Dynamic Bidding: SunMicro Systems
Written on 8:39 AM by Shaun Hutchings
This is a Case Study
©2010, Shaun Hutchings, All Rights Reserved.
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If you were Sonia, which dynamic bidding software applications would you recommend? By what criteria (think selection matrix) would you make your decision?
I would actually choose eXcellent Company because of the wide range of full-service to self-service that the product provides. There is flexability there which may be useful. Market Owner like Sonia said is a small company that may have been ranked high might not be able to provide everything they need. Also because
Market Owner is only a full-service product it may not be beneficial in times where full-service is not required in the bidding. Or let’s say as time goes Sun become proficient in using the dynamic system would they always need to full-service that Market Owner provides. I feel that if they go with eXcellent they can use its full-service benefits towards the beginning of the implementation and during several of the first auctions but after time I feel that because eXcellent also provides some self-service features that Sun can take over and do a lot of the primary things themselves. I also feel that eXcellent was still ranked pretty high in its software attributes which is one of the reasons why they went with Market Owner in the first place. I just feel that the flexibility that eXcellent provides with prove to be beneficial in the long-run.What concerns do you think the Global Commodity Directors would have and how would you resolve their concerns?
One of the concerns that GCD’s may have is that their job may be threatened. With new software which helps in the selection of suppliers there is less need for the aid of human influence in the supplier selection. Sonia also talked about how critical it was to get all the GCD’s on board with this so they could aid the suppliers they currently have to the new system. I feel to resolve this concern they can guarantee that the GCD’s would not lose their job even after the new product is implemented that would make them feel more at ease. They could say that their job description may change and may be different but neither wage decreases, nor loss of job would be a result of the new dynamic system. Another concern that GCD’s may have is their relationship with the suppliers may be strained and may cause them a lot of more work and trouble. Their relationships were already ‘complex’ and so by throwing a wrench in a complex relationship to them may be a bad thing. But if they can show that throwing a wrench into the relationship actually may build a stronger, less complex relationship they GCD’s would feel more at ease. Also to show that by using a competitive structure to help the suppliers achieve higher the suppliers may turn to the GCD’s more for help and advice in how they can be better than the other suppliers so they may win the auction.
If you were to move ahead with dynamic bidding, what concerns would your suppliers likely have and how would you resolve those concerns?
The suppliers may have several concerns. The first concern they may have is the thought that they may lose their contract and bid with Sun. This is true and could occur but if the GCD’s and if the Sun’s Supplier Relationship department works with current suppliers to help reduce cost, increase production, and maybe achieve a niche in the market they could hold and maintain their status with Sun and be better off because of it. The suppliers just feel comfortable right now and no one is pushing the suppliers for better, even some of them are generating a 70% profit margin. To show that this new dynamic system actually may benefit them can resolve this concern, and to show them that they still may retain the contract with Sun if they can produce. Also another concern may be that Sun may choose only on the bid price. Sun can meet with all the current suppliers and show them and teach them the new system and show that they will not make their decision entirely off of the bid price (which will play a large role) but they would also compare off of their requirements Sun has to the RFQs that the companies submitted before the auction. And if the suppliers know what Sun is looking for it would be easier for the current suppliers to satisfy those needs that maybe a new supplier. Also Sun could explain the structure of the selection process which means that a supplier may maintain 50% of the business even if they do not entirely win the auction. All this does is it creates an environment of competition that may prove beneficial to Sun and for its suppliers. Also suppliers may have a concern that the reason why Sun is doing this dynamic selection process is because Sun does not want to work with them anymore and Sun wants new blood, better blood and may be seen as a slap in the face to the suppliers. Something that can be done to resolve this is that Sun can explain with the GCD’s they really value the relationship that they have with them and they can put the Supplier Relationship department to work with aiding and helping the current suppliers in winning the auction. This will show that Sun is committed to them and shows that Sun really wants them to success and do well.
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