5 Study Case – Mærsk model
5.6 E-Sourcing Implementation
The steps involved in e-sourcing are not different than other purchases. The event should be well-planned and the buying process (sourcing, sending RFQ, conducting negotiations, etc.) is the same.
At Mærsk Procurement, the e-sourcing was created in a successful attempt to optimize the procurement activities and meet both mission and vision requirements as a first class procurement organization.
Figure 7 below shows in which steps of the procurement process the e-sourcing tools can be applied through the adopted platform Procuri and how it is done in practice in each one of the steps, explained in section 5.4.
Collect & Analyse Internal Data Collect & Analyse Supply Market Data Develop
Strategy StrategyExecute
Implement & Manage Category Establish
Scope, Team & Goals
• Identify stakeholders • Form team, assign
roles & responsibilities • Hold internal kick -
off meeting • Evaluate need for
external expertise • Confirm scope,
savings target & schedule • Develop &
communicate goals • Create project plan
• Understand stakeholder expectations • Collect spend,
volume & inventory data
• Establish spend and volume forecasts • Collect and review
specifications • Collect & review
contracts • Create baseline • Build TCO/TVO
model
• Hold internal idea generation session
• Perform supply market analysis • Identify supply
base
• Prepare & issue RFI
• Qualify & rank supplier base • Prepare supplier profiles • Map current strategies & practices • Review industry best practice • Develop sourcing
strategy & tactics • Establish criteria
for supplier selection • Communicate
strategy
• Prepare & issue RFP/RFQ • Evaluate & rank
RFP/RFQ responses • Make & review
supplier short -list • Conduct supplier
workshops • Review / update
sourcing strategy • Discuss strategy with
management • Conduct negotiations • Prepare and sign
contracts • Measure project
impact
• Prepare hand -over package
• De-brief all suppliers • Hold lessons learned
• Implement and communicate new agreement(s) • Develop product catalogue and sales kit • Manage internal relationships • Manage supplier relationships Collect & Analyse Internal Data Collect & Analyse Supply Market Data Develop
Strategy StrategyExecute
Implement & Manage Category Establish
Scope, Team & Goals
• Identify stakeholders • Form team, assign
roles & responsibilities • Hold internal kick -
off meeting • Evaluate need for
external expertise • Confirm scope,
savings target & schedule • Develop &
communicate goals • Create project plan
• Understand stakeholder expectations • Collect spend,
volume & inventory data
• Establish spend and volume forecasts • Collect and review
specifications • Collect & review
contracts • Create baseline • Build TCO/TVO
model
• Hold internal idea generation session
• Perform supply market analysis • Identify supply
base
• Prepare & issue RFI
• Qualify & rank supplier base • Prepare supplier profiles • Map current strategies & practices • Review industry best practice • Develop sourcing
strategy & tactics • Establish criteria
for supplier selection • Communicate
strategy
• Prepare & issue RFP/RFQ • Evaluate & rank
RFP/RFQ responses • Make & review
supplier short -list • Conduct supplier
workshops • Review / update
sourcing strategy • Discuss strategy with
management • Conduct negotiations • Prepare and sign
contracts • Measure project
impact
• Prepare hand -over package
• De-brief all suppliers • Hold lessons learned
• Implement and communicate new agreement(s) • Develop product catalogue and sales kit • Manage internal relationships • Manage supplier relationships • Identify stakeholders • Form team, assign
roles & responsibilities • Hold internal kick -
off meeting • Evaluate need for
external expertise • Confirm scope,
savings target & schedule • Develop &
communicate goals • Create project plan
• Understand stakeholder expectations • Collect spend,
volume & inventory data
• Establish spend and volume forecasts • Collect and review
specifications • Collect & review
contracts • Create baseline • Build TCO/TVO
model
• Hold internal idea generation session
• Perform supply market analysis • Identify supply
base
• Prepare & issue RFI
• Qualify & rank supplier base • Prepare supplier profiles • Map current strategies & practices • Review industry best practice • Develop sourcing
strategy & tactics • Establish criteria
for supplier selection • Communicate
strategy
• Prepare & issue RFP/RFQ • Evaluate & rank
RFP/RFQ responses • Make & review
supplier short -list • Conduct supplier
workshops • Review / update
sourcing strategy • Discuss strategy with
management • Conduct negotiations • Prepare and sign
contracts • Measure project
impact
• Prepare hand -over package
• De-brief all suppliers • Hold lessons learned
• Implement and communicate new agreement(s) • Develop product catalogue and sales kit • Manage internal relationships • Manage supplier relationships
Figure 7 – E-sourcing usability
Establish Scope, Team & Goals
Activities in which E-sourcing can be implemented:
Form Teams, assign roles and responsibilities Confirm scope, savings target and schedule Create project plan
Form Teams, assign roles and responsibilities
Purpose: to facilitate the information flow among stakeholders and project members involved.
Through an e-sourcing tool, all participants involved in the project have access to the information flow, which contributes to reduction in transaction costs while making it already at an internal level a transparent process.
Confirm scope, savings target and schedule
Purpose: to establish a widely supported savings target through the usage of internal surveys.
