When it comes to ‘free’ upgrades, ‘free’ vacations, or a ‘free’ gift of $5M from an international monarch, we recognize that if something seems too good to be true, it usually is.

However, in the case of free eProcurement software, many procurement professionals are accepting a ‘free’ platform at face value, without the critical lens they apply to other buying decisions. These platforms, in which vendors shoulder the cost of the software, may technically be free for buyers, but they come with high costs — to the competitiveness of your projects, the openness of your process, and the ability of your platform to keep pace with innovation. Last week’s announcement from the Government of Ontario on the elimination of fees for vendors to access contracts is a strong signal that the vendor-supported model, and its negative implications for procurement teams, is on the way out.

The elimination of vendor fees is part of the province’s mandate to make it easier for businesses to submit bids for government contracts, achieving what Minister of Government and Consumer Services Tracy McCharles calls “a modern procurement process that can work for every business.” This points to the first key problem with vendor-supported platforms: they make it more difficult for vendors to access opportunities.

Vendor-supported procurement tools pass the cost of the software onto vendors via fees to view documents, register for notifications, or submit to opportunities. These fees further disincentivize a process that can already be arduous and resource-intensive for vendors — especially small and medium-sized businesses without dedicated staff to prepare bids.

The inevitable result of making participation in your contracts both more expensive and more difficult? A smaller vendor pool, and reduced competition. When you consider that each additional supplier bidding on a given project results in a 5 – 20% greater pricing spread, the potential business cost of limiting competition quickly eclipses the price you might have paid for software in the first place.

Vendor fees also present barriers to open access to information, a concern which is becoming more and more central for public procurement teams in light of recent trade agreements, such as CFTA and CETA. Hiding project details behind a paywall is not consistent with the spirit of open access and a transparent process towards which so many teams are dedicated. Instead, procurement teams should be able to rely on software that prioritizes and facilitates transparency at every step.

Procurement teams also deserve an eProcurement platform that is built to suit their unique needs and evolves with the pace of technology advancement to provide more value. This is another area where vendor-supported models do not deliver. After all, procurement teams are not represented in the revenue structure of these companies, and as a result, there is a natural disconnect between the primary users of the platform, and those who are funding it. Procurement teams need a platform that is built for them, with their needs and feedback at the centre of each decision. In the long run, a platform designed first and foremost to serve procurement’s needs delivers time and cost-savings that far exceed the investment in the software.

Procurement professionals are experts at considering the whole picture when making a buying decision. But when it comes to software for their own team, many procurement leaders are allowing price to significantly outweigh the qualitative factors, an approach they’ve been discouraging for years.

Vendor-supported eProcurement platforms look good on paper. But when examined with a critical lens, it is clear that they come with very real costs, to procurement teams and also to taxpayers.

The good news is that procurement leaders around the world are recognizing this and adjusting their approach to procurement software decisions. The Government of Ontario’s announcement is emblematic of a broader movement away from the vendor-supported model towards software platforms that promote transparency, open competition, and innovation — the same values which public procurement teams are dedicated to upholding every single day.

Further reading: eBook | Vendor Fees & Sourcing Software in the Public Sector

Originally published on LinkedIn.

By implementing a paperless procurement process using software like eProcurement, every procurement team has the opportunity to improve their organization’s sustainability — while also saving time and money, reducing risk, and driving more value. In this infographic, we break down just how much paper has been saved by our clients.

See the Bonfire platform for yourself in a live 20-minute product demo.

Online procurement platforms like Bonfire have changed the way teams run their bids and RFPs: paper, email, and Excel are being replaced by a streamlined and fully online software that supports the entire procurement process, saving teams significant time by making the buying process easier, simpler, and more efficient.

However, when it comes to construction tenders, receiving valid bonds from bidding suppliers offline using paper can hamper your ability to get the greatest benefits from your platform.

These paper copies are not only time-consuming to obtain and submit on the vendor’s side, they add unnecessary complexity and prevent procurement teams from streamlining their entire process online.

Enter eBonding: an efficient, secure, and compliant alternative to paper bonds. Here’s how you can use Bonfire and eBonding to streamline your construction tenders online:

From paper to digital

eBonds are a recognized best practice. Simply put, eBonding brings paper bonds into a digital form.

eBonding providers offer a standalone online system where the parties to a bond can process their bonds in a digital format using digital signatures and seals. Vendors then obtain their bid bond as a PDF file, which has embedded digital certificates and can be verified online at any time during the time of the bond.

