Everything you need to know about eSourcing
Instead of directly emailing or contacting vendors and obtaining bids, eSourcing software makes it easy for procurement departments to quickly obtain them from multiple vendors using software. The aim is to collect and compare bids from a select number of vendors, and then select the best option.
eSourcing, or electronic sourcing, is the process of using web-based portals or systems to ask for, and receive bids and information from different vendors. The technology offers a variety of benefits, helping businesses maximize savings and optimizing their supply chains.
It is a critical part of the eProcurement process, as it allows procurement teams to invite potential vendors, hold a formal tender process or eAuctions. They can analyze responses and sign a contract with one that best meets their requirements.
There are several steps involved in the eSourcing process, as discussed below.
The first step is to prepare a questionnaire. This is designed to evaluate whether the vendor would be a good fit and whether it meets the company’s requirements. The pre-purchase questionnaire is also known as a Request for Information (RFI).
It generally seeks to answer questions pertaining to a vendor’s overall financial stability, compliance requirements, and standardized policies. The questionnaire can be created using “yes” or “no” questions, multiple choice questions, or others.
Known generally as an invitation to tender, this process involves asking vendors to provide quotes for the services or products required by the company. Once vendors are qualified using the questionnaire, you can send an invitation, asking them to submit a tender, initiating the bid process.
A RFQ, or a request for quotation, is a formal document that is sent by a vendor to prospective vendors. They’re then asked to provide their price lists for the required quantities. Companies can also send RFQs prior to inviting companies to tender, thus giving them a better understanding of price ranges.
Once the company receives quotes, they’re then evaluated by the buyer. The company determines if the vendor is a suitable candidate, and if yes, they’re asked to follow a formal onboarding process.
Once the vendor is onboarded, they can then be asked to participate in an eAuction. This is much like a tender, where vendors place their bids for delivering quantities and specify their prices. While eAuctions can be executed at any time throughout different eSourcing stages, it’s generally a good practice to run them after a tender.
The aim of eAuctions is to foster healthy competition and reduce prices, so the procurement team gets the best deal at the most affordable rates. In most cases, these auctions take place through a vendor portal.
eSourcing offers a variety of benefits to companies, some of which are listed below:
If you want to simplify vendor management and improve overall productivity for procurement teams, one of the best solutions that you can deploy is SoftCo’s Procure-to-Pay. It automates the entire finance process, especially for procurement departments.
There’s a dedicated vendor portal that lets you manage vendors, keep all documents in one location, including vendor contracts. It also offers features for invoice data capture, matching, and approvals, making it an excellent all-in-one solution for procurement departments that want to improve operations.