Strategic Sourcing
Features, Functions and Demo
QuestDirect.org
Eddie Quinn, CPA
Senior Manager
The Business and Technology Resource Group
EQUINN@BTRGROUP.COM
QuestDirect.org
PeopleSoft SCM
Supplier Relationship Management Modules – Where does Strategic Sourcing
module Fit In ?
PeopleSoft Enterprise SRM Family of Applications:
• Spend Mart
• Strategic Sourcing
• Supplier Contract Management
• eProcurement
• Services Procurement
• Purchasing
• Procurement Mart
• Supplier Rating System
• eSupplier Connection
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STRATEGIC SOURCING
FEATURES
• A complete internet-based sourcing solution
• RFx capability
• Reverse auction capabilities and proposal analysis tools
• Event creation
• weighting assigned to Bid Factors for response optimization
and evaluation
• Digital signatures
• Configurable Bidder search criteria
• Filter criteria for Event Workbench
• Supplier Registration to bid online
• Segregation of duties
• Event collaboration security
• Proposal response analysis and award
BENEFITS
• Reduced procurement costs through
competitive bidding and reverse auctions
• Alignment of purchasing objectives and
execution with business strategy
• Long-term strategic supplier relationships
based on best value and lowest cost
supplier performance
• Ability to exploit untapped value in your
supply chain
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Process Overview
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Buy Events
Sourcing buyer and seller buy event process flow
1. The buyer creates an event, and optionally copies from an existing
event, an event template, requisitions, purchase orders, contracts,
Manufacturing bills of material (BOMs), Engineering BOMs, or
planned orders.
2. The buyer includes bid factors and business constraints, and invites
bidders.
3. Optionally, the buyer invites collaborators to give input to the event,
reviews the input, and posts the event based on the input.
4. Bidders register, review the event, and submit their bids.
5. The buyer evaluates the bids manually or uses the optimization
engine, and can create another round of the event to solicit more bids.
6. Optionally, the buyer invites collaborators to give input on the bids and
bidders.
7. The buyer awards the winning bid, and the system notifies the winners
and nonwinners.
8. The buyer either creates a purchase order or contract to order the
goods or services from the warded
9. bidder.
If the bidder isn't previously a supplier, the system creates a record
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Sell Events
1. The seller creates an event by selecting depreciated assets. The
seller optionally includes bid factors, and invites bidders or
customers.
2. Optionally, the seller invites collaborators to give input to the event,
reviews the input, and posts the event based on the input.
3. Bidders register, review the event, and submit their bids.
4. The seller evaluates the bids based on the bid factors, and can
create another round of the event to solicit more bids.
5. Optionally, the seller invites collaborators to give input on the bids
and bidders.
6. The seller awards the winning bid.
7. The system notifies PeopleSoft Asset Management
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Event Types
Situation
Event Type
Information gathering for a future request for proposal.
RFI (request for information)
Selling depreciated assets. You award the event to the highest
bidder.
Sell/Auction price-only event. You select the bidders.
Compete On the Basis of Price option on the Header Details page to
create a price only sell event.
A reverse auction where price is not the only consideration. You award
the event to bidder with the best score.
Buy/Auction event. You select the bidders compete On the Bases of
Score option on the Header Details page
Add additional line bid factors to create a score based buy auction
event.
A complex purchase with many bid factors, such as a large
procurement for a government agency. Bidders don't actively
bid against one another, but instead submit their best overall
bid.
Buy/RFx event.
Optionally, you can create multiple rounds to
negotiate further with selected bidders.
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Roles
Internal default roles:
• Event Administrator:
• Event Approver:
• Event Buyer/Seller:
• Event Collaborator:
• Plan Owner:
• Plan Approver:
• Task Owner:
The Strategic Sourcing System Administrator.
Users who will approve sourcing events.
Users who will create buy or sell sourcing events.
Users who will provide input on the creation, award, or both of sourcing events.
Users who will create sourcing project plans.
Users who will approve sourcing project plans.
Users who will be assigned sourcing project plan tasks.
External default roles:
• Event Bidder:
• Event Customer:
• Event Supplier:
• Event Guest:
Businesses or individuals with whom the enterprise has not previously done business.
Businesses or individuals to whom an enterprise has sold before.
Businesses from which an enterprise has purchased before.
Default role for guest users who have not yet registered as bidders.
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Role Related Tasks
Event Administrators perform
the following tasks:
Event buyers and sellers perform
the following tasks:
Event Collaborators perform the
following tasks:
1. Set up bidder registration.
2. Set up bidder selfcategorization trees.
3. Set up the file attachment
server.