It is simple and easy for Bonfire users to use eBonds as part of their construction tenders:

• When creating your project and requirements for suppliers, indicate that you require digital bonds as part of a submission (this differs little from the instructions you’d provide using paper bonds)
•  You can choose to direct suppliers to a specific eBonding provider, or allow suppliers to choose their own (we would recommend exploring and vetting eBonding providers to understand their approach, functionality, and specific compliance).
• When setting up a construction tender in Bonfire, buyers can create an additional document slot for the bid bond during project setup (see below).

When the bidding vendor creates their submission, they upload their bid bond as a PDF into this document slot.

Once the project closes and evaluation begins, the buyer can then verify the bond with the eBonding provider and download an audit report as confirmation.

Benefits for vendors and buyers

With eBonding, vendors no longer need to rely on couriers or tie up staff time with the hand-delivery of paper bonds. Instead, they can submit their tenders and bid bonds from the comfort of their office, at the click of a button.

On the buyer’s side, eBonding allows procurement teams to run their entire construction tendering process within one online platform, eliminating hard-copies, boosting efficiency, and ensuring perfect compliance.

We’re sitting down with procurement professionals in different organizations to hear about how they approach their work, how Bonfire fits into their day-to-day, and the resources and tools that keep them on track.

This month’s guest is Joel Neaveill, Director of Purchasing at Louisville Metro Government in Louisville, Kentucky. Joel and his team are responsible for the management of over 1,100 contracts that assist in the programmatic and operational functions of the city. Needless to say, he gets things done! Here’s more on how he does it.

First of all, tell us a bit about your background and how you got to your current role?

I started my role with the city in January 2016. Prior to that I spent 16 years working for the Commonwealth of Kentucky in various program development and policy roles. I was asked to come work for the city to help provide some improvements to the procurement process.

What’s your primary goal in your role?

My goal when I came here was to create a procurement program that is one with integrity, one with transparency, a trusted program, and one that makes sense to the common user.

In procurement in general, I’ve found that there is lack of knowledge of what the processes really are. We follow our state law, our local ordinance, and we also create policy — all of those have to make sense. What we try to do is make sense of things that aren’t written to make sense in layman’s terms. What I hope to do over the course of my time here is to demystify the process — not only to employees who are part of the process, but also externally to our vendors. We need to be the experts on that process so we can advise others.

How do you start your day?

Coffee. Then email.

My role is two-sided, overseeing purchasing and accounts payable; on the purchasing side, I find myself going to Bonfire first to see what new vendors have registered, what questions have been submitted, what activity we’re seeing on which projects, and if there have been any submissions overnight.

That’s kind of a cool thing about Bonfire — it used to be that projects would have a closing time of, let’s say, 3 o’clock, and the buyers would be listening for the door down the hall, and inevitably there would be someone coming in at the last minute to do the old ‘chu-chunk’ timestamp, and put it in the bid box. We don’t have people doing that anymore — it’s fantastic. From the comfort of their home, vendors can submit a response.

So I start the day by looking at the activity that’s happened, especially if there are any higher-profile bids or projects that have seen any activity.

How is that different now, compared to when you began your role?

When I joined, from day to day, if anyone asked me where a particular bid was, or who the buyer was, or what the status of any one bid was, I could not tell them, because I had no formal way of tracking that. I started looking at what available tools were out there for us.

I wondered, do we create our own, do we have the expertise to do that? I learned pretty quickly that we do not. From a manager’s perspective, I needed to get a handle on how to manage the workflow.

What publications/resources do you turn to for industry info?

My background is not procurement, but I’m always trying to learn more about the thing I’m focused on, so for the last two years I’ve just tried to immerse myself in everything procurement.

NIGP, the national institute for public procurement, has a daily feed of purchase issues and questions that are being raised across the country. So they might say, ‘hey has anyone done an RFP for salt trucks?’ or ‘how do you structure a public/private partnership on RFPs?’ People help to step in and advise on solutions to particular issues. The NIGP forums, publications, and certification process — I am completely absorbing these like a sponge.

I also read a lot of the publications of the GFOA – the Government Finance Officers Association. And whenever an issue comes up, I always go back to our law — I always go back to ask, what is the governing statute, what is the law, how is this issue framed within the context of the governing law? I have those bookmarked in my browser.

How do you stay organized?

One thing that helps is being able to compartmentalize priorities and know what can and cannot be delegated. If you can find tools that help you do that, and they’re not too incredibly expensive — make the business case to obtain those tools.

Bonfire is one of the tools that your team has implemented. What has it brought to your procurement process?

There’s consistency of message. There is assurance that the platform we are using is consistent to our end users, and there is more communication between our evaluators and our buyers. That’s one of the best things — there is more communication about the specifics of each project.

