefited them in many ways. “Now about 70 percent of what we source goes through Ariba Sourcing, and we see a vendor base that’s very interested in and happy to get invited to these events,” Kory adds. “It’s clean and efficient for them and for us.”
#2: Do take advantage of buyer-offered training. When customers offer training or mock events to help you get accustomed to sourcing activities or solutions, use them—even if you’ve participated before. Exercises like these familiarize you with their format ahead of time, so you can focus on your pricing and performance during the actual event rather than worrying about how to use the tools.
#3: Do read event content and instructions up front. Like most buyers, Caesars provides explicit seller rules and instructions prior to sourcing events to make the process easier. All too often, however, sellers fail to review them. “By actually reading that content, you can avoid being disqualified for engaging in prohibited activities like backdoor selling,” Kory points out.
#4: Do emphasize your diversity. Make sure you emphasize being small, local, or diverse—and indicate that status by filling out the “Certifications” tab in your Ariba cloud profile. “In many jurisdictions, we’re required to do business with diverse vendors,” Kory says. “And on the Ariba® Network, you want to share the right information in the right spot. We use Ariba Discovery™ to find diverse vendors now, but if a supplier doesn’t indicate their diversity status in the right place, they won’t show up in the search.”
#5: Don’t partner with another seller without asking. “We had a situation where one vendor decided to team up with another to respond to an RFP,” Kory says. “We found out because the second vendor requested direct event access.” While some situations do require more than one seller, buyers need to be involved in that decision, Kory explains. “We have to adhere to intense regulations and meet specific diversity or local spending requirements, and joint awards can be one way to do that. So great, let’s get together and talk about it. But don’t do that on your own or just tell us you’re going to.”
#6: Do read your Ariba email. “We post changes in specifications all the time, so suppliers need to stay on top of the messages that come in from the Ariba message board,” Kory says. “Otherwise they’ll miss out on seeing key changes that can affect their bids.”
#7: Do use the message board to engage. The message board is a great way to collaborate with buyers, especially if you can add value in some way. “If you’ve been invited to a sourcing event, that means we want to talk to you, so when something’s not clear or you have specific questions that make sense for the commodity, post it on the event message board,” Kory says. “Communication with vendors is key throughout the sourcing process—we might learn that there’s another way to approach the commodity or project scope, and we prefer that type of exchange to occur via the message board.”
#8: Don’t attempt backdoor selling. Approaching internal stakeholders to negotiate special deals, pricing, or treatment outside a formal sourcing project can seriously backfire. Yet this can occur almost without your realizing it, so stay on guard. “For example, in a less mature organization, an employee who wants to buy something may start to get supplier bids before realizing they have to go through their sourcing team instead,” Kory explains. “But meanwhile they already had relationships with some vendors, and it’s common for those vendors to want to work with the product/service end user, especially if they’re at a disadvantage. So they might ask for inside information—like what other vendors are being considered, or how their pricing stacks up against the competition.” Such practices can damage your credibility and even cause you to be disqualified.
#9: Do plan your strategy before the event. “Vendors tend not to think about strategy when going into auctions, but they should,” Kory notes. “For example, know your walkaway price before you begin so you’re not going crazy calculating during the actual event, then start above that (but never above the lowest offer you’ve already made) and bid down to it.” By considering both the buyer’s and your own best interests ahead of time—and outlining potential strategies to meet both—you can develop an approach that works to your mutual benefit.
#10: Don’t give up just because you’re not in first place. Bid results can flip at the last minute, so keep striving throughout the event, even if the odds look long. “For example, we just ran an auction for monitors, and towards the end the vendor in first place was disqualified,” Kory says. Though this pushed the second- and third-place vendors into first and second, the third-place vendor had already stopped negotiating, causing them to miss out on the chance to compete. “Even if you think first place is way out there, try to get into second. Or think about how you can get yourself to the most strategic position possible, even if it’s not the best position, because you don’t know what’s going to happen,” Kory advises. “If you’ve gone as far as you can go with price, maybe you can offer better payment terms or other value-adds that will get you over the finish line.”
This article was originally published in the Supply Lines group.