4. Set up discussion forums.
5. Set up chats using the
MultiChannel Framework.
6. Review and approve bidder
registration requests if
registration approvals are
selected.
1. Create bid factors.
2. Create global policies and
constraints.
3. Create events and invite bidders.
4. Invite collaborators (optional).
5. Monitor their event and, if
necessary, pause the event or
create another round or version.
6. Invite collaborators for event
analysis.
7. Analyze the event.
8. Award a bidder.
1. Receive invitations to
collaborate on event creation.
2. Check out events from the
Manage Events Workbench
and enter input on bid factors.
3. Receive an invitation to
collaborate on event analysis.
4. Enter input on bids and
bidders.
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Creating an Event
Header
Line(s)
Processes
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Bid Factors
Bid factors are questions bidders must answer about their products, services, or
company.
You set weightings for each bid factor, letting bidders know how much value you
give to that portion of their bid.
You can also create bid factors that you do not display to the bidders,
but instead answer during the analysis of the bids. These bid factors
can be for subjective responses such as current business relationship
or interview results.
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Header vs Line Bid Factors
Header bid factors relate to the overall event and cover the entire event. For
example:
• Is this a minority-owned or woman-owned business?
• In what state is the corporate headquarters located?
• Is the company ISO certified?
Line bid factors can be set for individual Event lines. For example:
• Color might be an important factor. You can set different colors or
weightings for a color list bid factor on the line items.
• You can set ideals and weightings that, for the line item, differ from the
same bid factor set in the header.
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Total Cost Modeling
Analyze bids based on three different criteria:
• Lowest price
• Best score
• Lowest total cost
All three methods can be used simultaneously to give you the most information for making the
best award decision.
Costs are calculated based on:
Calculate a cost related to:
•
•
•
•
• Each bidder's response to a bid factor,
• Total line cost
• Total event cost
Bidder's bid price,
Bidder's bid quantity,
Predefined cost range,
User-defined cost.
Use: manual analysis or optimization engine
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Purchasing an item that has a warranty bid factor associated with it ?
ITEM: You are asking the bidders to indicate the length of warranty provided for the item with a range of
one year to five years.
Bid Factor: A longer warranty period reduces maintenance and repair costs.
Each extra year of warranty provided = $50 in maintenance and repair per unit. You can assign this cost
to the warranty bid factor so that the total cost for this bid factor will be calculated based on the bidder's
response.
Bidder 1: bid $1,000 per unit but only provide a one-year warranty,
Total cost = $1,000 – (1x50) = $950
Bidder 2: bid $1,100 per unit but provide a five-year warranty.
Total cost = $1,100 – (5x50) = $850
Even though the first bidder has a lower bid price, the second bidder will have an overall lower
cost because the bidder is providing the full five-year warranty.
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Scoring vs Weighting
3 factors regarding scoring vs. weighting:
• The score depends on how close the answer to the bid factor comes to the
ideal answer.
• The weighting is based on how important the bid factor is to the overall line or
event.
• The final score is the average of the score and the weighting.
• The header and line bid factors are scored separately; each bidder gets two
scores.
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Bid Factor
Best / Worst / Ideal
Bidders Response and
Score
Weighting and Score
Header: Is HQ in NA ?
Ideal: Yes
Yes = 100%
70% Weighting x 100%
Score = 70 Score
Header: Is company ISO
certified
Ideal: No
No = 0%
30% Weighting x 0% Score
= 0 Score
Avg = (100 + 0) / 2 =50 if no
weightings are set
70 + 0 = 70
Combined Header Score
Line 1 Warranty
Best = 5
Worst=1
4 = 80 %
40% Weighting x 80% = 32
Score
Line 2 Capacity
Best = 10ghz
Worst = 3 ghz
9 = 90%
60%Weighting x 90% = 54
Score
Avg = (80 + 90) / 2=85 if no
weightings are set
32 + 54 = 86
Combined Line Scores
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Line vs Bid Factor Weighting
Example with Bid
Factor Weightings
Calculated
Score
Line
Weight
CPU
80
50%
Score = 40 = (50% x 80)
Monitor
90
30%
Score = 27 = (30% x 90)
Keyboard / Mouse
100
20%
Score = 20 = (20% x 100)
Score = 90
100%
Score = 87
Total
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Final Score for Each Line
Creating an Bid Factor
Cost Contribution
for White or Other
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Event Header
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Event Settings and Options
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Event Header Components and
Attachments
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Event Header Bid Factors
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Event Header – Add RFx
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Event Payment Terms
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Demo
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APRIL 7-11, 2014
Sands Expo and Convention
Center
Las Vegas, Nevada
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