Strategic Guide to e-Procurement
Planning Tools
Spend analysis, issuing and evaluation of a RFP, RFQ, or RFI (collectively referred to as RFX), contract or supplier management and negotiation using an auction, are sourcing processes that can be undertaken using electronic planning tools. The primary benefits of these tools are:
- an increase in speed to market and response
- more effective procurement activities through better understanding of agency requirements
- maximisation of value for money through effective leverage of competitive pressure in the marketplace.
Spend analysis tools
Spend analysis tools are electronic methods or programs that automate the spend analysis process. The tools provide end users with quicker and easier access to spend data in order to structure sourcing strategies and make procurement decisions.
These tools operate with either live or historical data. Live spend analysis systems refresh the data on a periodic basis so all of the spend information is current. Historical based spend analysis systems mine and upload data into a spend analysis at a single point in time.
Decide if live or historical data is needed, this decision will drive what types of spend analysis tools are necessary.
Spend Analysis Tools include:
- Spreadsheets
- ERP/FMIS system data
- Multi–dimensional statistical analysis programs
- Data warehouses
- Third party managed systems or databases.
If spend data needs to be accessed on a regular basis or an agency’s spend profile changes frequently, a spend analysis tool that extracts live data is recommended. Typically, a software provider would provide this type of tool rather than an agency developing it in–house. These tools provide enhancements over traditional spend analysis methods because they also give end users the ability to “slice and dice” data in a multitude of different ways. These tools can provide end users with the ability to view line item detail on both orders and suppliers invoices.
When considering spend analysis tools remember the most sophisticated tools in the market will only be as useful as the underlying data that the tool is accessing.
Spend analysis tools are only as useful as the underlying data
Benefits of using spend analysis tools:
- speeds collection of spend analysis data from systems
- provides better opportunities to manipulate data providing more insight into spend profile and agency requirements
- potentially highlights additional sourcing/leveraging opportunities
- can provide multiple stakeholders with access to the same set of data
- automated spend analysis can reduce analysis time.
- Challenges to using spend analysis tools:
- numerous different types of systems (General Ledger (GL), Accounts Processing (A/P), ERP/FMIS) may need to be accessed to gain a complete picture of the spend
- a lack of commonality of data for suppliers, part numbers, category codes and GL codes across systems
- potential for multiple supplier master records due to duplicate data
- spend tools are only as good as the underlying data, and significant data scrubbing may need to take place for the spend analysis to be useful information.
Summary of Checkpoints
Spend Analysis
- a Identify the purpose of performing a spend analysis
- a Determine the level of detail needed for the spend analysis
- a Investigate if readily available tools will be sufficient to perform the analysis
- a Establish who will need access to the data
- a Determine if suppliers can provide spend information and in what format
E-RFXs (RFI, RFT, RFP, RFQ) Tools
E-RFX is the collective term for requests for information (RFI), requests for tender (RFT) requests for proposals (RFP), and requests for quotes (RFQ) through an electronic medium. These requests can be used independently, sequentially or as part of a larger negotiation process.
E-RFX is the collective term for RFI, RFT, RFP and RFQ through an electronic medium
An E-RFX tool is designed to help an agency to construct an electronic RFI, RFP, RFT or RFQ that can be issued to suppliers. AusTender, the Australian Taxation Office (ATO) Print Portal and the Department of Education, Science and Training (DEST) BuyIt system are examples of E-RFX tools.
Typically, E-RFXs have one or all of the following functions:
- electronically distribute RFX information to suppliers
- capture suppliers’ electronic submissions of RFXs responses
- provide a specified template for specific categories being sourced
- limit supplier responses/specify types of responses to a set criteria or list of questions
- act as a repository for RFX responses including archive documents
- improve governance through maintaining an electronic record of all activities associated with the RFX process
- notify suppliers of success or failure of tender.
Suppliers can benefit through E-RFXs because:
- similar format for all RFX can result in a faster response time
- no supplier is disadvantaged as the same information is available to all
- suppliers have equal access to the buyer
- equal opportunity to respond, regardless of location or time zone
- electronic submission can reduce costs in terms of printing and postage.
E-RFX can offer suppliers significant tangible benefits
Typical process flow for a fully implemented E-RFX:
- buyer defines specifications for their required goods and service
- buyer prepares templates, or develops RFX document online and draws required information from PO, catalogue and contract data
- buyer loads specifications into the Web-based tool in as much detail as necessary
- buyer notifies the supplier (via email, public website, bulletin board or fax, phone call) and provides access to the portal where the E-RFX is located
- supplier accesses portal and completes E-RFX online, or completes associated documentation and sends to buyer
- buyer accesses site to view supplier responses or reviews documentation.
E-RFX provide the greatest benefit where categories are sourced frequently
E-RFXs are applicable to all categories, and provide the greatest amount of benefit where the category is sourced on a frequent basis.
Benefits of using an E-RFX include:
- reduces sourcing cycle time
- supports a transparent negotiation process
- provides a comprehensive audit trail
- improves repeatability of sourcing events.
Summary of Checkpoints
E-RFX
- a Understand where, when and how to use AusTender for RFX issue
- a Evaluate the type of functionality needed over and above standard tools
- a Establish templates that can be used for RFX preparation and issue
- a Consult with suppliers to:
- a identify their technical capabilities to receive or submit E-RFXs
Contact for information on this page: ICT Procurement