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What is eSourcing and how do companies benefit from it?

What is eSourcing?

The process of Sourcing involves finding new suppliers, evaluating their capability, comparing their products and offerings with the requirement or with the incumbent supplier’s offering, collaborating with all suppliers to receive commercial bids, analyzing the bids and negotiating for the optimum price & capability mix.

Depending on the strategic nature of the goods or service being sourced, some stages of the sourcing process assume greater prominence, say brainstorming sessions to decide on cost reduction levers, inputs from manufacturing and quality teams on issues faced and framing an approach that addresses them.

eSourcing helps to digitalize the entire Sourcing process through an online platform which is accessed by both the buying team and the suppliers.

eSourcing solutions typically deliver 3 functionalities viz.:

1. Request for Information (RFI)

A questionnaire that suppliers respond to. Given the strategic nature of the sourced category, the questions can be weighted and the supplier responses scored by a cross-functional team in order to arrive at a net weighted average score per supplier. 

2. Request for Quote (RFQ) or Request for Proposal (RFP)

Here the specifications, quantity of the items or goods being sourced along with the terms & conditions are sent to the suppliers. Suppliers provide commercial bids for the same. Collaboration with internal stakeholders and addressing supplier queries are done online

3. Online Auctions

The 3 basic types of online auctions include Reverse Auction, Forward Auction and Dutch Auction. Online auctions help a buyer negotiate with multiple suppliers across multiple categories in an effective manner making the negotiation process more transparent to the supplier.

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What are the benefits of eSourcing?

There are 5 key benefits of any eSourcing solution. It is important for every organization to articulate the benefits they seek or the problems they need to solve and ensure the same is achievable using the solution they have shortlisted.

1. Higher COMPLIANCE

Conducting the sourcing process on a common online platform instead of emails, spreadsheets and phone calls ensures higher compliance. Strong audit trails help audit teams to understand how many suppliers participated, which supplier declined to participate and why, who approved the award scenario, who provided what evaluation to a supplier response, etc.

2. Lower CYCLE TIMES

There are two aspects to sourcing cycle time. One, the time taken to create an RFI or RFP and two, the time taken to award the business post releasing the RFP. eSourcing tools allow users to create and reuse templates which speed up the RFX creation process. Buyers should be able to analyze bids as soon as they are received and collaborate with suppliers instantly to reduce the time to analyze and award business.

The use of templates also standardizes processes and enables sharing of best practices between buying teams spread across locations.

3. Improved COLLABORATION

Collaboration is important between the buyer and other internal stakeholders within the organization and externally with suppliers. 

4. Lower COST

Auctions are proven to deliver 9-11% of savings for indirect spend. This is one of the best means to test qualified suppliers competitively.

Competitive RFPs also display the Rank/Best Bid to suppliers, which helps get multiple bids from a supplier without much effort. The time assigned to all suppliers to respond to the RFP, say 3 days or 10 days, is more productive for the buyer.

From a supplier’s perspective, they tend to respond better to eSourcing solutions because they trust a system more than what the buyer verbally informs them. Supplier management is easier. The solution needs to be user-friendly not just for the buying team but also for the supplier to log in and participate in the sourcing event.


About Krinati Sourcing

Krinati Sourcing is an innovative solution that delivers the above benefits. Our solution is used by marquee companies globally across multiple industries. What makes us stand out from the competition is the ease of creating complex pricing sheets – be it Activity Based Cost Models or Total Cost of Ownership models. The ease of use ensures high adoption and our vaunted support services ensure every customer is successful.

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A comprehensive solution that digitalizes the entire sourcing process. Get in touch with us to determine the benefits you can achieve.

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