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With an annual production in excess of 16 million units, Grundfos is one of the world's leading pump manufacturers. Jeppe K. Pedersen is a key member of the team responsible for all indirect spend at Grundfos, which includes amongst others, office supplies and print materials.
He recently completed his first online prequalification tender and integrated eAuction on print materials with a very satisfactory result. Jeppe K. Pedersen explains his experience of the process and why he preferred eSourcing rather than the more traditional face-to-face negotiation.
eRFx is without doubt the best way to prequalify your suppliers
Jeppe K. Pedersen decided to use the Scanmarket eRFx and eAuction modules to prequalify his suppliers. The reason was that he needed to compare side-by-side, a large number of prospective and current suppliers.
“I decided to start with an eRFx because I had a lot of suppliers I wanted to invite – not only our existing ones, but also some potentially new suppliers. The Scanmarket eRFx gave me the opportunity to retrieve detailed information about each supplier – especially about their environmental profile, which is a crucial issue to Grundfos.
Some suppliers chose not to respond to our eRFx. My interpretation is that these suppliers are either not competitive or just not interested in new business although few claimed that they only participated in Traditional RFPs.”
Easy Evaluation
"Evaluating supplier responses were fast and easy – the eRFx provided me with an immediate overview of the best suppliers – I could easily see who were in the top 10 for example. After my evaluation I shortlisted the suppliers that I found qualified for the second round eAuction. Within the eRFx this is done by a few clicks, and the system can even transfer the initial eRFx bids into opening bids in the eAuction.”
Results
- Large savings against current prices
- Substantial time savings
- Well structured process and gathering of all information in one place
Large savings and market transparency
Due to variations in the standards of paper quality amongst suppliers, the market prices were quite different and therefore difficult to compare. The eRFx gave Jeppe K. Pedersen the opportunity to evaluate the suppliers on qualitative criteria as well as price, which resulted in transformed prices that were a lot more comparable than the initial market prices.
“When conducting an eRFx followed by an eAuction we found we were able to get a comparable price level, which made it much easier for us to weight the suppliers against each other. There is no doubt that not only has eSourcing helped us to select the best suppliers, it has also resulted in significant savings and better market transparency. When you take a look at the overall result, I can say for sure that I would never have obtained savings as large as these in a traditional face-to-face negotiation”
Economize your time with eSourcing
Jeppe K. Pedersen also explains that his workload was significantly reduced when utilizing the Scanmarket platform. “Using eSourcing places the responsibility for responding with the suppliers. They need to provide you with all relevant information and prices and the system takes care of the rest! It made it easy for me to analyse the final prices from a methodically selected number of suppliers. If I had conducted the sourcing process as a traditional face-to-face negotiation, I would have spent at least 3 months on the whole process. With the Scanmarket platform I have managed to complete the same process in less than 3 weeks! So there is no doubt that such significant time savings creates a heavy argument for me to use eSourcing.”
“Scanmarket is a great tool to keep track of information because you have everything gathered in one place”
eSourcing can easily be combined with traditional face-to-face negotiation
The goal of the eRFx and eAuction was to select and prequalify a selected range of suppliers that as a final third step, would be invited to participate in a traditional face-to-face negotiation. Thanks to the eSourcing process Jeppe K. Pedersen has an exclusive selection of suppliers and very keen competitive pricing.
“If I compare the Scanmarket online process with a traditional face-to-face negotiation, it would have been very hard for me to convince the supplier to come down to the low price level I obtained in the eAuction. At this point the eAuction has provided me with a list of very competitive prices which will be beneficial for us when we conduct the final negotiations.”
Important suppliers were willing to participate
“Since this is the first time I used eSourcing instead of a traditional negotiation I was a bit worried about the reactions from our current suppliers. Fortunately, we discovered that all the larger, existing suppliers wanted to participate. My conclusion is that as long as a supplier can be competitive, he will participate."
This was also confirmed when I reviewed the event statistics from the eAuction. The suppliers have been very active with their bidding and several of them have continued bidding after the intended close time, which resulted in the eAuction being prolonged with a whole extra hour. The eAuction created a very dynamic process that I would not have experienced in a traditional face-to-face negotiation.”
More eAuctions and prequalifications coming up!
Jeppes K. Pedersen’s first experiences with eSourcing have proven to be very valuable to Grundfos when they are carrying out prequalifications and negotiations.
“I can strongly recommend Scanmarket – I personally think that the platform is a great tool and I already plan to run more events in the future. I also know that 3 of my colleagues have been inspired by my success and now are planning to use the Scanmarket platform in their purchasing projects.”
“After my great experience with the Scanmarket platform, I have at least 3 colleagues who are planning to use it in their future negotiations”