SLA Europe, London Sourcing information products and services Presentation Date:  5 th  October 2006 Rowan Atkins, Operati...
Agenda <ul><li>Overview of A.T. Kearney </li></ul><ul><li>A.T. Kearney Procurement Solutions </li></ul><ul><li>Knowledge m...
A.T. Kearney is a leading international top management consulting firm Asia Pacific Bangkok Beijing Hong Kong Jakarta Kual...
A.T. Kearney is the recognized market leader in procurement with a unique experience across all industries &quot;Invention...
A.T. Kearney Procurement Solutions © A.T. Kearney 2006
A.T. Kearney Supply Management A.T. Kearney Procurement Solutions is part of A.T. Kearney Management Consulting (MC) Procu...
Knowledge Management at A.T. Kearney Procurement Solutions © A.T. Kearney 2006
Knowledge management services © A.T. Kearney 2006 <ul><li>Case studies </li></ul><ul><li>Data mining analysis </li></ul><u...
Supply Market Solutions   – delivering content and knowledge to external clients © A.T. Kearney 2006
The KM team delivers content and knowledge to our consultants and sourcing managers through category packs Content – Categ...
The seven step strategic sourcing process © A.T. Kearney 2006
A.T. Kearney has developed the seven step strategic sourcing process to improve procurement Profile the Category Select So...
Sourcing information products and services © A.T. Kearney 2006
Sourcing information products is relevant to information professionals in all sectors Types of products and services typic...
Some categories of information products can be complex to source <ul><li>The difficulty in comparing products on a feature...
Information professionals need an effective methodology to evaluate the different products <ul><li>Compare apples with app...
Preparing for the strategic sourcing process <ul><li>Put together a small sourcing team if your category of information pr...
Each step in the process has a number of representative activities  Representative activities Profile the category Select ...
Step one Profile the category <ul><li>Spend analysis - understand your organization’s internal spend for the information p...
Multiple relationships with one supplier Contract Relationship  Non-Contract relationship Major Publishing  Company <ul><l...
Five forces analysis for the information products industry  <ul><li>Increasing availability of information from other sour...
Step two <ul><li>Select your go-to-market approach </li></ul><ul><li>Do you want to combine your organization’s total spen...
Sourcing strategies  <ul><li>Exercise Power </li></ul><ul><li>Create Advantage </li></ul><ul><li>Conduct product value ana...
Step three <ul><li>Identify all viable suppliers, even those you have not previously considered </li></ul><ul><li>Although...
Step four <ul><li>How will you best execute your sourcing strategy? </li></ul><ul><li>Traditional RFP (email to suppliers)...
Step four <ul><li>They introduce rigor and discipline into the purchasing process </li></ul><ul><li>They create a level pl...
Step four <ul><li>They replace paper-based processes with a web-based solution that streamlines and standardizes the data ...
RFP content outline - example © A.T. Kearney 2006 Qualitative and quantitative response documents that you have put togeth...
Step five <ul><li>Conduct the RFP process (traditional or online) – issue your RFP </li></ul><ul><li>Analyse your response...
The supplier selection process Long list/RFI <ul><li>Data source: </li></ul><ul><li>Existing suppliers </li></ul><ul><li>T...
Invest time in preparing agreed responses to anticipated questions from suppliers Will decisions be made on price consider...
Prepare counter responses to the responses you anticipate from the suppliers Negotiation tactics worksheet: Supplier X © A...
Factors in the lotting, build and execution of internet negotiations Internet  negotiations Tactics Strategy Lotting strat...
Make sure you are well prepared before you enter the negotiation process © A.T. Kearney 2006 Negotiations Checklist <ul><l...
Some tips for successful negotiating <ul><li>Always negotiate in a team  </li></ul><ul><li>Never concede anything without ...
Step six <ul><li>If you are disengaging a current supplier and working with a new one, remember to: </li></ul><ul><ul><li>...
Step seven <ul><li>This step is about keeping abreast of what is going on in your supply market so that you will be in a s...
Conclusion © A.T. Kearney 2006
Sourcing information products strategically uses many skills that information professionals have… <ul><li>Researching the ...
… and enables information professionals to develop new ones <ul><li>Constructing sound RFPs </li></ul><ul><li>Negotiating ...
