Procurement professionals are tasked with not only identifying but also securing savings. Many times this means that people will take the easy way out and take minimal savings with the incumbent supplier just because they know implementing a new supplier is risky and challenging. However, if proper savings goals are put into place you can’t always take the easy route. If high enough savings can’t be secured through direct negotiations with incumbent suppliers this means you will be going out to market via a formal RFP process and identifying a lower cost, alternate supplier. The problem now is you need to manage an implementation process and timeline. This is when procurement gets caught between a rock and a hard place. Why? Well usually there are stipulations around those savings you need to capture. The most important being the dollar amount of savings you need to capture in year. Which means time is of the essence. This causes procurement professionals to shortcut important steps that hamper implementation, impact savings, frustrate stakeholders and can ultimately lead to a failed initiative. So how do we avoid these issues and ensure that we are setting ourselves up for success?
Step One is properly understanding the category and developing a comprehensive baseline before even taking the category out to market. This of course means defining current price. But a well-developed baseline shouldn’t just be about the numbers. It should also be about understanding the supplier relationship, the stakeholder requirements, issues and/or challenges within the category, and how the stakeholders are going to go about evaluating a new supplier. You should also gain a high level understanding of what the stakeholders will need to do in order to implement a new supplier. Will the stakeholders require samples for testing? Are their VMI requirements or on-site resources needed? How much time will need to be dedicated by the stakeholder team in order to get the new supplier implemented? Answers to questions like this will help you develop not only your RFP but also your timeline for implementation.
Next is asking the right questions in your RFP. Ensure that there are at least a few questions that focus on implementation. Make sure the supplier has the right experience. Have they completed large scale implementations before? With similar sized customers? Within the same industry? Etc. Questions should also be asked around if there is a dedicated Account Manager focused on implementation and transition. What does the typical implementation plan look like and how long do they anticipate implementation to take? Questions like this are imperative since it’s not only your job to ensure that the supplier has a competitively priced offering but can actually get the job done. There’s nothing worse than recommending and moving forward with a low cost supplier that can’t deliver to the business.
Lastly, realize that you will need to physically manage the implementation and stay involved. Hold the supplier and stakeholders accountable and manage to an implementation timeline. Ensure that there is an open communication flow with all stakeholders and the supplier.