E-Sourcing: An Essential Component in Devising a Good Sourcing Strategy
E-sourcing is simply the digitization of the sourcing process which involves consolidating proposals, quotes, and e-tenders from various suppliers. Traditional sourcing processes are time-consuming and tedious and are unable to handle a large volume of information. As a result, sourcing of goods and services is carried out with limited available information and is based on […]
E-sourcing is simply the digitization of the sourcing process which involves consolidating proposals, quotes, and e-tenders from various suppliers. Traditional sourcing processes are time-consuming and tedious and are unable to handle a large volume of information. As a result, sourcing of goods and services is carried out with limited available information and is based on the relationship with the supplier. However, the advent of modern technology has changed this trend as organizations have now realized the cost saving potential of a good sourcing strategy.
Implementation of an appropriate e-sourcing tool can help optimize productivity and lower annual spends in the following ways:
More Data Leads to Informed Decision Making
Data and information on supplier prices and offerings are easily recorded within the e-sourcing application, which also facilitates digital quotations, catalogs, and e-tenders. A procurement manager is equipped with vast information to base his decision on as it enables him to invite multiple bids from different suppliers, analyze product and price offerings, and contract terms of multiple suppliers. The data collection process should start right from the spend analysis, which gives the procurement manager information on most important categories and best cost saving opportunities. This paves the way for e-sourcing project selection by evaluating top opportunities with regard to organization goals and Time to Value (TTV).
Cost Savings and Improved Efficiency
Access to a large number of suppliers, analysis of their offerings, and process digitization helps organizations maximize on cost-saving opportunities. It also speeds up the procurement process by reducing the time for the tender process, reducing the person hours required for sourcing and procurement activities, and eliminating lengthy paperwork.
Improvement in Supplier Relationship
E-sourcing provides transparency in transactions between buyers and sellers as suppliers can have a glance at all tender opportunities with all the details listed. The communication delay is eliminated as suppliers are fully aware of all the bids and tenders, which are directly processed through the portal. Since e-sourcing eliminates all geographical barriers, procurement managers can look forward to suppliers from much larger geographies.
Better Compliance and Risk Reduction
Digitization and systematic approach of e-sourcing eliminates lengthy paperwork for contract compliance adherence – facilitating internal audit. With the help of e-sourcing, procurement managers can create templates for sourcing activities, which ensures adherence to policies and conditions.
A purchasing manager is presented with a vast amount of data and information for his sourcing needs. It paves the way to devise a better sourcing strategy by helping the purchasing manager to decide on the appropriate RFx document.
To know more about e-sourcing and how it can help in effective procurement:
- Building A Strategic Partnership Between Procurement and Marketing
- Strategic Sourcing and Supply Market Intelligence – Best Friend’s In The Making?