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  1. 1. SLA Europe, London Sourcing information products and services Presentation Date: 5 th October 2006 Rowan Atkins, Operations Director, Europe Procurement Solutions Helen Clegg, Knowledge Manager, Europe, Procurement Solutions
  2. 2. Agenda <ul><li>Overview of A.T. Kearney </li></ul><ul><li>A.T. Kearney Procurement Solutions </li></ul><ul><li>Knowledge management at A.T. Kearney Procurement Solutions </li></ul><ul><li>The seven step strategic sourcing process </li></ul><ul><li>Sourcing information products and services </li></ul>© A.T. Kearney 2006
  3. 3. A.T. Kearney is a leading international top management consulting firm Asia Pacific Bangkok Beijing Hong Kong Jakarta Kuala Lumpur Melbourne New Delhi Seoul Paris Prague Stockholm Stuttgart Vienna Warsaw Zurich Americas Atlanta Boston Buenos Aires Caracas Chicago Cleveland Costa Mesa Dallas Detroit Mexico City Miami Minneapolis New York Ottawa San Diego San Francisco Santa Clara São Paulo Stamford Toronto Washington, D.C. Shanghai Sydney Tokyo Wellington Africa Johannesburg Europe Amsterdam Barcelona Berlin Brussels Copenhagen Düsseldorf Frankfurt Helsinki Istanbul Lisbon London Madrid Milan Moscow Munich Oslo Office Locations <ul><li>$800 million in annual revenues </li></ul><ul><li>Approximately 2,600 consultants worldwide </li></ul>A Large and Growing Company <ul><li>60 offices in 35 countries </li></ul><ul><li>Two-thirds of revenue from outside the U.S . </li></ul>A Global Services Organisation <ul><li>Established in 1926 </li></ul><ul><li>Average consultant work experience: 17 years </li></ul><ul><li>Merged in 1996 with EDS, global leader in IT outsourcing and services </li></ul><ul><li>MBO in January 2006, wholly owned by partners </li></ul>Unsurpassed Experience and Capabilities © A.T. Kearney 2006
  4. 4. A.T. Kearney is the recognized market leader in procurement with a unique experience across all industries &quot;Invention&quot; of Global Sourcing Extension to Strategic Sourcing Building and Leveraging Tools and Know-how <ul><li>Results </li></ul><ul><li>500+ projects last 3 years </li></ul><ul><li>600 consultants </li></ul><ul><li>$ 400 bn. volume analyzed </li></ul><ul><li>$ 68 bn. saved </li></ul><ul><li>$ 15 mil. p.a. invested in Intellectual Capital </li></ul>Automotive Enginee-ring Financial Industries Telecommu- nication Process Industry Utilities Retail/Con- sumer Goods Sourcing BPO Consortia <ul><li>Carrefour, Campell, M&S, Sara Lee, Sears, Unilever, … </li></ul><ul><li>e.on, EnBW, RWE, Anglian Water... </li></ul><ul><li>Akzo, Chevron, Clorox, Corus, DSM, Elf, Henkel, Hoogovens, Norsk Hydro, Novartis, Shell, SSAB… </li></ul><ul><li>Bell South, GE, HP, Lucent, Nortel, Deutsche Telekom, Telefonica, Telstra, Swisscom, … </li></ul><ul><li>American Express, Banco Santander, Bank of America, Barclays, Citibank, Crédit Lyonnais, JP Morgan, Prudential, Société Générale, … </li></ul><ul><li>ABB, Blohm + Voss, Fincatieri, Fluor Daniel, Hochtief, Holzmann, Impregilo, Kvaerner, Lurgi, Salzgitter, VA Tech, … </li></ul><ul><li>CNH, DAF, Deere, Fiat, Ford, GM, Iveco, Mack, Mercedes-Benz, RVI, Volvo, VW, ArvinMeritor, Bosch, Dana, Delphi, Faurecia, Federal Mogul, Getrag, Visteon, … </li></ul>Selection 1990 1995 2000 2004 © A.T. Kearney 2006
  5. 5. A.T. Kearney Procurement Solutions © A.T. Kearney 2006
  6. 6. A.T. Kearney Supply Management A.T. Kearney Procurement Solutions is part of A.T. Kearney Management Consulting (MC) Procurement Solutions (PS) <ul><li>Consulting focus (highly customized approaches to specific customer needs) </li></ul><ul><li>Industry specific approaches </li></ul><ul><li>Complex change management challenges </li></ul><ul><li>Innovation in next generation offerings </li></ul><ul><li>Service focus (repeatable solutions to needs) </li></ul><ul><li>Advantage through specialization (spend management, categories, technology, etc.) </li></ul><ul><li>Innovations in technology enablement, categories, delivery model </li></ul>Capability focus Capability focus © A.T. Kearney 2006
  7. 7. Knowledge Management at A.T. Kearney Procurement Solutions © A.T. Kearney 2006
