Negotiation Software: One Step Closer to Full Business Automation

May 7, 2001

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A newcomer to business automation, negotiation software, is edging its way into the center of B2B e-commerce -- with good reason.

Companies that trade in goods and services in markets were prices vary considerably, depending on the season, increasingly rely on negotiation software to enhance efficiency and cost effectiveness. This approach to e-Business is also known as "multi-parameter bidding", and "structured bidding". Ostensibly, the companies offering negotiation software permit buyers and sellers to transact business quickly and accurately. Without these automated Request For Quote (RFQ) systems, companies can spend hours negotiating the details of prospective transactions, a process that could be quite frustrating or, in the case of organizations that are not ready to buy, a loss of valuable time and effort. Negotiation software uses filters to remove RFQs from companies and organizations that are not genuine. By blocking these spurious bids, negotiation software can reduce the user's cycle time by 15 to 20%.

Several e-Market vendors are currently offering their products as "strategic sourcing solutions". However, this labeling is misleading, since in e-Market operations "strategic" is narrowly defined as items that are essential to production. The definition of "strategic sourcing solutions", as far as the negotiation software vendors are concerned, refers to "tools that can be used to automate transactions, based on an array of factors, including the quality of the goods and services, delivery dates, installation, training, support and an almost endless array of value-added services."

Negotiation Software is better suited to Business-to-Business (B2B) transactions than other basic online platforms. Most B2B transactions involve an array of variables, such as market fluctuations, distance from supplier to buyer, availability of materials, and applicable government regulations. These variables can make basic online exchange systems useless in B2B transactions.

As with any business automation software, the road to full implementation will have its ups and downs. Even negotiation software's champions admit that some solutions may require more than just minor tinkering. For example, the option that removes unwanted bids is an area that requires a considerable amount of time to adjust. However, as its advocates are quick to point out, once the software users become familiar with the technology, bidding rules can be created to minimize manual involvement. After the initial investment of setting the criteria for bidding, the user can then rest assured that the negotiation process will run smoothly. In addition, the buyer is not required to spend as much time on the transactions as the supplier. They can simply submit an RFQ and expect bids to start rolling in from carriers.

With several vendors currently offering negotiation software solutions, there are a number of packages, from which prospective users can choose, each offering a different angle on the negotiation process. One solution boasts a built-in intelligence that can analyze RFQs by subjecting them to thorough performance criteria, the complexity of which would be difficult for a human negotiator to match. Another supports online auctions and reverse auctions for those who use such markets. The logic behind all of these packages is to offer the user something special that sets their product apart from the others. The potential user should identify a package that offers the best fit for the type of transactions its company conducts.

Of course, as industry moves toward complete automation, many may wonder what the future holds for humans in business negotiations. As Tim Clark, senior analyst at Jupiter Research, suggests: "Some people feel there's still something to be said for the human element in sales negotiations. Software, no matter how good it is, doesn't offer the flexible atmosphere of a one-on-one meeting". The fact is that as the technology develops to better anticipate the needs of users, and as it becomes more transparent, the person-to-person role in negotiations will diminish. Companies will still require personnel to "approve and qualify the participants" with whom they choose to do business, but it is conceivable that, in time, the human factor in negotiations will be relegated to a formality, with the tedious, mundane functions being automated. One such solution for RFQ automation is Custom Quotes at ThomasRegional.com. The new service offers buyers the opportunity to post their RFQ, transfer technical data, evaluate quotations and correspond with qualified suppliers. For custom manufacturers, it offers a sales and marketing tool that enables them to find new customers with needs that meet their expertise. Sellers can create both job and custom manufacturing profiles that apply filter criteria to help automate the search for RFQ's matching their capabilities. For information on posting RFQ's, click: http://www.ThomasRegional.com/rfq For information on bidding on RFQ's for custom work, click: http://www.ThomasRegional.com/cq

Source: Working the Wiggle Room
John Edwards
Line 56 Magazine, April 15, 2001
http://www.line56.com/articles/default.asp?NewsID=2445

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