Supply Excellence — Big Apple Dreams and Organizing for e-Sourcing Success

Big Apple Dreams and Organizing for e-Sourcing Success

May 17th, 2006 · by Tim Minahan · 1 Comment · best practices, sourcing

The first stop on the U.S. swing of the Supply Management 2.0 Forum brought me to my old stomping grounds: New York City. While I had little time to revisit my favorite haunts, I was able to catch up with supply management executives from an array of financial services, publishing, industrial manufacturing, and transportation companies. Some of the most intriguing conversations centered on how to organize for e-sourcing success.

Erik Rupinski, e-Sourcing Analyst in the Supply Chain at Mead Westvaco, a worldwide packaging, office products, specialty chemicals, and paper companies, shared how his company was undergoing a transformational shift to a centralized e-sourcing structure. An aggressive user of online sourcing methods and tools, Mead Westvaco had more than 300 buyers running more 150 sourcing projects online in 2005 alone. To drive such adoption, the company employed a train-the-trainer approach and imposed a policy requiring use of e-sourcing for all sourcing opportunities that were greater than $100,000 in value. Sounds like a smashing success, right? Well, sort of. Rupinski says after an evaluation of its e-sourcing performance last year, Mead Westvaco uncovered three major issues with such a broad but decentralized e-sourcing approach:

Too many users: “We had so many users that it was difficult to keep everyone fully trained and up to date on new features and approaches,” says Rupinski. “And, despite their training, some users needed a lot of hand holding through the process.”
Inconsistent approach and results: With e-sourcing execution at the local level, Mead Westvaco was challenged to provide sufficient oversight to ensure that lotting approaches and sourcing events were executed properly. “Some [e-sourcing] events were set up wrong and needed to be re-run,” says Rupinski. He added that varying e-sourcing event approaches confused some suppliers that were bidding on business with different units.
Variable knowledge: “We had a widely variable skill set across the organization with approaches being inconsistently applied by multiple users,” said Rupinski.

In response, Mead Westvaco has begun to centralize its e-sourcing efforts under a small team of experts that will manage all online sourcing projects for the company. Under the new structure, sourcing managers and commodity experts within the business units will continue to specify requirements and conduct supplier and market analyses. The e-sourcing team will take this intelligence and set up a detailed e-RFx, ensure proper lotting structures, and support and manage online negotiation events.

Rupinski expects that the new structure will enable Mead Westvaco to keep the core team of e-sourcing experts fully trained and ensure the use of consistent best practices approaches to e-sourcing events. This core team will also be able to apply more advanced online sourcing methods, such as flexible bidding and optimization-based analysis. Most important, Rupinski says the new structure will help drive more spending through e-sourcing, results to the company.

If early returns are any indication, Mead Westvaco is on the right track. The company is already on course to double the number e-sourcing projects compared to year ago figures and is consistently driving more spend under management of standard sourcing and e-sourcing methods.

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