  8. 8. Knowledge management services © A.T. Kearney 2006 <ul><li>Case studies </li></ul><ul><li>Data mining analysis </li></ul><ul><ul><li>Analysis of internet negotiations results for the purpose of trend and predictive insights </li></ul></ul><ul><li>Sourcing strategy development </li></ul><ul><ul><li>Developing a sourcing strategy based on client’s category situation </li></ul></ul><ul><li>RFP development </li></ul><ul><li>Auction setups </li></ul><ul><ul><li>Best practice auction setups </li></ul></ul><ul><li>Supply market analysis </li></ul><ul><ul><li>Profiling category supply markets </li></ul></ul><ul><li>Client opportunity assessment </li></ul><ul><ul><li>Category diagnostic and prioritization of client spend profile, recommendation of the of the most sourceable categories based on tangible results and supply market conditions </li></ul></ul><ul><li>Supplier search service </li></ul><ul><ul><li>Leveraging our global research departments in addition to internal and external databases </li></ul></ul>
  9. 9. Supply Market Solutions – delivering content and knowledge to external clients © A.T. Kearney 2006
  10. 10. The KM team delivers content and knowledge to our consultants and sourcing managers through category packs Content – Category knowledge packs © A.T. Kearney 2006 01 Sourcing tree 02 Data collection templates 03 Kick-off workshop document 04 Sourcing strategy 05 Supplier market analysis 06 Supplier lists 07 RFP template 08 Specifications 09 Negotiation strategy 10 Online-negotiations 11 Baseline (price benchmarking, quantity structure, results) 12 Contract template 13 Final report 14 Case study Category pack structure Content 1. Ausgangssituation 2. Angestrebte Beschaffungssituation 3. Beschaffungsgruppenbaum 4. Teammitglieder 5. Strategie 6. Ausschreibung 7. Basisdaten für den Preisvergleich 8. Verhandlungen 9. Ergebnis 10. Savings 11. Übersicht der Rahmenverträge 12. Status 13. Nächste Schritte Category packs contain key, structured information for steps of the sourcing process Category packs contain templates to accelerate the sourcing process
  11. 11. The seven step strategic sourcing process © A.T. Kearney 2006
  12. 12. A.T. Kearney has developed the seven step strategic sourcing process to improve procurement Profile the Category Select Sourcing Strategy Generate Supplier Portfolio Select Implement-ation Path Negotiate and Select Suppliers Integrate Suppliers Benchmark Supply Market 1 2 3 4 5 6 7 <ul><li>This methodology can be used to source many products and services an organization may need – these could be indirect or direct goods </li></ul><ul><li>IT hardware & software </li></ul><ul><li>Temporary labour </li></ul><ul><li>Fabricated metal parts </li></ul><ul><li>Rabbits </li></ul><ul><li>Chicken wings </li></ul><ul><li>Utility poles </li></ul><ul><li>Online databases, subscription services & primary market research </li></ul>© A.T. Kearney 2006
  13. 13. Sourcing information products and services © A.T. Kearney 2006
  14. 14. Sourcing information products is relevant to information professionals in all sectors Types of products and services typically sourced © A.T. Kearney 2006 Special Public Academic Other products/services √ √ Cataloging services √ √ Library equipment and supplies √ Primary market research √ √ Secondary market research √ √ Audio/video materials √ √ √ Books/directories √ √ Journals √ √ Online databases Special Public Academic Categories of information products/services
  15. 15. Some categories of information products can be complex to source <ul><li>The difficulty in comparing products on a feature-by-feature basis </li></ul><ul><li>The overlap in the content offered and products purchased </li></ul><ul><li>The unique features of some products which core users will find indispensable (e.g. Alacra’s ability to download content in xls format) </li></ul><ul><li>The different pricing structures of the products </li></ul><ul><li>The difference in users’ needs </li></ul><ul><li>The monopoly of the supplier in some sectors (eg real-time stock market data), which limits the relative power of the buyer </li></ul>Reasons for complexity include © A.T. Kearney 2006
  16. 16. Information professionals need an effective methodology to evaluate the different products <ul><li>Compare apples with apples instead of apples with pears </li></ul><ul><li>Understand the exact needs of user base </li></ul><ul><li>Demonstrate to management that you get value for money from your suppliers and in some cases make savings </li></ul><ul><li>Demonstrate to management that you can think strategically </li></ul><ul><li>Demonstrate to management that you can align user needs with the strategic direction of your organization </li></ul><ul><li>Justify your recommendation to stakeholders </li></ul>Using a methodology has advantages. It allows you to: © A.T. Kearney 2006
