Loading...
 
 

Better Procurement: Platform vs. Panel

Published: 28 May 2019 Average Rating: unrated Print
 

Author: Tim Cummins

The use of 'supplier panels' is relatively widespread in modern procurement, especially in categories such as professional services. The concept behind them is that they bring greater speed and efficiency to supplier selection and - in theory - reduce costs. In practice, some argue, they undermine value, stifle innovation, threaten integrity and more likely increase costs.

Concept and reality

The idea behind supplier panels is to reduce the complexity of managing multiple suppliers. It supports increased compliance by limiting choice. In theory, it may generate lower negotiated rates.

In practice, panels tend to include only the larger, multi-capability providers, since otherwise competitive tension is lost. These providers are typically the most expensive and frequently the least creative; creativity is more normally associated with smaller niche organizations that specialise in specific fields. These organizations also run with much lower overheads and much greater flexibility in winning business.

Panels not only limit the flow of new ideas, they also reduce the likelihood of challenge. For example, a recent report suggested that legal advice may be compromised because panel members become more concerned about maintaining their position than they are about honest (but perhaps uncomfortable) advice to their client. Similar concerns arise with regard to the bigger consultancies and audit firms, frequently accused of lacking objectivity or failing to ask tough questions.

An alternative

So if not panels, how should organizations manage the market? The answer could be through platforms. Just as the Cloud is opening up the choice of software applications, so Cloud-based platforms, powered by artificial intelligence, can offer access to a host of suppliers – without the complexity of the past. Platform providers such as Globality and Tradeshift are taking much of the hard work and risk out of market management, going beyond the services of a provider like Amazon by overseeing key areas of compliance and quality. 

So which will win, or is there room for both? My bet would be on platforms.

 
 
 

Related Discussions

Please sign in or register to post on this forum
Anonymous
2020-05-27 20:22:26

Best Practices - Signed or unsigned Purchase Orders

Hi All -- Looking for any insights as whether you require signed purchase orders for goods and services or not (esp. for U.S. transactions). On the one hand, it's...
 
 
 
Replies: 2

Rock Central, LLC
2020-05-20 13:41:10

maintenance fees for fleet of printers

Our company has a fleet of 1800 printers and are in the middle of negotiating a maintenance contract. Wondering if anyone can help me benchmark an annual fee. We are b...
 
 
 
Replies: 2

Bank
2020-05-12 10:47:41

Supplier audits in Europe

I cannot find easily many companies that offer supplier audit services to buying companies. The goal is to have an external provider that help auditing, in agreement w...
 
 
Replies: 1

Mythics Emergent Group
2020-05-04 20:51:41

Public Cloud in the IT Space - Cost of a Contract

Cloud has significant impact on the cost of Contract Creation and Negotiation. Data Processing and Security terms can be particularly difficult to negotiate, especiall...
 
 
Replies: 1

Transforming Forenics
2020-02-19 07:14:52

Exit Management and exit strategy

Hi everyone, I am looking for one / both! A template covering the headers / topic areas will be great or one that i can re-develop please.
 
 
Replies: 1

DataRobot
2019-12-31 20:34:58

Building Out the Procurement Function

Does anyone have advice or best practices for building out basic procurement operations? I am currently running a task force with finance, accounting, and legal to cre...
 
 
 
 
Replies: 3

N.M.I.A.L.
2019-11-14 15:27:49

Warranty & Discontinuation of Product

Hi everybody, Now we have a situation here in terms of warranty and product discontinuation : A large facility was being constructed which required ~1500 architectu...
 
 
 
 
Replies: 3