Chambersburg, PA - Traditional procurement methods have failed to solve the quality – timeliness – cost (“good, fast, and cheap”) dilemma of being able to provide a product or service for a low cost while delivering top quality work on-time. One of the three is always sacrificed… until now, according to William Gindlesperger, chief executive officer of e-LYNXX Corporation.
With new procurement technology, buyers can create a unique competitive bidding environment -- one that breaks the quality – timeliness – cost "iron triangle." Here is how, Gindlesperger explained:
First, the buyer qualifies vendors that it wants in its database with the ideal goal of having 14 to 24 vendors in the pool. All must be thoroughly vetted to ensure that regardless of pricing each will deliver quality work on time. Next, the buyer enters detailed job specifications into the computer. The computer, empowered with AVS Technology, is then instructed to automatically select from the vendor database only those vendors capable of doing the job. This patented* automated vendor selection procedure matches the buyer's job specifications with vendor qualifications and selects only those vendors best qualified to get the job done.
Each selected vendor knows three things: (1) others against which it is competing are likewise qualified, (2) quality and on-time delivery requirements are clearly specified and must be met, and (3) low bid wins since quality and service are a given. In order to compete, each vendor must identify its own otherwise idle production capacity. To fill that open capacity, each vendor must offer deep discounts of 25% to 50% or more from normal pricing. Low pricing varies from vendor to vendor, depending on which vendors have downtime available for any given project to be produced at any given time. Because each vendor has been pre-qualified and each project has been appropriately specified, the buyer does not have to worry about compromising quality or on-time delivery, even though the job is being produced at a deeply discounted price.
"This approach is tailor made for ordering custom goods and services, such as print," Gindlesperger said. "Custom goods and services must be specification defined when ordered. They are not off-the-shelf and cannot be ordered from a warehouse."
For instance, a transportation/freight services provider procures print for a wide variety of internal and external applications. These include direct mail, marketing and promotional material, manuals, forms and labels and internal publications. Over a period of several months, using AVS Technology, a recommended set of best procurement practices, and a robust communications and workflow management system, the company ordered 54 print jobs for which the average value of each job was $6,288. Bids from printers for the projects ranged from $168 to $154,975. The market savings achieved for this body of work was 37%, comparing the cost using the new procurement approach with what the cost would have been if the buyer had used traditional methods that rely upon negotiated prices with a limited number of vendors.
"The average savings for all organizations licensing the patented* automated vendor selection procedure is 42%," Gindlesperger said. AVS Technology by itself does not deliver the 25% to 50% cost reductions. This only occurs when the new technology is used with a series of procurement best practices and a robust communications and workflow system. The buyer also gains total transparency, strengthened quality controls, full reporting and accountability, and complete documentation and archiving of every action from planning through production to on-time delivery and invoicing.
Historically, regardless of the industry involved, every procurement or supply chain solution sought to attract business customers that wanted to achieve the purchasing trifecta of “good, fast, and cheap.” That was impossible because the buyer could only achieve two of these three goals at any one time, not all three simultaneously. Now they can. The benefits are obvious. Buying products and services at a low cost, with top quality results and on-time delivery should be a business priority for all organizations in 2011.