6 – B2B Negotiations Trends to Watch in 2019-20

Posted on by procurEngine

– Anupam Aggrwal, Director AgileApt Solutions (procurEngine)

B2B Negotiations went through plenty of changes in the last few years with increased IT penetration in this field.  The advent of smart, intelligent and easy-to-use e-Negotiations platforms have already disrupted this arena, yet it is far from getting standardized again. Negotiation is expected to go through big changes now with the advent of Industry 4.0.

This article focuses on what Supply Chain Leaders can see Trends in Negotiation in this financial year 2019-20.  

1. Increased Focus on Comprehensive e-Negotiation

With the advent of high-speed internet reaching even the remotest places in India, many large and mid-sized organisations have already moved or started to move towards e-Negotiations in a big way. The e-Negotiation platforms are becoming more intelligent and smarter with increased usage. The e-Negotiations not only provide a fast and efficient tool for the negotiators ensuring good prices through intra-industry competition but also it creates organisations to see the cost and advantages to move towards low cost yet efficient substitutes.

e-Negotiations also helps organisations to record the entire process to avoid getting tags of being biased and for future audit purposes. Now the focus of the organisations will on combining AI and HI for a comprehensive outcome.

2. Data Analytics as a Negotiation Compulsion

The IT tools have impacted the early days of Negotiations and continue to impact it now. That doesn’t mean that everyone’s Negotiation is finished digitizing – far from it – but it does mean that even companies that are miles away from achieving Industry 4.0 operations are still collecting massive amounts of data.

In the coming year, we expect that it will become increasingly uncommon for that data to go unused. Where advanced prescriptive and predictive analytics were once considered luxuries, they will increasingly be seen as an indispensable part of administering a negotiation. Why? Because without them, the large caches of data that are routinely collected across the negotiation couldn’t be leveraged into value-added propositions like improved purchase cost and higher efficiency – two things that will be necessary for keeping companies competitive. 

3. Greater Acceleration of Product Lifecycles

Just as the new technology is changing the way that we do businesses, it’s also changing the way that organisations do negotiations with their vendors. The rise of digital infrastructure has given us the subsequent rise of e-commerce particularly in B2C space, which has changed and continues to change the way that customers learn about and ultimately purchase various products.

On similar lines in B2B, as customer expectations evolve, businesses have to evolve along with them. One of the most significant ways in which changing customer expectations is driving necessary operational change is the shortening of product lifecycles.

Manufacturers across multiple industries are discovering that new products and new innovations need to be turned over much more quickly than ever before, with many existing products now reaching obsolescence sooner than expected. This new reality requires a high degree of organisational flexibility and a much “sharper” value chain than many businesses are used to. Production plans have to be developed and implemented more quickly and demand needs to be estimated more precisely in order to account for the low likelihood that a large buffer stock will come in handy. In order to meet these new requirements, businesses are going to need smarter Negotiation planning and more intelligent processes, e.g. real-time demand tracking, “what-if” scenarios, etc.

This expects to put a lot of pressure on the entire negotiation to approval cycle. It will also mean that there are now previous price trends or the conventionally used LPP (last purchase price) for many items. The move has to be more on price – discoveries.

4. Focus on Cost Reduction

With many industries facing imminent global slow-down, there is expected to be a renewed focus on lowering the cost of production of offered products and services. This would mean the need for quicker and harsh negotiations. The vendors will also feel an increased threat of substitutes. Many organisations may form CFT to drive down the cost.  

In our e-Negotiation business also, we have seen many organisations who were paying huge amounts to e-Negotiations global platforms only because they use their ERP system, are evaluating the small yet reliable cloud-based e-Negotiation platform, whose subscription cost is just a fraction the large giants, yet offer lot more features, without any need of additional hardware or software.

5. Greater Vendor Segmentation and RM standardization

The Supply Chain heads of the future won’t be interested in customization of the products, raw-material, services it buys only to satisfy users. Rather, purchase standardization will be part of a broader strategy that includes ever more granular segmentation of vendor-bases. This will mean collecting data on your various vendors in order to segment them into different smaller groups so that you can be sure that your production and shipping workflows are specifically aiming to meet the needs of your organisation. 

