Ariba Knowledge Nuggets
~Customer Success Team
Strategic sourcing provides the single greatest opportunity to impact the cost, quality, and performance of your supply chain.
Companies using Ariba Sourcing solutions have reported the following additional benefits:
- Negotiate best-value supply agreements
- Standardize and enforce disciplined sourcing best-practices across the enterprise
- Elevate sourcing skills and knowledge across the organization
- Accelerate sourcing cycles and throughput
- Extend strategic sourcing to all spend categories
- Capitalize on low-cost-country opportunities
- Minimize supply risks
- Optimize and align sourcing decisions with strategic business objectives
Basic RFx Types:
RFI – Request for Information
- Suppliers submit information only – typically no price quotes
- Use when you have questions about your suppliers or about what you are buying
RFP – Request for Proposal
- Suppliers submit a response to a proposal with pricing
- Use when you want suppliers to submit other information in addition price and you wish to explore alternative solutions
RFQ – Request for Quotation
- Many design options including reverse auctions
- Price is typically the key factor
- Employ once you have defined what you are looking for
- •Online RFX’s save time compared with one-to-one offline negotiations
- • Time savings can be used in more “strategic” initiatives
- • Online RFX’s do not replace “solid” current supplier relationships, moreover, they
- improve as more “transparent” market is created
- • Dynamic bidding helps to get low level pricing difficult to achieve with offline negotiations
- • Annual eSourcing plan will be shared with your division
- • You will be involved in decision process: supplier selection, teams, strategy
- Example of Ariba Sourcing features: RFI/P scoring & grading features , role to launch events, etc..
- • You will see events and as team members (observers and/or approvers)
- We will help your managers in defining Award/Bonus metrics for projects
Best Practices on Opportunity Assessment
Is the good/service currently available for sourcing?
- The current contract should be ending soon after the project is complete so you can relieve yourself of any commitments.
- If the contract end is not upcoming, determine if there is an out clause in the contract and time to act upon it.
- If the good/service is not contractually available and you try to re-source it, you could face legal issues with incumbent.
Is the good or service commercially attractive enough to encourage suppliers to devote the time to quote on it?
- Ensure the spend is appropriate for the industry and the supplier size in that industry.
- Make sure the number of items or extent of the service is appropriate relative to the spend of the project.
Competitive Supply Base
Are there enough suppliers in the market to create competition?
- If this is a sole-source item (only one supplier capable of producing), there are no other suppliers capable of providing it and manual negotiation may be more appropriate for this type of project.
- There should be a number of suppliers to choose from to have multiple options for award after the eSourcing project.
- Ensure that the current requirements are not too strict to allow other suppliers to fairly quote on the good/service.
Clearly Defined Requirements
Can you clearly define the requirements so that all suppliers are quoting on the same information?
- Ensure clear /current specifications are available for the good/service. If not, determine how to produced them.
- If the current specifications are too limiting, determine if alternative proposals can be accepted.
Is there opportunity for cost savings (if that is the ultimate goal)?
- Research whether your goal should be cost decrease, cost containment, or to switch to a higher quality supplier regardless of price?
- Determine what would define a successful project up-front. Set expectations appropriately.
Can you and the internal team stay committed to this process?
- Determine if you have the appropriate resources available(i.e., quality, engineering, marketing, etc.) in order to implement a new supplier.
- Ensure that the internal stakeholders are committed to re-sourcing this good/service, if necessary.