The e-sourcing platform can make the important initial information of a sourcing project available to everyone related to the project, such as the scope, visible savings target and prepare the schedule for each activity involved in it.
Create project plan
Purpose: to manage the project process.
The management of an e-sourcing process can be facilitated by making use of the e- sourcing platform, which helps in keeping an updated project plan by demanding less time from the Strategic Sourcing Group than the traditional procurement method. Once all the participants have access to the platform and it is possible to identify who is responsible and what is the schedule for each activity.
Collect & Analyse Internal Data
Activities in which e-sourcing can be implemented: Collect and review specifications Create baseline
Collect and review specifications
Purpose: to enhance the information collection process.
The e-sourcing platform helps to gather all necessary specifications from stakeholders, which could also include current suppliers, through an internal RFI where the structure for
cost break down, specification and any other relevant information for the RFQ could be identified.
Create baseline
Purpose: To ensure agreement between SSG, MPRO Finance and stakeholders at an early stage in the sourcing process on the starting point from which the project impact should be measured.
The e-platform improves the creation and divulgation process of the baseline and diminishes the time spent in this activity, the participant SSG members and MPRO Finance agrees on the figures updated in the system.
Collect & Analyse Supply Market Data
Activities in which e-sourcing can be implemented: Prepare and issue RFI
Qualify and rank suppliers
Prepare and issue RFI
Purpose: to validate the competencies of the suppliers identified in the supply base search and gather more information about the supply market.
The process of creating and issuing the e-RFI is simplified through the e-sourcing platform. By the use of templates such as cover letter, draft of a standard contract, supplier guide to the process, among others, the time spent in this phase is minimised and the focus of the buyer can be directed to another strategic task. The platform scores/evaluates suppliers according to the criteria established by the buyer, enhancing the time necessary to spend in the analysis and interpretation of the responses.
Qualify and rank suppliers
Purpose: to assess the relative advantages and disadvantages of suppliers identified based on input provided by them.
The platform enables a Scorecard analysis and ranks the supplier automatically according to the ranking criteria and buyer’s preferences set in the beginning of the project.
Execute Strategy
Activities in which e-sourcing can be implemented: Prepare and issue RFP/RFQ (e-auction) Evaluate and rank RFP/RFQ
Measure project impact Lessons learned
Prepare and issue RFP/RFQ (e-auction)
Purpose: to request a quotation or proposal to supply goods and services to fulfil the specific needs identified in the previous phases, through an online platform.
Creating an e-RFQ follows the same principles as the ones mentioned for the e-RFI, the buyer can use templates to facilitate the process or simply upload an Excel sheet into the platform. It enhances transparency and fairness of the process as all the suppliers receive the e-RFQ at the same time and have access to the same information, thus questions the suppliers might have can be shared through all participants while keeping the anonymity of suppliers.
The e-RFQ can be more beneficial than the normal tender process because the e- sourcing tool can be used as a central data repository, diminishing the managing of several mails and folders, which contributes to the:
• On-line data collection and project management, securing a common standardized format
• Data re-usability and templates are available downstream in the process • Market intelligence is built up for each commodity group that is sourced
• Cross-functional collaboration is easier between key people due to the web-based format
• Advanced data analysis and scenario capabilities
Due to the re-usability and advanced analysis capabilities cycle times tend to be shortened. As shown in Figure 8 below.
The e-sourcing platform is able to both run an e-RFQ and an e-auction (in various formats). The use of both tools can be incorporated if the buyer sees relevance in that, the difference between running an e-auction and an e-RFQ is that in e-auction it is possible to only ‘negotiate’ one item, such as the delivery terms, payment conditions or price, while in the e-RFQ buyer and supplier can agree or disagree on basically everything, resulting in a contract sign off or in another negotiation round.
E-auctions
It is important to notice that an e-auction is not suitable for all sourcing projects, there are a couple of factors to consider when deciding whether or not to conduct an e-auction. E- auctions are generally suitable if:
Wave 1
Wave 2
• There is a competitive supplier field (+3 suppliers);
• Situations where it is possible to have precise specifications; • Not very strategic products.
However it does not mean that it is limited to non-critical items, leverage items can be used as well.
In MPRO we have only had experience with reverse or transformation e-auctions.
Evaluate and rank RFP/RFQ
Purpose: to create a single database containing all offers received, find out the best choice according to the strategy established.
Another benefit of running an e-sourcing project is that the analysis after the RF(x) (RFQ, e-auction or both) can be facilitated by the creation of multiple scenarios; variables change to identify the best possible outcome and to rank suppliers for future negotiations.
Measure project impact
Purpose: to ensure that value created by the SSG is correctly reported and acknowledged by BU’s.
Through the e-platform, participating members in the SSG have access to project detailed information such as the baseline, total spend for previous year, estimated savings and reached savings.
Lessons learned
Purpose: to ensure that all SSG members are debriefed and aligned on the project they participated in, also to ensure a continued development of the sourcing process.
The templates for creating a lessons learned presentation is uploaded in the system, the SSG identify what could have been done differently, what was the successful point of that process and what they could consider as a ‘needs to improve’ issue. The platform works as a central repository for important information regarding the sourcing project and the link with the lessons learned presentation can be sent to all SSG members, spreading the knowledge sharing through a common platform.