World Class Procurement Technology without the Corporate Price Tag

PEPCO Services LLP has introduced a shared service model which brings world class e-sourcing technology to the mid market. A number of leading mid market portfolio companies are already using the PEPCO service with great success and realising the benefits of procurement technology usually only enjoyed by global organisations. Under a centrally negotiated agreement with Trade Interchange, a leading provider in cloud based e-sourcing software, PEPCO offers portfolio companies significant cost savings and reduced administration overheads compared to traditional procurement methods.

The service currently covers e-rfx; a powerful tender and quotation system, and e-auction; a system for running open and competitive online negotiations. As part of the service model clients have unlimited access to the tools and specialist support from the PEPCO team.

In hard financial terms one of the key drivers for implementing e-sourcing tools is of course pure bottom line savings. In a recent study carried out by Aberdeen Research, e-auctions deliver an average annual saving in excess of 16%.

There are however many additional benefits from an administrative, compliance and governance perspective. Imagine a tendering process where multiple responses from potential suppliers can be gathered in under 10 days, a prescribed process with reusable templates, with built in qualification to ensure responses only come from appropriate participants and the ability to open a tender to an increased volume of suppliers to encourage competitive bidding. A transparent, open and fair process where all suppliers have an equal chance to participate on a level playing field, with governance of every aspect of the process and controlled management by authorised users from anywhere in the world.

Add a secure audit trail, a collaborative environment for sharing input across teams, live visibility of supplier progress to tenders, simultaneous supplier negotiation and instant tracking and management reporting and you start to understand the value of this technology. Information and process bottlenecks are avoided, data is secure and instantly accessible and incomplete responses from unsuitable participants are a thing of the past.

E-sourcing has developed over the last 10 years and is now widely used across large organisations. E-sourcing platforms have developed in response to the growing need for tools to support and simplify large scale procurement processes, but typically these tools came with high overheads in terms of implementation and management. Implementing anything close to this level of capability as an in house function has thus been out of reach of many mid market companies due to the cost and timescales of such a project.

PEPCO has recognised this and in line with its strategy of aggregation has launched a shared e-sourcing service such that smaller companies can benefit from the efficiencies associated with implementing these tools, without the large company price tag.

The service combines access to the leading e-sourcing software platform and expert advice and support from our specialist e-sourcing team.

PEPCO's e-sourcing service can be delivered as either a standard shared service model with an annual subscription fee, or under a price per event model. We can also provide a fully managed end to end tender process around the e-sourcing services. For more information please contact Andrew Walsh at Andrew.Walsh@PEPCOservices.com or on 07793 957148.

We have put together the PEPCO Guide to e-Sourcing for an overview and some FAQs.

You can also read our latest Client Testimonial where we delivered savings of 26% through our e-sourcing platform.

PEPCO Guide to e-Sourcing
Our goal at PEPCO is to add value to our portfolio companies by supporting them across a range of procurement activities. One of the areas where we can add significant value is through our e-sourcing expertise and technology, however in our experience organisations are still not making the most of this incredibly powerful procurement tool.

Andrew Walsh, our e-sourcing specialist, provides an overview of e-sourcing and answers some of the questions that we most frequently hear from our portfolio companies.

What is e-sourcing?
In general terms e-sourcing is the management of an online tender and negotiation process. It provides a fast, transparent and fair way of facilitating tenders and conducting supplier negotiations. Utilising a web-based platform, e-sourcing provides a tool that greatly simplifies the process for both the suppliers as well as the business issuing the tender.

What are the benefits of e-sourcing?
Compared with traditional procurement methods e-sourcing allows for greatly accelerated timelines, transparency of process and drives cost reduction across your business.

How does it work?
There are essentially 2 parts to e-sourcing:

1) e-RFx - the electronic collection of information / quotes / proposals etc. - a replacement to the traditional methods of issuing RFI/RFQ/RFP

2) e-auction - the online negotiation whereby suppliers submit their pricing and proposals in real time in an open market

What is e-RFx?
An e-RFx system captures and manages all of your tenders in a single online system allowing for centralisation of data, simplified management overview, standardisation of processes and documentation, controlled access and a clear audit trail to support best practice and legislative compliance. It also ensures smooth and clear communication both internally and to and from suppliers, greatly reducing the overhead on all sides.

