e-Sourcing ensures higher competitiveness through effective purchasing
The international market place for independent traders has become especially competitive over the last 15 years. In the past, many traders have lost market shares to financially strong chain stores. Therefore, they must exploit every means to ensure smooth, efficient working processes within their purchasing organization. One key area for improving processes is sourcing: with the use of an e-sourcing platform, traders and retailers alike can gain a broader overview over the market and its suppliers and generate savings in time and costs when buying goods.
SuperGros A/S, founded in the year 2000, is Denmark's largest wholesaler in the grocery retail market and the main supplier to eleven chain stores throughout the country. The company has a turnover of approximately DKK 17 billion per annum and around 700 employees. The Danish market place is served by three key players, which together cover 90 per cent of the market. SuperGros' share amounts to approximately 27 per cent. With its purchasing power, SuperGros can match and outbid competitors, and in the years to come the company clearly aims to become the market leader in Denmark. One step to pursue this goal is optimizing its purchasing process by introducing an online sourcing tool.
Being one step ahead of the competition with e-sourcing
SuperGros aimed at finding a way to facilitate the handling of a huge variety of goods and suppliers. The screening of suitable suppliers had been a very time consuming process in the past which took place mainly through personal meetings, email, and phone communications. When deciding to introduce an online sourcing tool in 2003, the company was among the first retailers in Denmark to switch from classical face-to-face negotiations to online auctions. The company purchased a license from Scanmarket, a decision which was taken by Bjarne Bak, Purchasing Director at SuperGros: "As we have been an e-sourcing forerunner in the Danish retail market, we went very open into the negotiation with Scanmarket - without screening all providers. We had a meeting with Scanmarket in March 2003 and I knew from the beginning that the simplicity of the system met my requirements as there was no need to install any software or hardware in my company."
The Scanmarket platform convinced SuperGros due to two key assets: Firstly, because of its ease-of-use which was a prerequisite to allow for a broad and fast acceptance among SuperGros' employees; secondly, due to its variety of functions, which offers an auction type for every demand. "When I first saw a demo of the Scanmarket e-sourcing tool, I was immediately convinced. It was simple, no rocket-science, and I knew it would not take me several months until the roll-out", says Bjarne Bak.
Roll-out and upgrade to Platinum license
In March 2003, SuperGros acquired a Scanmarket Gold license and started using the e-sourcing tool in its purchasing department. After a one-day training from Scanmarket, the platform was ready to be tested by both SuperGros employees and the wholesaler's suppliers. After testing the system for about two months, SuperGros started using it for real auctions.
In autumn 2004, SuperGros has upgraded from its initial Gold to the Platinum license, which includes all auction types and allows for extended file storage to 200 Megabytes - from 100 Megabytes included in the Gold license. The storage capacity is used for documenting the auction processes - from the first bid to the final order, ensuring that the sourcing manager can claim a legally binding order. The license is paid on a yearly basis and includes an unlimited number of auctions.
Today, up to 25 employees work with the tool, some of them have been declared "Super Users", which means they are responsible for the introduction of the system to new employees and keep up with its further development. Since then, the company has executed over a thousand online auctions for the purchase of unlabelled goods - ranging from grapefruits to fresh meat - which the company re-sales under its own brand. Whereas SuperGros did not reduce its staff, the wholesaler has already considerably reduced its expenses when buying goods - from 15 to 140 per cent at each auction in comparison to its traditional face-to-face screening. Thereby, the company has saved a two figure amount of millions of Euros over the last three years.
Due to the very positive results, the decision to work with an e-sourcing tool was soon backed by the whole SuperGros top management. "The Scanmarket platform has met all our expectations, and more importantly, it has been well received by our employees, which is the essential success factor for us - that people actually do work with the system", Bjarne Bak argues. Whereas the initial training of employees was executed by Scanmarket consultants, SuperGros took care of training their suppliers and new employees - with the help of Scanmarket's demo videos.
One platform - endless possibilities
When inviting suppliers to an auction, SuperGros directs them to a website developed in the company's corporate design. Prior to any online auction, suppliers are screened and invited to submit an RFI (Request for Information) and an RFQ (Request for Quotation), thereby allowing the buyer to select which suppliers qualify for the auction. At the same time, the sourcing manager sets the specifications for the product he wants to buy. As many goods are purchased repeatedly, this step has to be undertaken just once, saving time for all future auctions which can be re-invested into sourcing, especially of more strategic products.
The purchase department can chose from a wealth of auction types and is supported by Scanmarket's suitability analysis in selecting the right auction for each purchasing. SuperGros has so far used all types of Reverse Auctions - including List Auctions, Cherry Picking, Bundling, Japanese Auctions as well as Ranked Parameter Auctions. Once the suppliers and auction type are selected, the bidding can start, and the best bid wins.
Continuous work on usability
Due to its high satisfaction with the services, support and features of the Scanmarket platform, SuperGros has become a close partner of the e-sourcing provider. Both companies cooperate to making the platform even easier to use and to build a network of contacts between purchasing directors in different companies using the system. As a first step, SuperGros, Scanmarket and other companies have decided at the end of March 2006 to set up a newsgroup on the provider's website as a discussion forum for clients for the exchange of information and experiences on auctions and suppliers.