E-Sourcing
the approach to global markets
E-sourcing is a type of procurement strategy enabling companies to connect, screen and shortlist suppliers. As result companies do not need to be present at the same location nor at the same time which improves efficiency tremendously.
The definition of e-sourcing:
“The sourcing process enabled with the appropriate web-enabled, collaborative technology to facilitate the full life-cycle of the procurement process for both buyers and suppliers.”
[Chartered Institute of Procurement and Supply]
This particular strategy can be seen as a process of dynamic negotiations in real time between one buyer and a group of pre-qualified suppliers, each competing against each other to close a deal with the buyer, using B2B sourcing platform. There are reasons why e-sourcing has grown tremendously and is competing against traditional sourcing strategies successfully, as the internet brings both parties closer together, facilitates reduced costs, improves communication, and is a very efficient process.
The main driver of e-sourcing is to save money. In addition to that it enables buyers to interact with various suppliers around the globe and access vast markets. Since e-sourcing has evolved, different bidding approaches emerge that systems facilitate to provide even more efficiency for both parties and especially successful outcomes for buyers. For instance, there was an e-auction conducted by the UK government that enabled mobile phone users savings of over 59 %. Besides this fact, buyers benefit from reduced procurement costs as e-sourcing systems speed up procurement processes. E-sourcing reduces the total time of a tender process, cutting the number of hours a procurement manager spend on it. That frees up valuable time, enabling the procurement manager to focus on other strategic activities. Process efficiencies that e-sourcing provides, lowers expenses for both parties by eliminating particularly print media costs and travel expenses.
Besides the aspect of increased process efficiencies, e-sourcing provides enormous improvements regarding transparency and openness between buyers and suppliers. Hence, e-sourcing boosts close and solid long-term business relationships between both parties as the system of e-sourcing provides a portal through which buyers can see all tender opportunities from a supplier such as deadlines, current statuses, and final outcomes – all at real time. Real time is another great aspect of e-sourcing as interaction through the system ensures speedy communication and hence enhancing efficiency and obtaining effective feedback keeping buyers up to date. Since e-sourcing facilitates the reduction in geographic boundaries, it allows suppliers to efficiently engage in more opportunities. That results in further potential like the development of relationships with companies whose size might have previously been a barrier.