  17. 17. Preparing for the strategic sourcing process <ul><li>Put together a small sourcing team if your category of information product is a complex one </li></ul><ul><li>Talk with your incumbent suppliers </li></ul><ul><li>Keep an open mind </li></ul>© A.T. Kearney 2006
  18. 18. Each step in the process has a number of representative activities Representative activities Profile the category Select sourcing strategy Generate supplier portfolio Select implementation path Negotiate and select suppliers Integrate suppliers Monitor the supply market 1 2 3 4 5 6 7 <ul><li>Profile the volumes spent on products/services being sourced, details of specifications, current prices and suppliers </li></ul><ul><li>Understand your end-user/customer requirements </li></ul><ul><li>Decide your go-to-market approach – e.g. combining total spend across units, negotiating on price only – see Gemstone </li></ul><ul><li>Widen your supplier base – investigate all viable suppliers </li></ul><ul><li>Identify leverage points </li></ul><ul><li>Decide how best to execute your sourcing strategy – either by traditional RFP or eRFP; or perhaps just developing incumbent suppliers. </li></ul><ul><li>Develop criteria and weightings for RFP </li></ul><ul><li>Develop RFP template </li></ul><ul><li>A) Conduct the RFP process (traditional or eRFP), issue RFP and analyse the responses </li></ul><ul><li>B) Negotiation process – either traditional face-to-face or eAuction </li></ul><ul><li>Prepare a transition plan for new suppliers </li></ul><ul><li>Manage implementation of any new suppliers </li></ul><ul><li>Capture lessons learned </li></ul><ul><li>Incorporate lessons learned for your next strategic sourcing process </li></ul>Step © A.T. Kearney 2006
  19. 19. Step one Profile the category <ul><li>Spend analysis - understand your organization’s internal spend for the information product/service you are sourcing. Does more than one department purchase the same product? </li></ul><ul><li>What is the volume usage of the products which you currently purchase? </li></ul><ul><li>What is your current pricing agreement and terms & conditions with each of your suppliers? </li></ul><ul><li>Needs analysis - how many users of each product do you have and are you aware of their needs and future needs? What about potential users? </li></ul><ul><li>Supply market analysis - what does the supply market actually look like? </li></ul>Do your homework thoroughly – it will make the whole process more effective © A.T. Kearney 2006
  20. 20. Multiple relationships with one supplier Contract Relationship Non-Contract relationship Major Publishing Company <ul><li>Business Unit 7 </li></ul><ul><ul><li>Credit ratings </li></ul></ul><ul><ul><li>Investment research </li></ul></ul><ul><li>Business Unit 9 </li></ul><ul><ul><li>Indices </li></ul></ul><ul><ul><li>Credit ratings </li></ul></ul><ul><ul><li>Securities codes </li></ul></ul><ul><li>Business Unit 8 </li></ul><ul><ul><li>Securities codes </li></ul></ul><ul><ul><li>Credit ratings </li></ul></ul><ul><li>Business Unit 5 </li></ul><ul><ul><li>Relationship Mgt </li></ul></ul><ul><ul><li>All Categories </li></ul></ul><ul><li>Business Unit 6 </li></ul><ul><ul><li>Commodities </li></ul></ul><ul><ul><li>Energy information service </li></ul></ul><ul><li>Business Unit 1 </li></ul><ul><ul><li>Specialist Data </li></ul></ul><ul><ul><li>Stock market news </li></ul></ul><ul><ul><li>Energy information service </li></ul></ul><ul><li>Business Unit 3 </li></ul><ul><ul><li>Indices </li></ul></ul><ul><li>Business Unit 4 </li></ul><ul><ul><li>Credit ratings </li></ul></ul><ul><li>Business Unit 2 </li></ul><ul><ul><li>Indices </li></ul></ul><ul><ul><li>Securities codes </li></ul></ul>Multiple relationships with suppliers exist in many organizations. Through a strategic sourcing exercise, one company discovered that nine different business units were purchasing information (with or without contracts) from a major publisher. As a result, the company was able to optimize its total spend in negotiations with the supplier as well as to reduce costs by eliminating duplication of resources. © A.T. Kearney 2006
