It never ceases to amaze us that most companies are still sourcing the traditional way — that is sending emails with requests for quotation (RFQs), usually excel files, to suppliers. But doing so is a surefire way to waste time and leave money on the table. Here are some of the main reasons why e-sourcing really is better than traditional sourcing
- Helps build your organisation’s market knowledge, and gives you a consistent approach to the market
- Improved transparency and supplier trust
- Improved ability to compare suppliers
- E-sourcing saves time
- More credibility in the market and in your requests to suppliers
- Simplified communication with suppliers
- E-sourcing allows for real-time evaluation of offers and of your requests
- And, perhaps most important of all, e-sourcing gets you better prices!
Keep reading below for a more detailed explanation of how e-sourcing can help your organisation:
E-sourcing helps build your organisation’s market knowledge, and gives you a consistent approach to the market
E-sourcing helps your organisation build up knowledge that can be re-used in the next cycle of contractual renewal, or if you are at the start of a sourcing process, it helps you move more efficiently to decide the final selection of a supplier and an offering.
An e-sourcing tool helps bring more consistency to the way you approach the market, and it is perceived by suppliers as more ”professional”.
Improved transparency and supplier trust
The e-sourcing process is by design web based and auditable, which means that all the suppliers involved in the tender process know what is on offer and everyone has the same level of information. There’s no room for hidden agendas and no chance to play favorites, so everyone is more likely to give their best offer.
Improved ability to compare suppliers
In a e-tender, all the requirements are published online, and suppliers are aware that the bids will always be looked at and compared on the same basis. With e-Sourcing suppliers don’t have to ask “Are you comparing apples with apples?”, because they already know.
E-sourcing saves time and improves credibility
Procurement is all about efficiency, and an e-sourcing tool can help make procurement departments truly more efficient. It saves time in terms of qualifying and registering suppliers for your sourcing action; a pre-qualification of the suppliers can also be done with a help of a simple e-RFI. More suppliers qualified and more suppliers registered = more savings.
Simplified communication with suppliers
E-Sourcing tools have internal communication systems, which ensure that all communication to the suppliers is done correctly and at the same time, and is then stored and available for audit in the same place. Buyers (and suppliers) don’t have to spend time scanning through their emails to look for a supplier inquiry, or risk missing one, and losing time and credibility.
E-sourcing allows for real-time evaluation
While, depending on the e-sourcing tool you use, there is a wide variety in the type of analysis done by the tools themselves, most include multiple types of embedded reports, which allow you to respond quicker with initial feedback, identification of outliers and of best bids per product, service line, business unit… you name it. Of course post-hoc analysis will still be required, but you will spend much less time collating, cleansing and comparing bids in an e-sourcing tool than in a manual process.
E-sourcing improves results, that is, it saves you money!
Savings average between 5 and 20%, with the highest savings seen on services (legal, accounting, etc) and office supplies. Besides just savings, it is also a great way to avoid cost increases; when faced with rising prices, putting out a broad e-rfq is a great way to either find a new supplier or convince your current supplier to cancel a cost increase.
