Five Lessons from an eSourcing Legend

April 7, 2020Posted inArticles, Chief Procurement Officers, Events, Lists, People, Process, Strategic Sourcing, Strategy, Technology
Five Lessons from an eSourcing Legend

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Today at 2 pm, Gregg Brandyberry will deliver the presentation, Rethinking the Global Supply Chain, the latest session in Ardent’s CPO Rising 2K20 Virtual Series: The Resiliency Imperative. As a leading procurement executive in the pharmaceutical industry (click here to read our profile of Gregg), he led the charge on global sourcing into China and India in the 1990s and early 2000s. Today’s presentation will look at how today’s global supply chains developed in the aftermath of this first wave of activity and what company’s should be thinking about given the current disruption and uncertainty that pervades the market.

Four years ago, my team sat down with Gregg, to discuss his background and experience in greater detail, including his many years in sourcing. From that conversation emerged five lessons on how to successfully implement eSourcing. Since sourcing and savings are about to skyrocket back up the CPO’s priority list, I think the timing is right to revisit that chat.

Similar to today’s presentation, I’m going to add my own color commentary to Gregg’s great ideas.

Lesson 1: Push the Value of eSourcing Technology

Gregg said that from his experience not everyone on the sourcing side appreciates the value of eSourcing or maximizes its use. This is partly due to the fact that eSourcing events are typically driven by lower-level staff that lack the big-picture experience of category managers or senior sourcing experts. Despite their deep domain expertise, even these folks may not appreciate the value of eSourcing technology. Chief Procurement Officers (CPOs) and procurement leaders need to push the value of eSourcing technology within their organizations. Instead of asking, “Can you give me an example of when eSourcing was used here?” eSourcing should be the default platform and approach for any sourcing opportunity – make your staff tell you why in great detail eSourcing will not work.

Andrew – Unfortunately, this lesson can still be found in the “sad but still true” file after more than 20 years of quantifiable success. I believe that if a supplier negotiation requires a contract, an eSourcing platform should be used to capture the negotiation. It is utterly ridiculous for a procurement team to bypass eSourcing. Maybe the rising urgency to source and save more will change the majority view. 

Lesson 2: Consider Your Company’s Culture

In some respects, Gregg was lucky at GlaxoSmithKline, where he was Vice President of Procurement – Global Systems and Operations for 10 years. At GSK, the culture was ripe for eSourcing and the timing was right. The technology was coming online in the marketplace, there was a lot of buzz around eSourcing, and his staff were genuinely excited to use it. Also, he and his team worked beneath an executive mandate to conduct eSourcing whenever possible. As a result, Gregg and his team were able to run between 10,000 and 12,000 sourcing events annually, and without having to have much debate about it or to “tin cup” for new business.

Andrew – Gregg and his team ran between 10K and 12K events each year. Even today, 15 years later, that eSourcing volume is astounding and rarely seen. 

Lesson 3: Push Your Staff

Although Gregg and his team fully embraced eSourcing and ran events using the solution whenever they could, he acknowledges that not every organization is as lucky. Staff can and do resist its use, especially if the technology is not streamlined or user-friendly. And it can be a hard sell to people who do not want to learn how to use the technology because they would only use it once or twice a year. “If you weren’t doing it, you became an outcast,” said Gregg, adding that he and his team would not tolerate low adoption.

“As management, we would intervene if we saw that going on.” Some ways that staff can effectively intervene are to offer hands-on training to sourcing staff and or to have sourcing gurus “co-pilot” with inexperienced or reluctant staff. CPOs and procurement leaders can also incentivize staff to adopt eSourcing by rewarding those that run x-number of events or y-number of dollars of spend through events weekly, monthly, quarterly, annually, etc. And if all else fails, they can mandate that eSourcing be used as the rule, rather than the exception.

Andrew – As a function, procurement is evolving away from the “command and control” mindset, but CPOs and all business leaders can influence staff behavior by offering intrinsic ($$$$) and extrinsic (acknowledgements) rewards. How about a free lunch with the CPO awarded to the owner of the best eSourcing event each month or biggest user each quarter?

Lesson 4: Push Your Suppliers

A lot of people consider suppliers to be their biggest barrier to conducting eSourcing events, when in reality they should be the easiest. Buying organizations have leverage over suppliers that are eager to conduct business and generally will accommodate different B2B arrangements. Gregg and his team had some pretty basic principles that they would adhere to when suppliers would say, “Oh, we don’t do auctions.” They would say, “Well, then it’s going to be very difficult for you to win our business.” Typically, they would change their mind.

Andrew – Reminder: eSourcing does not only mean reverse auctions. There are a wide range of negotiation types/formats that these systems can model – even one-to-one negotiations. 

Lesson 5: Higher Cost Doesn’t Necessarily Mean Higher Quality

A point that Gregg hit during our conversation, and again during the panel discussion at CPO Rising 2016, was that in his experience, higher cost does not necessarily correlate with higher quality, so why pay more? “How it carries through,” Gregg said, “is the business client will be faced with an array of pricing, they’ll be afraid to pick the lowest price because there’s a psychological, ‘feel-good’ part of paying more, and I’m here to say that that’s a bunch of crap.”

Reflecting on his time spent in the automotive and manufacturing industries, Gregg explains further. “Usually, when things don’t work, it’s more about a specification that’s not right – it’s more about a requirement.” If it is an indirect category or service, the difference can be significant; and if category managers are not actively supporting how that category or service should work in their business, there is a good chance that it might fail. “It doesn’t matter what you might pay,” Gregg said, added that he says the same thing about risk. “There’s no direct correlation between what I’m paying and the risk I’m taking.”

All the more reason to get the best price one can get by conducting an auction, reverse auction, or some other type of eSourcing event.

Final Thoughts

Having run eSourcing events for roughly 15 years, particularly when the technology was coming online, Gregg learned by doing. He instilled his lessons upon not only his staff, but also his clients when he made the leap to consulting. For him, eSourcing has always been about giving more power back to the buyers so that they can get the best price – and best value – for the enterprise. The more spend that an enterprise puts through eSourcing, the greater the savings and the greater the value that they will experience. The question should not be, “Why should we use eSourcing?” It should be, “Why shouldn’t we use eSourcing?”

Andrew – Given the uncertainty regarding organizational headcount, it is more important than ever for organizations to capture their sourcing activities and supplier negotiations digitally.

CPO RISING 2K20 Series

Instead of our typical related research section, we are inviting our readers to investigate our new virtual series, CPO Rising 2K20 – The Resiliency Imperative. Click on the session titles below to learn more and register for them! (Note that we now have 15 sessions planned plus the Summit – not all have been added yet, so more titles coming soon).

On-Demand Sessions:

** If you enjoyed today’s article, don’t miss these sessions.

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