  21. 21. Five forces analysis for the information products industry <ul><li>Increasing availability of information from other sources, e.g. World Wide Web, as search engines such as Google and Yahoo continue to mature and Wikipedia products develop. </li></ul>1 Low 2 3 4 5 High Example <ul><li>Greater awareness of pricing policies putting pressure on suppliers to be more flexible with pricing. </li></ul><ul><li>Beginning to manage demand and negotiate more effectively. </li></ul><ul><li>Individual departments within a company can band together to leverage buying power. </li></ul><ul><li>Opportunities still exist to switch suppliers. </li></ul><ul><li>Buyers are increasingly able to purchase services tailored to their needs. </li></ul>Threat of New Entrants 2 Bargaining Power of Buyers 4 Bargaining Power of Suppliers 3 Threat of Substitute Products or Services 2 © A.T. Kearney 2006 <ul><li>Some suppliers have unique content which cannot be bought from other sources </li></ul><ul><li>Continuing to invest money in new tools and in developing content. </li></ul><ul><li>Some suppliers pursuing a full-service, one-stop shop model. </li></ul><ul><li>Industry is continuously changing and this will bring potential opportunities for new entrants. </li></ul><ul><li>New entrants need deep pockets and strong strategy </li></ul><ul><li>Opportunities still exist in Asia-Pacific </li></ul><ul><li>Most products are web-based, therefore main differentiator will likely be ease of navigation. </li></ul><ul><li>Mature industry with a small number of large, powerful suppliers is pushing suppliers to be more responsive with their pricing policies and terms & conditions. </li></ul><ul><li>Less competition due to industry consolidation, but buyers can still switch suppliers </li></ul><ul><li>Information aggregators are forming alliances that enable them to provide value-added content analysis such as reputation management and other services </li></ul>Industry Competition Rivalry Among Existing Firms 3
  22. 22. Step two <ul><li>Select your go-to-market approach </li></ul><ul><li>Do you want to combine your organization’s total spend to gain leverage with the supplier or do you want to negotiate on price only? Which strategy best suits the type of information product or service you are sourcing? </li></ul><ul><li>Also consider demand management as a strategy. Does your department or organization need all the passwords or seats that it currently pays for? </li></ul>Now you are ready to engage with suppliers Select sourcing strategy © A.T. Kearney 2006
  23. 23. Sourcing strategies <ul><li>Exercise Power </li></ul><ul><li>Create Advantage </li></ul><ul><li>Conduct product value analysis </li></ul><ul><li>Rationalize / standardize specifications </li></ul><ul><li>Reengineer joint processes </li></ul><ul><li>Support supplier operations improvement </li></ul><ul><li>Establish/develop key suppliers </li></ul><ul><li>Employ strategic alliances/partnering </li></ul><ul><li>Expand geographic supply base </li></ul><ul><li>Develop new suppliers </li></ul><ul><li>Compare “total” costs </li></ul><ul><li>Model “should-costs” </li></ul><ul><li>Renegotiate prices </li></ul><ul><li>Hold an online auction </li></ul><ul><li>Consolidate number of suppliers </li></ul><ul><li>Aggregate volume across units </li></ul><ul><li>Redistribute volume among suppliers </li></ul>© A.T. Kearney 2006 The Strategic Sourcing Gemstone Best-Price Evaluation Joint Process Improvement Volume Concentration Product Specification Improvement Relationship Restructuring Global Sourcing
  24. 24. Step three <ul><li>Identify all viable suppliers, even those you have not previously considered </li></ul><ul><li>Although the information products industry has seen enormous consolidation, there are still new players entering the industry </li></ul><ul><li>Ensure your criteria for supplier selection covers all your requirements </li></ul><ul><li>Don’t discard any suppliers at this stage </li></ul>Weighing up all potential suppliers gives you a better idea of the supply market and the competition between the suppliers Generate supplier portfolio © A.T. Kearney 2006
  25. 25. Step four <ul><li>How will you best execute your sourcing strategy? </li></ul><ul><li>Traditional RFP (email to suppliers) or eRFP (online) – another way of getting the required request for proposal out to participating suppliers </li></ul><ul><li>Put together a small sourcing team </li></ul><ul><li>Develop your RFP template – build it around your objectives and business requirements </li></ul><ul><li>Analyse previous contracts and correspondence and obtain any additional information you need from your incumbent suppliers </li></ul><ul><li>Be clear about what you want to accomplish and design your questions accordingly </li></ul><ul><li>Develop your RFP evaluation criteria and weightings for analyzing the responses – what are your key factors for choosing a suppliers? </li></ul>Select implementation path © A.T. Kearney 2006