Benefits of e-RFx
Initial screening in the system accelerates the process as it ensures participants meet the appropriate criteria to respond at the earliest stage. By utilising a common platform it also ensures absolute fairness across all participants.

The system provides secure communication and very clear information in a simple and logical view so participants can quickly understand the timelines, specifications and detail of the tender.

The system requires each supplier to submit information in the same format so you can easily compare and cross reference responses. And at all stages, as participants work through their response, the system ensures compliance / ability to deliver to requirements and adherence
to your business conditions, for example any conditions pertaining to health & safety, industry standards, ethics etc. ensuring there are no surprises on either side at the end of the process.

Timescales are greatly reduced using e-RFx; a traditional tender process might take 6 weeks from issue of tender to closing of receipt of responses - using the PEPCO e-RFx platform we can reduce this to 2 weeks or less.

What is an e-Auction?
An e-auction is an online negotiation tool used by industry leading procurement teams and major consultancies to accelerate the sourcing process and drive cost reduction. In the majority of cases once companies have used e-RFx and have qualified their suppliers they would go to an e-auction. It is important to note that whilst e-auctions are the forum for price negotiation the business always retains control over contract award meaning best price does not always win. The business is enabled to make an informed commercial decision based on the most appropriate combination of quality, capability and price.

How does an eAuction work?
All providers who have met the qualification criteria to supply are invited into an online bidding environment. They join a live event process, are exposed to price positioning and bid on price in a direct market.

When should an eAuction be used?
Typically if these conditions are met then an organisation would benefit from running an e-auction.

- there is a requirement for product or service where spend is over £100k

- the business can clearly define minimum requirements

- there is a competitive / capable supply base i.e. 3 or more suppliers

Additionally an e-auction allows for easy engagement of a wider market as the overhead to reviewing suppliers is significantly reduced, plus the ability to operate to very tight timescales.

There are those who believe that you can only run e-auctions for "widgets" but in reality e-auctions are successfully used for all manner of procurement including service contracts. Weighting can be applied in the system to allow for bids to be adjusted based on different levels of service being offered by participants. e-auctions can also be used as an effective tool to mitigate price increases by an incumbent supplier.

What does an eAuction deliver?
e-Auctions on average show 16% savings over traditional procurement negotiations notwithstanding benefits in reduced administration.

Typically an e-auction can be run in under an hour and can be accessed from anywhere in the world.

The system ensures best price and fairness across participants, supports a robust sourcing process and allows the business to retain control of award.

Overall results are to drive best value while meeting or exceeding business requirements.

Example Savings
Across the most recent 6 e-auctions PEPCO has supported portfolio companies tendering a total spend of £3.1m of products and services to realise savings of £695k, in excess of 22%
of spend.

Client Testimonial
"PEPCO's e-procurement service has proved to be an invaluable tool in obtaining significant savings for our business.

The recent e-auction resulted in a savings figure 25% higher than initially anticipated when planning for the traditional method of negotiating. The Pepco technology provides the tools to manage the full process from RFI to result and is as suitable for SMEs as it is for multinational blue chip organisations. It provides a platform to achieve rapid and consistent communications with the supply base, with the user benefiting from significantly reduced negotiating time. I found the representative from Pepco to be knowledgeable in terms of the e-auction process and the Procurement field, his support throughout the process was comprehensive and invaluable.

Due to the success of this, e-auctions will form an integral part of the Procurement strategy going forward.

I would certainly recommend PEPCO for your e-procurement requirements and I will be using their services again in the near future."

Head of Procurement - nationwide specialist hardware installer & service provider

e-Sourcing Service from PEPCO
PEPCO's e-sourcing service can be delivered as either a standard shared service model with an annual subscription fee, or under a price per event model. We can also provide a fully managed end to end tender process around the e-sourcing services. For more information please contact Andrew Walsh at Andrew.Walsh@PEPCOservices.com or on 07793 957148.

Andrew Walsh
is responsible for PEPCO's category sourcing and group aggregation initiatives, and is PEPCO's e-auction specialist. Andrew has over 7 years experience with online procurement technology and sourcing and has held global roles at CEVA Logistics and at BAA, where he was responsible for group sourcing, e-procurement systems and cost reduction initiatives which have delivered over £250m EBITDA impact. He has experience of global, regional, national and local procurement activities across direct and indirect spends and has managed over 1,000 online sourcing processes.