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.
Some stages of the sourcing process assume greater importance depending on the strategic nature of the products or services being sourced. For instance, cross functional sessions are held to brainstorm cost reduction strategies. Manufacturing and quality teams provide feedback on problems encountered and help frame a solution.
Through an online platform that is accessible to both the buying team and the suppliers, eSourcing assists in digitising the entire sourcing process.
eSourcing solutions typically deliver 3 functionalities viz.:
1. Request for Information (RFI)
A questionnaire that suppliers respond to. If the sourced category is strategic, the questions can be weighted and the supplier responses scored by a cross-functional team in order to derive an accurate net weighted average score for each supplier.
2. Request for Quote (RFQ) or Request for Proposal (RFP)
An RFP outlines 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
Higher compliance is ensured when the sourcing process is carried out on a shared, collaborative platform as opposed to emails, spreadsheets, and phone conversations. 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
The cycle time of sourcing has two components. First, the time it takes to create an RFI or RFP, and second, the time it takes to award the business after the RFP has been published. The creation and reuse of templates is made possible by eSourcing tools, which expedites the RFX creation process. To shorten the time needed to review and award the business, buyers should be able to examine bids as soon as they are received and provide immediate feedback.
Additionally, templates standardize processes and facilitate the sharing of best practices among buying teams.
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.
