Procurement Glossary & Terminologies
Before discussing e-sourcing, let’s first define sourcing. When a company spends money on purchasing goods or services, it engages in sourcing. Analysis of the company’s requirements, historical research on the market or supplier, collaboration with current and potential suppliers, and contract drafting are all part of the sourcing process.
E-Sourcing adds an electronic layer to business transactions performed through a web-based platform, which is the norm in today’s digitalization world. E-sourcing systems have many benefits. First, they are made to assist businesses in making savings from their supply chain operations, increasing the visibility of critical business data and reducing the time procurement specialists spend on routine tasks. Second, E-sourcing software oversees every aspect of sourcing strategy, from contract management to negotiation. Third, buyers research providers, learning about their offerings, costs, and services. The e-sourcing software organizes, normalizes, and combines the data to enable accurate comparisons and a better understanding of client needs.
Benefits of E-Sourcing
Businesses can benefit from e-sourcing in several ways. Some of them are as follows:
1. Cost Reductions: Procurement teams can save money by adopting eSourcing to access a larger pool of suppliers and various eAuction tactics. This leads to increased competition which improves price discovery.
2. Enhances productivity and saves time: Electronic sourcing shortens the time needed to award a contract. This is achieved by reducing the time, and effort procurement specialists devote to the tendering process, allowing them to concentrate on other tasks.
3. Utilize supplier data and transparency: All parties can access information about the items, delivery date, price, status, and other details through online portals and software.
4. Strengthens Compliance: Audits are made simple by centralizing all data and papers related to purchases. By disclosing the criteria used to select a supplier, a transparent strategy also makes it simpler to adhere to regulatory requirements.
E-procurement and e-sourcing are complementary processes. For effectiveness, cost savings, and supplier relationship management, are both equally important. Without e-sourcing, e-procurement would be useless. E-sourcing is necessary to ensure a contract is signed and that products and services are obtained at the lowest cost.
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