Enabling assisted strategic negotiations in actual-world procurement scenarios

Abstract

In the everyday business world, the sourcing process of multiple goods and services usually involves complex negotiations (via telephone, fax, etc.) that include discussion of product and service features. Nowadays, this is a high-cost process due to the scarce use of tools that streamline this negotiation process and assist purchasing managers' decision-making. With the advent of Internet-based technologies, it has become feasible the idea of tools enabling low-cost, assisted, fluid, on-line dialogs between buyer enterprises and their providers wherever they are located. Consequently, several commercial systems to support on-line negotiations (e-sourcing tools) have been released. It is our view that there is still a need for these systems to incorporate effective decision support. This article presents the foundations of Quotes, a commercial sourcing application developed by iSOCO that, in addition to cover the whole sequence of sourcing tasks, incorporates decision support facilities based on Artificial Intelligence (AI) techniques that successfully address previous limitations within a single and coherent framework. The paper focuses on the computational realization of sourcing tasks along with the decision support facilities they require. While supported negotiation events are Request for Quotations/Proposals (RFQs/RFPs) and reverse auctions, decision support facilities include offer generation, offer comparison, and optimal bid set computation (winner determination) in combinatorial negotiations. Additionally, the paper presents a compound of experiences and lessons learned when using Quotes for real sourcing processes. © Springer Science+Business Media, LLC 2007.