From the Industrial Revolution, businesses have used the reverse auction to buy goods and services. Requests for Proposal (RFPs) and Requests for Quote (RFQs) were a way to get suppliers to compete on price. For a long time, this worked well. As long as companies were buying simple things, it was straightforward and pretty quick.
But over time, the things firms buy have changed. It is not just commodities anymore. Today, businesses purchase complicated products. Even worse, the Pandemic taught us that optimizing purchases for cost was dangerous. Post-Pandemic supply chains are risky. They are vulnerable to tariffs, war, politics, and inflation.
Today, if you get the purchasing decision wrong, you might miss your targets. You might miss some innovation that could give you a leg up on the competition. You might be stuck with a second-best solution for years.
B2B buyers need to purchase the right solution, from the right supplier, at the right price.
Does making the sale more difficult for suppliers surface the best solutions?
Or does it chase them away?
Does extending the sales cycle ensure that buyers see the right solutions?
Or does it just make suppliers less interested?
Does all this bureaucracy, time, and expense ensure that buyers see enough competition on price and solution?
Does using an archaic process and an older technology tool help recruit the right people into the procurement function?
For us, the answer to all of these questions is no.
People ask us, “What’s your why?” Why would we spend time on procurement?
Maybe it’s because we come from financial markets. When we first stumbled across the procurement function, we couldn’t believe how inefficient it was. We loathe bureaucracy. We’re allergic to it.
Coming from financial markets, we were trained in matching buyers and sellers. In financial markets, people take execution for granted. Investors focus on what to buy and what price to pay.
We were shocked to see how much energy people in procurement wasted on ensuring the execution of the trade worked. Figuring out what to buy and what price to pay often seemed like an afterthought.
This is precisely backwards.
For us, we couldn’t think of a better way to help people than to simplify procurement using our experience.
That’s why we built EdgeworthBox.