As a manager, I can go in to review anyone’s work at any time. It allows me to let them know that I am watching for consistency and watching to ensure our policies are applied across all of our projects. It’s an invaluable tool from a management perspective.

There’s also more teamwork among buyers. Every week, there’s a standing meeting and everyone goes through Bonfire to look at the projects in various stages — where we are at, who we are waiting on, what’s next?

When I first got here, it seemed as though there was a very hierarchical structure — if you had a question, you went to the purchasing manager. Now, they’re asking each other, ‘hey, how did you handle that?’ and ‘how did you set this one up?’ In the end, we need to be the experts on how to get the procurement completed and advising the departments on the best way to do that. The more we learn from each other, the better we can serve those departments in getting their needs accomplished.

Do you have any advice to offer about a career in procurement?

Oftentimes, the longer you work in government, you tend to get jaded — either by the process, or people’s attitudes. Especially in today’s environment, there are people who look at government and their functions as unnecessary or excessive. It is an uphill battle always to defend your profession.

What I have kept in the back of my mind, in my experiences throughout 18 years of service, is that the vast majority of people that are in public service are good people who are trying to do the right thing. We may argue about the way in which we get things done. But in general, no matter what side of the aisle you may be on, everybody is trying to do the right thing.

We can’t look at our functions through the lens of a critic, thinking that people have the worst intentions. We have to put policies in place to prevent those things, but not at the expense of those that are trying to do the right thing. I keep that in mind every day of my work.

Read more stories from real procurement teams using Bonfire. 

Technology has made it easier to gather feedback and assess performance in a variety of areas, from student learning to employee performance. This has impacted procurement teams as well, giving them more options than ever to collect feedback and manage their vendor relationships.

In a previous post, we made the case for gathering feedback more frequently to give you better visibility into your vendors’ performance throughout the contract lifecycle.

However, it’s what you do with that visibility that counts. The key benefit of frequent feedback is that it empowers a proactive approach to supplier management and ultimately strengthens your relationships with vendors.

So, how do you go from survey to satisfied stakeholders? To answer this, we dove into the research from a related field which has clear parallels to vendor relationship management: employee performance management.

Like vendors, employees are engaged in a long-term business relationship with an organization and are accountable to certain deliverables. Employee performance management—like vendor performance—is undergoing transformation, as more managers realize the benefits of informal, ongoing feedback as opposed to the formal, infrequent methods of the past (i.e. the dreaded annual performance review).

These insights from employee performance will help you leverage more frequent feedback for better vendor relationships:

1. Clarify expectations

Research on employee performance conducted by Jean Martin and Brian Kropp of corporate research firm CEB found that more frequent feedback can improve employee performance by up to 12% (Washington Post). The reason? They cited managers’ ability to clarify expectations as a key benefit.

In the relationship between a vendor and an organization, the contract establishes the terms of the relationship and specifies a standard of service — nevertheless, opportunities remain for miscommunication, especially given the pace of change in some industries.

Using frequent vendor performance surveys, procurement teams can catch these issues early and intervene to correct the mismatch in expectations and ultimately avert bigger performance issues before they arise.

2. Offer proactive rather than punitive performance management

Nobody likes giving bad feedback. However, there’s good news! Research from leadership development experts Zenger and Folkman suggests that people are more receptive to negative feedback than you might think.

Their research on employee performance concluded that employees actually want to receive negative feedback and believe it is effective in improving their performance. Ninety-two percent of respondents agreed with the assertion: “Negative (redirecting) feedback, if delivered appropriately, is effective at improving performance” (Harvard Business Review).

When it comes to procurement, vendor performance surveys are historically issued at the conclusion of a contract, at which point it’s too late for vendors to make improvements or repair the relationship.

This is a missed opportunity for everyone involved. More frequent feedback allows procurement teams to identify vendor performance issues, notify vendors, and proactively work towards improvements. Negative feedback can be the jumping-off point for conversations that ameliorate vendor performance issues, resulting in happier stakeholders and reduced risk for your organization.

3. Recognize and enhance good performance

Recognition for good work is a powerful force in building trust and improving performance. This has been shown time and again in employee performance. Studies show that 69% of employees would work harder if they felt their efforts were being better recognized, and 78% of employees said being recognized actively motivates them in their job (LinkedIn Talent Blog).

Thus, even if all your surveys come back with rave reviews, frequent feedback still has the potential to improve your vendor performance.

In addition to ensuring continued strong performance, recognition can be the first step in moving from transactional vendor relationships towards partnerships — with attendant benefits in risk mitigation, coordination, and ultimately your bottom line.

