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eSourcing- The Perfect Neotiation Gateway!

April 19, 2012 Leave a comment

Today, cost rationalization is at the forefront of agenda for every organization. Efforts are channelized towards developing a system which lays a platform for long term benefits. On the organizational level, departments face the issue of adopting modern approaches. The test is to balance new methods vis-a-vis traditional procedures on one hand and human inertia on the other. The challenge also rests with identifying and implementing newer methods without hampering the normal operational proceedings. A more detailed analysis reveals that these challenges are industry specific and are also influenced by geographic, demographic and social dynamics. All in all, organizations are looking for perpetual system that helps them in seamless switch from one level to the other.

For their central role in the determining the quality of end product, the procurement department is under the scanner for the material sourced. The sourcing personnel are under constant pressure to procure best quality material at an optimal value. They operate under several constraints of time, location; delivery, logistics, and fulfillment so on and so forth. Moreover, the quality of direct raw materials defines the quality of end product. Hence, it becomes all the more imperative to have the right option and adopt the right approach for sourcing.

The latest innovation in the sourcing process comes in the form of eSourcing! It is a reverse auction process for buying items where prices go down as the auction progresses. It leverages the power of internet and Software as a Service (SaaS) model, brings the bidders (suppliers) on a common platform. In a controlled ambiance the buyer invites its shortlisted (selected) suppliers who are at technically at par with each other. The buyer also reserves the right to craft the strategy for the reverse auction based on his or her organizational policies. An ideal reverse auction platform is one in which the buyers operational process is exactly replicated without any deviation.

Once the auction event commences, the bidders (suppliers) bid against each other for definite period. They are able to see the corresponding bids by other bidders and in a competitive scenario are forced to shrink their profit margins passing on the benefits to the buyers. This also saves substantial time for the buyers as they now no longer wait for E-mails from suppliers about quotes, no longer do they negotiate on phone and is independent of availability of suppliers for discussion. The suppliers on the other hand are happy that system is transparent and their chances of winning the contract are in their own hands.

It’s a collaborative process of negotiation and is also called as a ‘Negotiation Tool’ in loose sense. The science of negotiation is ideally aims at a win-win situation, but if you are a buyer, you will never mind a (you) win and (supplier) lose situation, will you?

Orginally post on Rishabh Software Pvt. Ltd.: eSourcing


Low Cost Country Sourcing

March 19, 2012 Leave a comment

Imagine a situation where you are buying say 10 kg sugar @ Rs. 50/Kg from the grocer next door. You end up spending Rs. 500 on the same. Now, there’s a new hypermarket in town, about 3 kms away from your home and is selling sugar with same quality if not better at Rs. 45/Kg, for 10 kgs, you incur Rs. 450. You will quickly calculate and quantify: A. Amount of expense on fuel, B. Cost of carrying sugar across a distance of 3 Kms, C. Amount of effort you will incur in the activity. If the sum of these 3 is less than Rs. 50, you will obviously go and buy the sugar from hypermarket. This is the essence of Low Cost Country Sourcing (Hereafter referred as LCC Sourcing).

In the example above, the two crucial facts though were, A. Availability of the ‘Information’ that there’s such a hypermarket in town selling sugar at Low Cost. B. Your calculations and Willingness to save that extra penny. Here comes the role of how aptly the ‘NEW’ source has orchestrated his or her offering and the avenues it has for expanding it horizon. Also, it depends on the ‘Trustworthiness’ of the new source. You may buy the sugar from Hypermarket, but if it’s just another grocer, 3 Kms away, giving huge discounts, you will definitely find it dicey and stick to your old source.

The current global competitive scenario is dominated by improved communication technologies and opening of global economies. These factors have paved the way for introduction of new players in traditionally insulated markets across industries. These new entrants with improved business and operational methodologies are exerting immense pressure on companies across the globe to cope up with the dynamics of modern day operations. New equations on the diplomatic levels, realignment of relations between economies, emergence of developing countries as regional hubs of trade and commerce are increasingly adding new dimensions to .

The LCC Sourcing is prudent concept gathering momentum in the industry circles due to this realignment of economies across the globe. In such a dynamic scenario, the winning formula lies in the hands of the companies who are most flexible and open for changes. The kinetics of adopting new entrants in the company’s ecosystem assumes topmost priority. One very important species in any organization’s ecosystem is its suppliers. LCC Sourcing is a smart way of sourcing items not only at the lowest cost but also (at times) at better quality. The manufacturing, resource, technological and other benefits give some countries unassailable lead over the others in terms of producing items better… faster and cheaper than other countries.

Author: P. Mane, ODScommerce

Originally Posted on Rishabh Software Pvt. Ltd

Categories: Uncategorized