Nurseries owners can net good value for their businesses by surfing the web, says Stephen Gaubert…
Every nursery needs to buy its supplies and services with the aim of getting best value for money – a combination of price, quality, delivery and service. However, purchasing is often carried out in a fairly informal way, for example…
● on an ad hoc basis, perhaps after responding to telemarketing calls or searching the internet to find the cheapest price, without due consideration being given to quality or service;
● by relying on suppliers who maintain frequent contact with their customers, to ensure that regular repeat orders are placed, without comparative costs being considered.
Over the last few years there has been a quiet revolution in purchasing behaviour by large corporates, with the development of e-sourcing or e-procurement. This involves the use of a collection of technology-based tools that enable businesses to:
● identify their requirements in terms of products and volumes, with some indication of current price levels;
● select suppliers who fulfil their requirements in terms of best value and regulatory or compliance issues;
● establish evaluation and success criteria; bull; obtain quotations from suppliers in a fast and transparent way.
As e-sourcing has developed, the main participants have been large corporates who use tools that appear to be complex and cumbersome and expensive to run. But today, e-sourcing is no longer the realm solely of large enterprises. It is now accessible to any business and it can deliver benefits to all. With easy-to-use, web-based software, it is being de- mystified, allowing more businesses to save money quickly and easily. The savings obtained far outweigh the cost of the tools being used.
At the heart of these e-sourcing tools is the on-line electronic Reverse Auction (e-auction). This is a procurement
tool using web-based software to bring potential suppliers together to compete online. They can offer their best prices for the goods and services required.
Suppliers vie with each other to offer lower prices from an opening level. As the auction takes place, they can each present better terms for the customer in order to win the business. The auction will typically take place over a short and defined period of time.
The key benefits of e-auctions include:
● driving down prices of the products and services you need;
● reducing purchasing lead times;
● increasing the number of suppliers competing;
● multiple opportunities for suppliers to bid;
● transparency for all the parties involved;
● reducing administrative effort and paperwork;
● establishing visibility and auditability within your own organisation in terms of the purchases being made and suppliers selected.
The use of an e-auction does not preclude negotiation at the end of the process in order to fine-tune the result and validate the supplier selection process. The opportunities for nurseries and nursery groups to use these tools are now here. They will reduce costs and return better value.
Stephen Gaubert helps organisations manage their overhead costs.