In this way, businesses will be able to provide higher quality service and better adapt themselves to changing markets. As Negotiations changes and evolves, this will be one of the ways in which businesses can make sure that technological advances are being leveraged toward the ultimate goal of better providing for clients and customers. 

6. Visibility – A Virtual Compulsion

While we’re on the topic of increased customer requirements: services like Amazon have set the bar a lot higher for tracking and shipment visibility, and those expectations are shifting even among B2B customers. People increasingly expect to know when a given shipment has completed each stage of its journey, just as they expect delivery dates to hue extremely closely to advanced estimates. For companies to offer this level of visibility to their customers, they’ll increasingly need to bolster visibility within their own Negotiations, taking a much more granular approach to tracking each product as its transformed from raw materials into a finished good and subsequently shipped to its final destination. This will require digitization and the adoption of IT solutions that help connect disparate points on the value chain—things that may seem onerous. But it will also help to drive a number of intra-operational benefits, from reduced silos to increased collaboration.

Ever thought about a smart e-Negotiation platform to improve your business profitability?

ProcurEngine is an advanced digital cloud based e-Negotiation platform hosted on Microsoft Azure. For more info, please click here.

8-Benefits of Digital Reverse Auctions You Should Know About

Posted on by procurEngine

A Reverse auction is an event, conducted physically or electronically, where technically equal or equivalent sellers compete commercially in a fixed time frame to obtain a business, and prices decrease in each bid as per the rules defined by the auctioneer or the buyer.

In Indian B2B space, Reverse Auctions are gaining momentum with substantial improvement in internet connectivity even in remote locations and with the successful advent of e-Commerce websites like Amazon, Flipkart, e-Bay, Alibaba etc in Indian consumers lives. 

The 8-benefits of Reverse Auctions over physical negotiations are:

  1. Lower Cost Discovery with real-time Competitive Forces: Since final price (L1) arrives through auction participated by all the techno-commercially suitable parties, it creates a platform for vendors to work out the best deal for your requirement to grab the order. It cuts all fat hidden in the process.
  2. Suitable for Products, Services or any offering: The single platform of digital reverse auctions, is useful for negotiating any offering whether it is a product, service or any other offering.
  3. Fair & Transparent Process: As a digital reverse auction is a real-time event, vendors have to take final decisions at the time of auction only. As they know their competitive ranking instantaneously, and all process getting captured in the system, there is an extremely low scope of manipulation. It builds trust between buyers and sellers and puts pressure on the organisations to create a level playing ground for vendors.
  4. Extremely Fast and Robust Process: Unlike physical negotiations, where it takes days to finalize a deal, in Reverse Auctions even very large deals can be finalized in a few minutes. A large number of deals can also be processed simultaneously for further advantage.
  5. New Supplier Discovery and Global Sourcing: As online bidding does not require physical travel for offer and negotiation; it encourages Global vendors and other large vendors to participate.
  6. Create better vendors management: The existing vendors can be classified based on Michael Porters’ 5-forces model. The vendor industries where competition is high, Reverse Auctions are extremely successful. In customized and engineered solutions, it puts the onus to the designers and technicians to create more options or ask vendors to offer the most competitive techno-commercial design to meet end objectives.   
  7. Complete record of Negotiations: When buyers do negotiations using reverse auctions, the complete records of negotiations are available like who all were invited to participate, who participated, how prices reduced within auction period etc. This is a completely audit-able document any time in future.
  8. Low cost of ownership: The cost of ownership of using Reverse Auction is extremely low. A cloud-based model costs a few Lakh rupees for an annual subscription, and you can start using it with just basic training. There is no other hardware or software required for this.

Ever thought about a smart e-Procurement software to grow your business?

ProcurEngine is a digital e-Procurement negotiation tool to schedule and conduct reverse auctions utilising any device, at anytime and from anywhere. ProcurEngine is cost effective, innovative and is concerned with the needs to the customers.