Drivers & Inhibitors for the Uptake of e-Sourcing Tools – The CIPS I-source Project
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eWorld Purchasing & Supply Conference Day 1 - September 28th, 2010 14:00 to 14:30 State of the Nation: Drivers & Inhibitors for the Uptake of e-Sourcing Tools – The CIPS I-source Project Overview: Early adopters were starting to use e-sourcing tools about 10 years ago. In 2004, CIPS and the University of the West of England conducted a comprehensive research project called I-Adapt, examining the after-effects of using e-auctions on the Buyer-Supplier relationship. Five years on, another investigation aimed to assess the extent to which e-sourcing tools have been adopted in both the public and private sector. The findings provide a fascinating insight into the key enablers that support adoption and the key inhibitors that prevent it… Speaker: Professor Andrew Douglas, University of the West of England on behalf of The Chartered Institute of Purchasing & Supply (CIPS)
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Drivers & Inhibitors for the Uptake of e-Sourcing Tools – The CIPS I-source Project
- 1. E Sourcing Tools Research into their current use within the UK Public and Private Sector Procurement Communities Professor Andrew Douglas – Bristol Business School
- 2. Some history • Internet invented 1969 • Internet commercially available 1984 • E Bay commenced 1995 • E Auctions first used 1998 • E Auctions and E Tenders become commercially available in the UK from 1999 • Over 30 ‘E Sourcing Suppliers’ selling in UK by 1984, EU give positive guidance re use of E Auctions Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 3. In 2004 • Bristol Business School (BBS) and the CIPS carry out first research into the effect of E Auctions have on Buyer-Supplier relationship called I-ADAPT • Findings are unambiguous – Relationship is not harmed in fact evidence points to it being enhanced. Reasons being- – Buyer has to be more diligent in their pre-auction preparations – Suppliers recognise most likely to lose new business on service, quality, delivery etc. - not price – Auctions goods and services not in ‘strategic ‘ category Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 4. So in late 2009 we decided to carry out some new research How are E Sourcing tools being deployed in the Public and Private sectors within the UK? What is the penetration? Who is using them? What do users see as the key enablers? What do both users and non users see as the key inhibitors? Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 5. So how did we go about it? Our Literature Review showed- • Numerous E Sourcing Suppliers / Consultancies who write on the subject • Whole new business has been built around ‘Strategic Sourcing’ over last 10 or so years extending beyond large consultancies • No evidence of similar independent academic research • An abundance of academic research on Innovation, little of it linked to Purchasing and Supply , none to E Sourcing Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 6. So how did we go about it? We produced and piloted a data gathering questionnaire that – • Aimed to cover a broad spectrum of public and private sector respondents • Was designed to identify innovation factors, sources and types • Was aimed at obtaining 80-100 respondents Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 7. How did we get on? • 90 respondents from 350 e mail requests and 5 from CIPS e-newsletter – so 99 in total • 33% Private sector - 67% Public sector • Public sector mix of health, local & central govt. • High incidence of multinationals in private sector • No respondents from Construction Companies • Mean response time 6.4 minutes • 95% of respondents had no problem completing questionnaire Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 8. Our Results and Analysis Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 9. First a profile of our Respondents Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 10. Job Titles What is your job title? Answer Job Title % 1 CPO / Director 15% Head of Procurement / 2 52% Purchasing Manager Sourcing Lead / 3 3% Category Manager 4 Senior Buyer / Buyer 5% Purchasing Systems 5 9% Lead / Specialist 6 Other (Please State) 15% Total 100% Mean average of 6.6 years in the role Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 11. No. of Buyers/Commodity Specialists How Many Buyers / Commodity Specialists do you have in your Organisation # Answer % 1 0‐5 25% 2 6‐10 30% 3 10‐20 15% 4 More than 20 30% Total 100 No significant association between business sector and no. of buyers Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 12. Annual Spend What is your organisation's typical annual external spend value? # Answer % 1 £0‐£50M 24% 2 From £50M up to £250M 36% 3 From £250M up to £500M 21% 4 Above £500M 19% No significant association between business sector and annual spend Organisations surveyed spend over an estimated £100 billion pa Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 13. Now their responses Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 14. Are you currently using any E Sourcing Tools? 93% of Yes group using E Tenders No Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 15. Lets look at the 61% who are using E Sourcing Tools Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 16. E Sourcing Tools Adoption Longevity How long have you been using E‐Sourcing Tools in your organisation? Duration E‐Tender users E‐Auction users 1 Less than 1 year 20% 8% 2 1 to 3 years 43% 47% More than three 3 37% 45% years E Auctions although less used have a more mature adoption profile Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 17. Spend addressed using E Sourcing Tools What percentage of your spend with suppliers is allocated using E‐Sourcing Tools? Question E‐Tenders E‐Auctions 1 Less than 3% 17% 39% 2 From 3% up to but not including 10% 23% 46% 3 From 10% up to but not including 25% 22% 11% 4 From 26% up to but not including 50% 17% 2% 5 From 51% up to but not including 75% 10% 2% 6 75% or more 12% 0% Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 18. % of Buyers using E Sourcing Tools What percentage of your buyers are actively using E‐Sourcing Tools? Question E‐Tenders E‐Auctions 1 Less than 25% 39% 59% From 26% up to but not including 2 8% 22% 50% From 51% up to but not including 3 20% 11% 75% 4 75% or more 33% 8% Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 19. How do you get your E-Sourcing Tools? Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 20. Previous experience of Users Have you used E‐Sourcing Tools in a previous organisation? Option E‐Tenders E‐Auctions 1 Yes 23% 40% 2 No 77% 60% Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 21. Their Key Enablers Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 22. Enablers considered most important for E Tender Adoption 1. Clear benefits to my organisation 2. Positive Buying team 3. Access to Software tool 4. Being part of a defined purchasing strategic decision / sourcing process 5. Senior management support Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 23. Enablers with mid importance for E Tender Adoption 1. Buyer(s) skilled in E-Tenders 2. A recognised 'champion / facilitator' was identified within the team 3. Developed sound success criteria and measurement techniques. 4. No security concerns Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 24. Enablers with least importance for E Tender Adoption 1. Positive experience of other purchasing departments in our organisation 2. Good links with a positive supplier base 3. Access to external support services 4. Undertaking a pilot activity Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 25. Enablers considered most important for E Auction Adoption 1. Clear benefits to my organisation 2. Being part of a defined purchasing strategic decision / sourcing process 3. Access to Software tool 4. Senior management support 5. Developed sound success criteria and measurement techniques Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 26. Enablers with mid importance for E Auction Adoption 1. Positive Buying team 2. Access to external support services 3. A recognised 'champion / facilitator' was identified within our team 4. Undertaking a pilot activity Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 27. Enablers with least importance for E Auction Adoption 1. Positive experience of other purchasing departments in our organisation 2. Good links with a positive supplier base 3. No security concerns 4. Buyer(s) skilled in E-Auctions Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 28. Their Key Inhibitors ie. What stops you extending the deployment of E Sourcing Tools? Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 29. The most significant inhibitors to extending the use of E Sourcing tools 1. Software tool not integrated with purchasing process 2. Prohibitive cost of access to Software tool 3. Current supplier relationships / attitude do not support using these tools 4. No buyer(s) skilled in E Sourcing Tools 5. Prohibitive cost of access to external purchasing services 6. Buying team resistant to using tools of which they have no experience or information Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 30. The least significant inhibitors to extending the use of E Sourcing tools 1. We have heard mainly negative comments about E- Sourcing Tools 2. Will affect the strength / balance of our supplier relationships 3. No clear benefits to my organisation 4. Concerns over network security 5. Past Procurement innovations have failed to return on their investment Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 31. Their potential future usage of E Sourcing Tools What are your future plans regarding E‐Sourcing Tools? Option E‐Tenders E‐Auctions a) Stay at current 1 19% 22% adoption levels b) Continue to expand 2 81% 78% the use 3 c) Discontinue usage 0 0 Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 32. Now lets look at the 39% who are not using E Sourcing Tools Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 33. Their previous E sourcing Tools experience? Have you used E Sourcing Tools in a previous organisation? option E‐Tenders E‐Auctions Yes 35% 48% No 65% 52% Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 34. Their Key Inhibitors ie. What stops the deployment of E Sourcing Tools in your Organisation? Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 35. The most significant inhibitors to using E Sourcing tools 1. Software tool not integrated with purchasing process 2. Prohibitive cost of access to Software tool 3. No buyer(s) skilled in E Sourcing Tools 4. Lack of senior Management support 5. No clear benefits to my organisation 6. Current supplier relationships / attitude do not support using these tools Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 36. The least significant inhibitors to using E Sourcing tools 1. Procurement team see these tools as a threat to their own buying skills / competence 2. We have heard mainly negative comments about E- Sourcing Tools 3. Concerns over network security 4. Past Procurement innovations have failed to return on their investment 5. A fear that these tools may fail 6. Will affect the strength / balance of our supplier relationships Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 37. Their potential future adoption of E Sourcing Tools Do you plan to adopt E Sourcing tools in the future? Option E‐Tenders E‐Auctions In the next 12 months 43% 13% In the next 24 months 29% 39% In the next 3 ‐ 5 years 11% 6% Not in the foreseeable 17% 42% future Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 38. In Summary Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 39. In Summary our research suggests Key Enablers 1. Clear benefits to my organisation 2. Positive Buying team 3. Access to Software tool 4. Being part of a defined purchasing strategic decision / sourcing process 5. Senior management support Key Inhibitors 1. Software tool not integrated with purchasing process 2. Prohibitive cost of access to Software tool 3. No buyer(s) skilled in E Sourcing Tools Copyright protected - Cannot be reproduced without permission of UWE or CIPS
- 40. In Summary our research suggests • E Sourcing tools have been adopted by more than half of Public sector and medium to large enterprises • Most user organisations have at least 1-3 years experience • Tenders are used by most buyers, Auctions by much fewer • Vast majority of access is through external hosted sites • Majority of usage covers 25% or less of Orgs. spend • Most users had no previous experience from other orgs. • Most users aim to extend usage Copyright protected - Cannot be reproduced without permission of UWE or CIPS