eSourcing has been and continues to be a game-changer in eProcurement and the overall supply chain management process. The benefits of supply chain management are profound, especially when it comes to eliminating repetitive tasks and optimising staff operations. But how can one piece of software revolutionise all elements in the supply chain?
We’re going to explore eSourcing’s role in supply chain management, including the simplification, automation, and accuracy of the processes.
Where does eSourcing fit in the supply chain?
eSourcing bridges the gap between buyers and suppliers. It whittles down masses of tender applications to a single supplier by using sophisticated cloud-based software that measures bids against pre-set criteria.
These features demonstrate the importance of supply chain management as eSourcing and eProcurement go global and the influx of tenders increases exponentially.
Digital platforms and supply chain management
eSourcing digital platforms provide a central hub or framework that takes over traditionally manual tasks, simplifying and accelerating processes, and freeing up employees to focus on their core activities. They can use specialist knowledge to refine buying procedures, streamline functions, and develop strategic supply chain management plans for the smooth running of operations.
eSourcing software is scalable to accommodate new suppliers and manage all accompanying data. The platform has the capacity to manage several projects simultaneously, regardless of their complexity. This provides far greater accuracy and standardisation which is especially important for buyers that need to capture data from global suppliers.
Supply chain management system integration is another important function that enables buyers to grow their stable of approved suppliers while still retaining control of their supply chains.
What advantages does eSourcing bring to the supply chain?
First, let’s look at why eSourcing in supply chain management is so important.
According to research, global supply chain disruptions in 2021 cost businesses $184 million. This is despite many suppliers adopting supply chain management software solutions to enhance the efficiency of their business operations.
The only way to remain an essential component in the supply chain is to fully embrace eSourcing and maximise the inherent advantages in the software and supply chain management systems.
ESourcing Advantages
ESourcing provides several advantages to the supply chain management process, four of which include:
1) One portal binds them all
ESourcing software takes all the information in proposals and stores it on one platform. Data is stored according to custom criteria and is easily accessible via the centralised hub or portal.
The portal can generate essential and supporting documentation that dictate terms and criteria specific to certain projects. The standardisation of these documents ensures all bidders provide the information required. This minimises the risk of unintentionally omitting information or including irrelevant information.
2) Information automation
Cloud-based eSourcing systems automate many time-consuming supply chain management tasks, including:
- Creating comprehensive pre-purchase questionnaires (PPQ) that identify worthwhile prospects.
- Posting requests for information (RFI) should for buyers want more detail than that provided in PPQs.
- Posting requests for proposals (RFP) for buyers who want to gather as much pertinent supplier-related data as possible.
- Sending invitations to tender (ITT) that clearly state project specifications and detailed supplier information regarding logistics, industry compliance, and performance records, etc.
- Forwarding requests for quotation (RFQ) for suppliers to submit their prices.
What advantages does eSourcing bring to the supply chain?
ESourcing tools built into the platform can also be set to assess specific information, negotiate certain processes, and evaluate proposals. This saves a considerable amount of time that is redirected at planning, innovation, and collaboration among internal teams and suppliers.
3) Managing eAuctions
EAuctions are where suppliers vie for tender acceptance. The automated tools can be set for the type of eAuction that best meets project needs. Types of eAuctions include:
- Reverse auction: Suppliers approve a set price and then start lowering their bids until they hit the lowest price. Buyers have the option to accept the lowest offer or choose the bid that provides the best value for money.
- Dutch auction: The opening bid is ridiculously low. The automated eAuction tools increase the price in reasonable increments until a supplier accepts the price. Approval is at the buyer’s discretion.
- Japanese auction: The price is set purposely high and is gradually lowered. Bidders can opt out at any time. The auction continues until there is only one supplier left. Again, acceptance is at the buyer’s discretion.
4) Contract management
ESourcing platforms can automate contract management. They can dispatch contracts to successful bidders and monitor and manage the contract throughout the supply chain process. For instance, edit contracts according to the needs of the project and notifying parties when a contract is about to begin or approaching the completion date. All of the contract-relevant data is accessible, which lends itself to easy monitoring and management.
The relationship between eSourcing and supply chain management
ESourcing enhances the relationship between buyers and suppliers by providing a platform that facilitates transparent communication. Keeping communication channels open enables both parties to discuss various parts of the supply chain, including how to address potential problems and when to prepare for upcoming projects and tenders.
ESourcing helps buyers identify suppliers that could fit the bill for future tenders. They can begin communicating and establishing relationships to learn more about the companies concerned. This personalisation of information lets buyers determine whether business policies and values.
What advantages does eSourcing bring to the supply chain?
really align, enabling them to remove suppliers that may meet tender specs, but are otherwise unsatisfactory business partners.
The analytics features in eSourcing software play a critical role in tender acceptance because they shine a light on past performance, opportunities to enhance supply chain operations, pervasive risks, and existing supply chain risk management solutions. This information, coupled with predictive analytics, helps buyers select suppliers that have the potential for long-term relationships.
Strong buyer-supplier relationships can positively impact the steps up and down the supply chain. For example, through suppliers, buyers can develop working relationships with those on the production and material sourcing levels. Through buyers, suppliers have access to procurement, warehousing, and delivery to end users. Communication across all these levels provides greater understanding of each step in the chain and can lead to improvements in the overarching supply chain procedures.
Where does the relationship between eSourcing and supply chain management go from here?
The past two years have seen a shift in the way companies conduct business. This can be attributed to changing consumer demands and stricter government regulations. The focus is on sustainable business practices. This includes ethical supply chains (safe working conditions, fair pay, and ethical sourcing) and low environmental impact (materials can be reused without additional processing or the impact can be offset by funding eco-friendly projects).
Suppliers and buyers will want to establish relationships with companies that prioritise sustainability as a way to boost their sustainable credentials.
Artificial Intelligence (AI) and Machine Learning (ML) will become the norm and automation will be used to manage more functions. AI, ML, and automation will continue to increase speed and accuracy while taking on additional tasks, such as those related to analytics and data evaluation.
AI-driven automation gives suppliers and buyers time to collaborate on ideas that further facilitate the smooth functioning of supply chain management.
Digital supply chain management, including eSourcing and eProcurement, will become more advanced as technological developments work their way through eSourcing software, upgrading tools and functions as they go. One of the upsides is eSourcing solutions have greater capacity for more complex tasks, while buyers focus on developing culturallly-sensitive global relationships.
Let’s recap
At the beginning of the article we aimed to cover essential factors that impact the relationship between eSourcing and supply chain management. Let’s see how well we did.
We started by placing eSourcing in the supply chain, where it bridges the gap between supply and procurement. Then we explored digital platforms and the framework they provide to store and organise supplier data.
There are plenty of advantages to a healthy eSourcing and supply chain management relationship, but we limited ourselves to the four primary benefits – one portal – automation – eAuctions – contract management – before moving on to a deeper look at the supply chain/eSourcing relationship.
A peek into an automated future that relies heavily on AI and ML to optimise global supply chain management rounds out the article.
