Why people don't use eSourcing, and how to overcome the barriers

One of the constant challenges in managing your eSourcing program is finding enough projects to "fill the pipeline".

Author
Date

Wednesday, February 13, 2019

One of the constant challenges in managing your eSourcing program is finding enough projects to "fill the pipeline".

While the categories under your direct control can usually be safely included, there is typically significant spend outside the procurement team's (and especially the eSourcing team's) direct control.
For eSourcing devotees, the benefits of using eSourcing are well known. eSourcing has a long and proven history of providing improvements in savings, efficiency, cycle times, transparency and compliance.

However, there are still parts of your business that haven't "seen the light". Reluctance to employ eSourcing in a particular category of spend typically falls into five different categories:

  1. Fear of change - anything new and different is always hard. This is especially true in Procurement where many resources come from the pre-"e" generation. They've always done it the same way, and would be perfectly happy to keep it that way. The key to addressing this concern is patience, understanding and training. While the applicability of a BidMatrix event or Cherry-picking eAuction might be readily apparent to you, your stakeholder probably doesn't see it that way regardless of how cogent your arguments. Instead, walk through the event with your stakeholder the way it is today and determine where exactly eSourcing can make his/her job easier. Show them how having a single repository, simplified tracking, and better evaluation can help them each day. A little executive push here and there couldn't hurt, either.
  2. My stuff is different - while it's easy to say that "not everything is strategic", it needs to be acknowledged that everything is strategic to someone. That said, we have yet to find a category, no matter how complex or obscure, that wouldn't benefit from the use of eSourcing. In fact, we would argue that, the more complex or difficult the category, the more important it is to incorporate online tools. The key to addressing this concern is deference. When dealing with stakeholders, be sure to acknowledge the difficulty and complexity and try to understand what challenges the stakeholders deals with. That way, you can target your efforts toward their pain. For complex categories, this usually involves a focus on data collection, organization and evaluation.
  3. Reluctance to cede control - whether for good (pride of ownership) or bad (nefarious activity) reasons, spend owners will sometimes be reluctant to use eSourcing if only because they don't want procurement teams "looking over their shoulder". The key to addressing this concern is emphasizing your support role. Rather than presenting eSourcing as a power grab from procurement, roll it out as yet one more tool to make the spend owner's life easier.  Just like Excel or even the telephone made them better buyers.
  4. Poor past experience - we frequently encounter spend owners whose full knowledge of eSourcing consists of "Yeah, we ran an auction during the dot.com days and it didn't go well". While these are becoming less frequent, they still happen and are very real. The key to addressing this concern is an emphasis that the online tools have come a long way since late 90's and are no longer focused on single-line reverse auctions. Most of the improvements have come in either bidder feedback or decision support, both of which are important to spend owners.
  5. Lack of advance planning - probably the most difficult (and least acceptable) of the excuses for not using eSourcing is the "Tyranny of the Urgent". A buying request needs to be executed quickly so there's not time for any sort of competitive bidding process to take place, regardless of how much eSourcing can speed the process. This is where you'll definitely need executive support because leaning on the "demands of the business" is an easy path to avoiding better sourcing techniques. The key to addressing this concern is executive support and setting targets for eSourcing activity so that the stakeholders "need" to pick something.

Our customers and sponsors are constantly searching for ways to introduce eSourcing into new spend areas. Some of the best tactics we've seen are:

  1. Know your stakeholders pain points and focus your efforts on those. While you might be focused on a specific savings goal, your stakeholder's incentives likely lie somewhere else. Talking up savings potential to someone whose job is to keep the warehouse running isn't going to get you anywhere.  Instead, start with what ails them.
  2. Enlist your executives early and often. Sometimes, a good old fashioned push from the top is what's needed.
  3. Focus on some of non-savings benefits of eSourcing. Your stakeholders will likely be more open to the efficiency, transparency and decision support benefits.
  4. Start small.  Instead of heading straight for an eAuction, employ eSourcing as a data collection, aggregation and evaluation tool.
  5. Be a support system, not a takeover. If you can present yourself as a support structure to your stakeholders, you will go much further than if there is an apparent procurement "takeover" under way.  

At Scanmarket, we've been eSourcing evangelists since 1999. While we believe that eSourcing can benefit any sourcing exercise, we also understand that each situation is different and needs to be addressed separately. By using these tactics, you will be able to increase the amount of spend and number of stakeholders involved and the benefits you get.  

For more information on these approaches or to learn more about how Scanmarket can help you achieve your business objectives, please visit us at www.scanmarket.com