Learn more about Bonfire Vendor Performance Management.

The procurement landscape is undergoing a seismic technological shift.

At the core of this digital transformation is the growing importance of procurement to the organization, new objectives for sourcing, and new technologies to reach them.

Procurement leaders are in the midst of preparing for and embracing a digital strategy for a competitive advantage within their categories. Organizations that are slow to adopt new technologies are exposing themselves to the risk of falling behind their industry rivals.

Perhaps more importantly, the top procurement teams are going beyond the technological ‘status quo.’ They are looking to the digital transformation of procurement as a means of achieving better performance and higher strategic goals—not just for themselves, but in comparison to their competition.

Getting there can mean asking the hard questions to evaluate where you stand, and what it will take to meet tomorrow’s procurement challenges. We’ve identified some of the key questions you need to ask when assessing your digital transformation:

Do a procurement ‘check-up’

What are your procurement objectives today? And how well does your technology support your team in meeting those objectives?

Your first step should be understanding where your procurement stands today; it’s difficult to plan for your potential future technology needs without addressing the gaps that currently exist in your processes.

Take stock of how well your current resources (including technology, but also include other aspects like team structure, budgets, personnel, skill sets, etc.) match your current procurement requirements and objectives.

Avoid the temptation to create a digital procurement strategy that only solves today’s problems. Your procurement digital transformation needs to also be strongly influenced by where you see your procurement processes in the next five or more years.

What’s the vision for your digital procurement transformation?

What’s your vision for the role of procurement in the not-too-distant future? What kind of goals will procurement be responsible for achieving? Does your vision for procurement align and support the overall organizational strategy?

We know that procurement is becoming an increasingly important value driver in most organizations. As your team’s role within the organization grows, procurement will feature more heavily in strategic planning and objectives.

Your digital transformation planning needs to address this growing role and your vision for the future of your procurement team. Your technology roadmap needs to be able to address today’s procurement needs, as well as the ones you expect to have tomorrow and beyond.

Making technology decisions is a long-term commitment—having a vision for the future is going to help you identify the technologies that will set you up for success in years to come.

What’s the plan to execute digital procurement transformation?

How will you achieve your vision? What milestones or dependencies are there to meeting that vision successfully?
You’ve identified the gaps in your existing capabilities and you’ve mapped out where you believe your procurement team is headed. With these in mind, you should start creating the plan for how you’ll get there.

It doesn’t need to be perfect, and you should assume that the details of the plan itself will evolve and change over time. As long as you have confidence in the foundation of your plan (the gaps that need to be filled, the strategic direction for the future, and so on), then your plan will help set you up for success.

Although the details may change, having measurable, realistic, and time-sensitive goals is important for keeping your plan on track.

Do you have the resources you need?

Does my team have the resources (time, budget, capabilities, tools, support, etc.) to execute against my plan?

In terms of your digital procurement strategy, the technology itself plays an important role. But you should also look at your plan holistically and look at all of the resources at your team’s disposal.

From a technology standpoint, you will need to carefully consider what eProcurement platforms will empower your team to meet your objectives—today and tomorrow.

Historically, organizations would look to larger ERP or P2P suites to solve their procurement challenges. Increasingly, the conversation around procurement technology is becoming “we already have a P2P suite… but we need something deeper for XYZ”. The use of best-in-class software, specifically SaaS platforms with API capabilities, is increasing.

As the new wave of eProcurement is arriving in the market, these tools can represent the most innovative and forward-looking solutions available. Today’s procurement leaders look at the kind of platforms which focus on delivering stronger value through workflow depth.

In today’s procurement climate, procurement leaders are making it a priority to improve their team’s efficiency and effectiveness. Any effort to improve their team’s capabilities is inevitably tied to technology and software.

These leaders are turning to the latest generation of eProcurement software to help achieve their goals and streamline their activities and workflows. These modern software platforms have the potential of supercharging your team’s performance and decision outcomes.

However, that’s only if your stakeholders are on board and are actually using your software.

If your end users — whether they are your buyers, evaluators, or executives — are not adopting your chosen software, your results (and your procurement strategy) are at serious risk.

Below are three risks you face when your platform suffers from poor user adoption:

1. Unrealized potential (or worse)

You can have the perfect software, but you won’t see the full benefits promised by the software if no one is using it. When you’re under pressure to deliver quality decisions with limited resources, this unrealized potential can have a devastating impact on your ability to meet your sourcing targets and objectives.

Not only can your performance plateau, it may even deteriorate. This is especially true if your new software was introduced to fix poor or declining performance in the first place.

