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Procurement - An Under-managed Treasure Chest
Savings through procuremenmt cost reductions can add 1% or more of gross revenues to your bottom line.
As stated in Bain & Company’s January 2012 “A Fresh Look at Procurement”
“Most organizations under-manage procurement, and I agree with the authors that procurement is a corporate treasure chest of found funds,” said William Gindlesperger, chairman and chief executive officer of e-LYNXX Corporation. “Unlocking those funds requires three commitments. First, C-level officers have to accept the fact that traditional procurement methods are antiquated and will not lead to greater procurement savings. Second, organizational leadership and procurement staff must come together to adopt new, corporate-wide approaches to achieving procurement savings. And third, an organization that wants procurement savings must be willing to embrace new procurement technology.”
One such technology that is garnering an average of 42% in savings for procured goods and services for its licensees is automated vendor selection (AVS) technology. AVS is a 180 degree change from traditional procurement. The main differences are:
(1) The buyer is in control, not the vendor or a third-party broker.
(2) The buyer knows that regardless of pricing any of its own objectively qualified vendors will deliver a quality product on time.
(3) Vendors are carefully prequalified by the buyer and entered into a computer database along with details about each vendor’s capabilities.
(4) Detailed job specifications are entered into the computer, which are then used to match against vendor capabilities.
(5) Only vendors qualified to do the job are invited to bid on the work.
(6) All vendors remain in the system to be considered for other jobs.
(7) A competitive bidding environment is established in which vendors know low bid typically wins.
(8) Most often vendors submit deep discount bids by scheduling the work to fill otherwise unused production time.
Two distinct advantages of this procedure over other procurement methods are:
(1) The buyer’s vendor options are increased significantly.
(2) A fair bidding structure eliminates awarding jobs to the same few vendors job after job without huge pricing discounts.
AVS broadens most buyer databases from a handful of vendors to national and world class resources – all willing to compete and offer discount pricing of 25% to 50%. Further strengthening this new approach is a secure web-based communications and workflow system that streamlines communications among all buyer and vendor stakeholders (no more e-mails), documents and archives every detail from planning through production, establishes full accountability for all involved and provides 100% transparency. Quality controls also are enhanced.
Traditional procurement methods, such as negotiated pricing and reverse auctions, cannot unlock the procurement treasure chest that the Bain study identifies. “You have to use the right key to unlock those untapped margins – savings that could add 1% or more of gross revenues to your bottom line. New procurement technology is the answer for any organization faced with ever increasing cost pressures and pricing volatility,”
About e-LYNXX Corporation
e-LYNXX Corporation patented the technology integral to e-commerce. Endorsed by Educational & Institutional Cooperative Purchasing (E&I) and Printing Industries of America (PIA), e-LYNXX drives results through its three divisions. ● AVS Technology® licenses the patented* automated vendor selection procedure used in e-commerce and procurement systems. ● American Print Management provides web-based system, services and patented AVS Technology® to reduce substantially the procured costs of direct mail, marketing, publications, packaging, labels and other procured print. ● Government Print Management offers effective U.S. GPO bid services and strategies. www.e-
*U. S. Patent No. 6,397,197, Patent No. 7,451,106, post-Bilski Patent No. 7,788,143, and Continuing Application 12/855,423 (collectively, the AVS Technology®) – This thicket of patents covers all custom goods and services, not just print. To inquire about licensing, contact Anthony Hawks at 888-876-5432 or Michael Cannata at 905-773-2207.