  26. 26. Step four <ul><li>They introduce rigor and discipline into the purchasing process </li></ul><ul><li>They create a level playing field </li></ul><ul><li>They have measurable criteria for evaluating suppliers’ products/offerings </li></ul><ul><li>The information manager is seen working at a strategic level </li></ul><ul><li>The RFP benefits suppliers too, giving them a clear understanding of your needs </li></ul><ul><li>The information manager is in the driver’s seat – your starting point is not the supplier’s standard terms & conditions </li></ul>Advantages of RFPs © A.T. Kearney 2006
  27. 27. Step four <ul><li>They replace paper-based processes with a web-based solution that streamlines and standardizes the data collection and analysis process </li></ul><ul><li>Suppliers can input their responses online, so no need to send out templates by email </li></ul><ul><li>E-sourcing reduces the number of laborious manual steps, accelerating the whole sourcing process – it can reduce time from months to hours </li></ul><ul><li>To be most effective, there need to be three or more suppliers </li></ul>Advantages of eRFPs If you work for a large organization, you may find that e-sourcing tools are already being used to source other products and services © A.T. Kearney 2006
  28. 28. RFP content outline - example © A.T. Kearney 2006 Qualitative and quantitative response documents that you have put together (e.g. product content or pricing information in more depth) Bid responses Provide a form that suppliers use to show their intent to respond to the RFP, checklist etc. Intent to respond Account management, pricing, training & support, IT environment issues etc. Specific requirements for all suppliers Content and capabilities, pricing, terms & conditions, duration of contract etc. General requirements for all suppliers Outline the steps the supplier must go through to complete the RFP, include key dates, details of contact person, scope of proposal, state your confidentiality terms, outline your criteria for evaluation (price/functionality/content etc). Instructions to suppliers Background information on your company, why you are conducting an RFP process etc. Introduction Comments Content
  29. 29. Step five <ul><li>Conduct the RFP process (traditional or online) – issue your RFP </li></ul><ul><li>Analyse your responses </li></ul><ul><li>Prepare for the negotiations round – either traditional face-to-face or eAuction (online) </li></ul><ul><li>For either approach you should pull together your negotiations team – assign them different roles </li></ul><ul><li>Think about hiring a professional negotiatior or perhaps there is an experienced negotiator in your organization? </li></ul><ul><li>Develop your negotiations strategy, using all the information you have collected and analysed </li></ul><ul><li>Put yourself in your potential suppliers’ shoes – what will be their likely objectives? They are not always all obvious! </li></ul>In a traditional negotiations process, several meetings may be required before an acceptable agreement to all parties is reached Negotiate and select suppliers © A.T. Kearney 2006
  30. 30. The supplier selection process Long list/RFI <ul><li>Data source: </li></ul><ul><li>Existing suppliers </li></ul><ul><li>Trade fairs </li></ul><ul><li>Industry contacts </li></ul><ul><li>Research </li></ul>Step 1 <ul><li>Criteria: </li></ul><ul><li>Content </li></ul><ul><li>Geographic coverage </li></ul><ul><li>Language </li></ul><ul><li>Functionality </li></ul>Feasible suppliers Short list 100% ­70% ­25% RFP 1) Step 2 <ul><li>Criteria: </li></ul><ul><li>Full text </li></ul><ul><li>Indexing </li></ul><ul><li>Downloading </li></ul><ul><li>Billing </li></ul><ul><li>RFP=Request for Proposal </li></ul><ul><li>RfI=Request for Information </li></ul>Typical selection process © A.T. Kearney 2006