2. Eroded return on investment

The benefits of implementing a new eProcurement software are often based on the resource gains from using it. This can be reflected in a variety of ways:

• Time savings through greater efficiency
• Putting more spend under management, or lowering purchasing thresholds
• Saving money on each project run (straight cost reduction)
• More strategic decision-making (contributing to organizational goals)

Ultimately, these factors add up to the overall return on investment for the platform.

You’ve identified the ways a new technology can help boost your team and your results, you’ve made the internal case, and calculated the benefits you expect to receive. Yet if your end users are not adopting your platform, the ROI is effectively zero.

After all, your investment in your software doesn’t decrease if your users aren’t using it.

3. Bad optics

The newest generation of procurement and procurement tools can act as a value multiplier and are a worthwhile investment. So when the implementation of these tools are successful, the benefits can be immediate and significant — both strategically and financially.

On the other hand, poor user adoption leads to missed opportunities and unmet expectations, the optics can look bad if not handled or solved relatively quickly.

This is especially difficult to take when you consider your motivation to improve performance — and how avoidable poor user adoption can be.

Better practices for driving user adoption

Whether you’re launching a new eProcurement platform or facing issues achieving the levels of end user engagement and adoption, there are a number of best practices you can follow to help drive better user adoption of your eProcurement software. Peggy Ferrin, Procurement Coordinator at the Town of Paradise Valley, explains that empathy is the secret sauce to compliance. Listen to more advice from Peggy in this episode of the Inside Public Procurement podcast.

The importance of supplier selection

Supplier selection is increasingly becoming the primary value driver in the procurement process: the success of your procurement cycle depends on the success of your procurement decisions.
It’s a process that requires great insight, analysis, and knowledge. But it’s not uncommon for procurement teams to have their attention split and for the focus on supplier selection to take a backseat.

Supplier selection has a big impact

It’s important not to lose focus on the value of supplier selection in the entire procurement process. It’s the key stage where you identify, evaluate, and select your suppliers.
Supplier selection is the stage where you decide what suppliers will get your business and ultimately determines how much risk you’re taking on. It determines the important questions that will influence the success or failure of your procurement process:

• Are we confident we’re selecting the optimal suppliers?
• Are we paying the best price for the good/service?
• Are we adding value (financially or strategically) to our organization?
• How much risk are we assuming when it comes to supplier quality and the service?

Reasons to keep a focus on supplier selection

The decisions made at the supplier selection stage will have an effect on the success of the entire procurement process.
Your supplier selection process needs to determine the best supplier efficiently and effectively with the most competitive prices. If you do not make the most optimal, timely decision, the rest of your procurement process may suffer.
Here are four reasons to ensure your supplier selection performance is an organization focus:

1. Enforcing poor buying decisions

A large part of many procurement cycles is the enforcement of supplier selection decisions, ensuring that organizational processes are followed and that spending is managed.
However, the tools and software you use to control the process can only enforce the decisions you make, regardless of how good or bad that decision might have been.
Poor buying decisions may lead to enforcing decisions with suppliers that aren’t cost-effective or lead to poor quality goods/services. An ERP or the typical eProcurement platform isn’t designed to help you make better, smarter decision. Without a focus on the process for selecting the best and optimal supplier, any benefit to the rest of procurement process is effectively nullified.

2. Dissatisfied stakeholders

If your supplier selection decisions are a poor match for the requirements of your organization or are in any way perceived to be less than optimal, stakeholders in your process will become dissatisfied.
In a world where organizations are increasingly looking to procurement to help achieve financial and strategic goals, dissatisfied stakeholders can have a major impact on your ability to deliver against those goals. This can range from stakeholders dragging their feet when it comes to their next procurement project, all the way to trying to avoid your processes altogether.

3. Driving maverick of spend

When individuals in your organization are dissatisfied or feel like the enforced options are not a good fit for what they need, you run the risk of increased maverick spending. Maverick spending represents purchases made outside of agreed contracts or dodged procurement processes. In an organization with a strong focus on great supplier selection decisions, maverick spend can be an expensive issue. A poor focus on supplier selection can make the issue of controlling and managing spend even worse.

4. Missed performance targets

Ultimately, better supplier selection decisions have a direct financial and strategic impact on the success of procurement, and of the organization as a whole.
It seems obvious but your ability to identify the suppliers who best meet your business requirements, and deliver against those requirements with the best value, is critical to your procurement success. If you’re finding it challenging to meet your sourcing metrics and KPIs, an increased focus on your supplier selection decisions can yield massive positive results.