In the first two posts in this series (Part 1 and Part 2), I provided background and context behind using software demonstrations in evaluating technology solutions, courtesy of my own opinion and experience as well as those of Debbie Wilson and Brian Sommer. In this third and final post -- at least for now, unless Spend Matters readers would like us to regularly list out potential demonstration scenario examples in different Spend Management technology areas -- I'll offer up a sample scenario in the e-sourcing area using the Brian Sommer school of scenario request authoring. It's important to remember that all scenarios work best when used in tandem with half a dozen or more others to create a combined rating (i.e., don't have a vendor demonstrate a single scenario; pick at least half a dozen or more for them to present). Here goes with an example, meant as part of a broader e-sourcing suite:
Scenario 1 Title -- Manufacturing Make/Buy Decision Analysis and Collaborative/Advanced Sourcing
Role -- VP Procurement/CPO, Category Manager, VP/Director Supply Chain, Functional P&L Owner
Scenario Description -- Our firm has a number of decisions to make in the next twenty-four months regarding make/buy analysis in key direct materials component areas. We plan, among other analyses, to consider whether or not to have suppliers provide integrated components vs. piece parts, whether there are tax/transfer pricing advantages for locating facilities in certain regions (or having supplier owned facilities that produce and hold inventory), and whether there are other benefits (e.g., working capital) of different supply scenarios based on ownership of production and inventory.
The Business Problem -- Please demonstrate:
- A solution that addresses our requirements from a make/buy perspective by allowing the solicitation and gathering of different supplier requirements and proposals based on different criteria (or multiple criteria in the case of multiple proposals)
- A way of analyzing the provided responses based on different award scenarios and constraints (e.g., pushing 100% of production out to suppliers vs. keeping a level of manufacturing capacity in-house or a blend of both)
- The ability to drive competition amongst suppliers in this type of negotiation environment (show market feedback mechanisms)
- An ability to enable a business user to configure such a system based on relatively minimal training
- Integration into a broader sourcing/procurement process
- Three different sourcing and bidding scenarios: A) Supplier assembled components vs. piece parts; B) Total cost analysis and methods for factoring in make/buy decisions including inventory carrying cost, tax/transfer price implications, etc.; C) Examples of other information gathering and award scenario elements that may be of importance (e.g., working capital consequences of different decisions)
- For each of these three demonstrated scenarios, please show the usage in the context of an end-to-end strategic sourcing process as well as how different stakeholders may be required to involve themselves in the process at different points in the process as users of the application
- When possible, show integration into other suite elements (e.g., basic e-sourcing, supplier performance management, spend analysis, etc.) to provide additional criteria on which to base scenario analysis and contract awards.
This business case scenario is about as high-level as possible for a subject that one could easily write pages and pages on. But on some levels, keeping it simple can allow for some artistic license, if you will, on what the vendor ends up showing (which can be a good thing). But be sure to narrowly define the specific scenario elements that you require. You also might want to put a time limit on the scenario demonstration (e.g., 90 minutes) and/or build in the ability to interact with the scenario as part of a short-term proof of concept type evaluation model.
If this is helpful, please let me know. We could make these types of scenario demonstration requests a regular thing on Spend Matters if there's enough demand for them. I could invite others, without a potential vendor conflict of interest, to chime in as well. And thanks again to Brian Sommer, the architect of this process and approach.