  31. 31. Invest time in preparing agreed responses to anticipated questions from suppliers Will decisions be made on price considerations alone? Who at Company X will be making the final decision? How many rounds of negotiation will there be? When will you award the contract? How many suppliers have you invited to negotiations? Question Answer The basis will be cost, content and functionality The final decision will be made by the Head of Research There is no fixed number of negotiation rounds Contracts will be awarded early in December The number of suppliers is not fixed at this stage Think how your answer may be used in the negotiation process – plan your own communications strategy © A.T. Kearney 2006
  32. 32. Prepare counter responses to the responses you anticipate from the suppliers Negotiation tactics worksheet: Supplier X © A.T. Kearney 2006 Issue Price Key message Anticipated response Counter response concessions priority Product Service Other
  33. 33. Factors in the lotting, build and execution of internet negotiations Internet negotiations Tactics Strategy Lotting strategy <ul><li>Support bidding </li></ul><ul><li>Product bundling </li></ul><ul><li>Market basket </li></ul><ul><li>Bid parameters </li></ul><ul><li>Support award </li></ul><ul><li>By product </li></ul><ul><li>By plant </li></ul><ul><li>By country </li></ul><ul><li>By volume </li></ul><ul><li>Best bid </li></ul><ul><li>Extension </li></ul><ul><li>Length of time </li></ul><ul><li>Reports </li></ul><ul><li>Messaging </li></ul><ul><li>Multi direction bidding </li></ul><ul><li>Target pricing </li></ul><ul><li>Category sequence </li></ul><ul><li>Nested or straight </li></ul><ul><li>Use of bid conponents </li></ul><ul><li>Multi currency </li></ul><ul><li>Contract length </li></ul><ul><li>Volume discounts </li></ul><ul><li>Single /multi source </li></ul><ul><li>Rules disclosure </li></ul>Build and execution © A.T. Kearney 2006
  34. 34. Make sure you are well prepared before you enter the negotiation process © A.T. Kearney 2006 Negotiations Checklist <ul><li>Define roles in your negotiations team </li></ul><ul><li>Supply market analysis </li></ul><ul><li>SWOT analysis on suppliers </li></ul><ul><li>Negotiation strategy </li></ul><ul><li>Negotiation tactics worksheet </li></ul><ul><li>Anticipated responses and your counter responses </li></ul>
  35. 35. Some tips for successful negotiating <ul><li>Always negotiate in a team </li></ul><ul><li>Never concede anything without getting something in return </li></ul><ul><li>Stay calm and polite </li></ul><ul><li>Start low </li></ul><ul><li>The highest ranking person is not necessarily the most suitable person for doing the negotiating </li></ul>© A.T. Kearney 2006
  36. 36. Step six <ul><li>If you are disengaging a current supplier and working with a new one, remember to: </li></ul><ul><ul><li>Identify the transition issues </li></ul></ul><ul><ul><li>Identify the organizational issues you may face </li></ul></ul><ul><ul><li>Create the new processes and procedures necessary to get your new supplier on board </li></ul></ul><ul><ul><li>Communicate what you are doing to your stakeholders </li></ul></ul>Integrate suppliers Integrating suppliers can take up to one third or more of the sourcing process © A.T. Kearney 2006
  37. 37. Step seven <ul><li>This step is about keeping abreast of what is going on in your supply market so that you will be in a strong position to negotiate when your contracts are up for renewal </li></ul><ul><li>Keep your eyes and ears open for news of potential new suppliers </li></ul><ul><li>Network with other information professionals </li></ul><ul><li>Go to trade fairs </li></ul><ul><li>Read the information professional literature </li></ul><ul><li>Read the quality press </li></ul><ul><li>Also remember to benchmark your supplier performance – how do they stack up against the metrics you agreed with them in the contract? Do they need to improve in any area? </li></ul>Monitor the supply market © A.T. Kearney 2006
  38. 38. Conclusion © A.T. Kearney 2006
  39. 39. Sourcing information products strategically uses many skills that information professionals have… <ul><li>Researching the market – finding out as much as you can about suppliers, SWOT analysis, pricing structure, competitive position </li></ul><ul><li>Interpreting data – volume usage, pricing </li></ul><ul><li>Understanding user needs </li></ul><ul><li>Defining user requirements </li></ul>© A.T. Kearney 2006
  40. 40. … and enables information professionals to develop new ones <ul><li>Constructing sound RFPs </li></ul><ul><li>Negotiating </li></ul><ul><li>Thinking strategically </li></ul>© A.T. Kearney 2006
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