The Ultimate Guide to eSourcing Technology

April 22, 2016

eSourcing at a Glance

Electronic sourcing (eSourcing) automates sourcing activities and enhances existing sourcing operations, strengthening buyer and supplier relationships and ensuring more efficient purchasing. From online platforms, organizations can access interactive sourcing events, competitive bidding, and optimized supplier selection. The systems also evaluate existing transaction and supplier information to improve future sourcing and procurement activity. eSourcing not only automates a company’s purchasing, but it expands their purchasing possibilities as well.

The basic workflow of an electronic sourcing lifecycle begins with the identification of a need by an employee, and the recognition that this need would be best met through a sourcing event. After a sourcing request is approved, the event creation begins.

The following tools are the essential functionalities in efficient sourcing solutions:

Optimized Sourcing Functionalities

An advanced sourcing solution is one that contains several tools to optimize existing processes. Optimized, or strategic, sourcing combs through purchasing activity, transaction history, supplier lists and performance, and spend analytics to identify both weak points and areas of hidden potential. It enables organizations to clean their repository of outdated and overpriced contracts while revealing more beneficial transaction opportunities from an enhanced supplier base.

There are many possible scenarios that can be achieved with optimized sourcing. The following tools are components of a strategic sourcing solution:

Supplier Performance Management

Supplier performance management includes integration with Customer Relationship Management (CRM)—the system assembles supplier ratings based on internal notes and reviews from sourcing and procurement users. These review templates can be pre-built or customized based on category, such as commercial risk, safety, quality, environmental, and performance history. In addition, some solutions include benchmarking capabilities that show negotiation rates and performance benchmarking based on internal data from other suppliers.

Strategic Search Engines

Sourcing search engines offer a continuous re-evaluation of an organization’s sourcing activities. The system looks through various fields—including market research, RFx processes, negotiations, contracting, and transaction activities—and identifies savings opportunities.

Data and Risk Management

Reporting and analytics tools assess all sourcing events, spend, and risk. These tools can include commodity risk management and supplier risk analysis based on credit scores, user reviews, logistics, and delivery history. This data can all be compiled on interactive drag-and-drop reporting platforms, offering customizable or standard reporting.