What eSourcing Is & How To Get Started

PurchTips - Edition #236 August 9, 2011

By Charles Dominick, SPSM, SPSM2

What Is eSourcing & How It Can Help You?

eSourcing is the process of obtaining bids from different suppliers via a single online portal. The benefits of eSourcing include streamlining the sourcing process, reducing prices by maximizing supplier competition, and creating a repository for sourcing information.

Such a repository "is so invaluable in companies with aging workforces, for example, or worker turnover," says Jason Busch, Founder and Managing Director of Azul Partners and Editor of the blog spendmatters.com. "Even companies with 10, 20 or fewer procurement professionals can begin to institutionalize and manage their knowledge of the sourcing category in one place." The first step in getting started with eSourcing is selecting an eSourcing tool. There are both basic and advanced types of eSourcing tools available today.

Beyond accepting bids, basic eSourcing tools "should help with the gathering of supplier information" and typically include the "the ability to import and export information in CSV format and Excel format, the ability to create the RFx itself" using templates, and the ability to manage the sourcing process workflow, according to Busch. He cites "being able to explore alternate award scenarios, being able to encourage supplier flexibility in how they bid, and [being able to] encourage suppliers to get creative with what they offer," as the additional capabilities of advanced eSourcing tools.

With both basic and advanced options available, should a procurement team start basic or pursue the most robust capabilities? "If they want to encourage creativity among suppliers and to be able to tap that," an advanced tool may be best, suggests Busch. "It's my view today that you should explore all options from the start."

In terms of eSourcing tool vendors, Busch advises "especially if you've heard of the vendor and you do reference checks on them, they're all fairly solid for sourcing." Even ERP system providers, which have historically lagged eSourcing specialists in innovation, "have largely caught up" in at least basic capability now, he claims. Busch notes that differences between eSourcing vendors lie in their user interfaces, negotiation capabilities, workflow flexibility, and data libraries.

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Want to learn more about today's topic? Check out Spend Matters' white paper entitled "A Foundational Look at the Evolution of Sourcing Technology and Platforms."

This paper explores the evolution of sourcing platforms from the basic reverse auction/RFx/eSourcing capabilities of yesteryear to the more advanced sourcing and commodity management platforms available today. It also provides shortlists of vendors that offer different types of solutions. Registration required and subject to Spend Matters' privacy policy.

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