Benefits of E-Sourcing Tools: Centralization
There are many benefits to incorporating an e-sourcing tool in to your organization’s procurement process. If used correctly and for an extended period of time, an e-sourcing tool can drive efficiency in the sourcing process by acting as a centralized repository for sourcing data. Sourcing data from historic sourcing events can be retrieved and then leveraged to cut a significant amount of time out of the sourcing process.
Sourcing data is typically comprised of several key pieces of information:
- Baseline – The products/services you purchased at the rate you purchased them. This data is used to compare sourcing event results to, in order to show savings or cost avoidance.
- Bid Package – The documentation sent to vendors that describes the products/services you are looking to procure, often referred to as RFP/RFQ documents. This documentation usually includes an overview of your organization, the reason your organization is going to market for products/services, a description of products/services, forecasted volumes of products/services, and can also include a questionnaire, detailed specifications, and service level expectations. The bid package is what your vendors use to prepare a proposal. Keeping a record of your bid packages will allow your organization to leverage them for future sourcing events.
- Vendor List – The contact information for the companies or individuals you are requesting to submit a proposal for products/services. This list is important in future sourcing events, so you know who to and who not to invite next time.
- Vendor Queries – Vendors will most likely request information in addition to what was provided in the bid package. By collecting and retaining these questions, you can improve your bid pack the next time you go to market.
- Bid Responses – Commonly referred to as market data, bid responses are both quantitative, cost-related elements, and qualitative, value/non-cost-related elements. By assessing the bid responses, your organization will be able to understand what cost and value is available in the market, in order to drive negotiations.
- Contract – The agreement(s) made between your organization and the selected vendor(s) for products/services. The pricing and terms of the negotiated agreement will serve as a baseline for you to measure against during the life of the agreement.
Effectively utilizing an e-sourcing tool allows your organization to centralize sourcing records, so the entire organization has access to them. This institutionalization of knowledge can help alleviate the burden of employee turnover. These benefits of an e-sourcing tool can only be realized if the tool is utilized and maintained.
As the saying goes, garbage in, garbage out. You can only glean value from an e-sourcing tool, if it is properly used. So often, companies invest in e-sourcing tools and technologies, only to have them partially implemented or leveraged just to distribute sourcing documentation. To truly improve your organization’s procurement practices with e-sourcing tools, you must get buy in from stakeholders, end users, and vendors. You will need to ensure the use of your selected e-sourcing tool is enforced. It is easy to distribute a bid package and collect responses via email, but you risk losing the all of the information distributed and collected, as files can get buried in poorly maintained e-files and emails can be lost to inbox archives.
E-sourcing tools can help your procurement team reach its savings goals. Make the most of your selected tools and technologies and you will be rewarded. Happy sourcing!