E-Sourcing

What is E-Sourcing
E-Sourcing refers to the use of advanced procurement techniques and IT to reduce the cost of procurement and streamline the process of sourcing. Since for many companies direct materials make up a sizable chunk of their purchase budget it is in their best interest to implement E-Sourcing

Aspects of E-Sourcing
Spend Analysis. Contract Management. Supplier Performance Management. Supplier Information Management Supplier Discovery

Spend Analysis
The first step to having an effective plan to save on procurement cost is to do the spend analysis. In spend analysis the spend data is analysed and classified into separate categories. The data is also analysed supplier-wise to find out how much the company is buying and from whom. Through spend analysis we overcome the following impediments Poor visibility into global spend Manual and time consuming process for spend classification No means to identify and sustain savings opportunities Lesser spend under management The result of the spend management classifies the procured materials into different categories in accordance with the business impact and supply market complexity and helps in identification of those categories which can be sourced through E-Sourcing and those categories where the market environment is such or the business importance is such that strategic relationships have to be maintained therefore should not be E-Sourced.

Contract Management
A contract management solution offers a package for the management of contracts. The package allows for the authoring of contracts and also enables the organization to monitor contracts with respect to compliance, renewals etc. The advantages of a contract management system are as follows Contract Compliance: the contracts can be analysed for the contractual spend and other factors like delayed deliveries and other compliance measures. This analysis yields valuable data for measuring the contractual compliance and opens up new avenues for exploring saving opportunities. Minimize Supply Risks - Alerts and reminders for Expiry, Auto Renewal, Utilization, FOREX, and Commodity Index can be set. These give use information to help the decision making process. Minimize Risk - Workflows for all of organizations existing processes and policies can be configured within the tool, so as to ensure that none of the steps followed in day to day routine are skipped and hence potential risks are minimized. Contract management also offers a tool for the authoring of contracts it makes it easier and faster to author the contracts and thus saves time. Advantages of a contract management system are as follows. Contract Authoring makes contract creation easy and secure using pre-approved templates, clause library. Template Library - Predefined template library is available for standard template in the repository for new contract creation. Clause Library - Clause library for any of the pre-approved clauses to be inserted in the contract.

Supplier Performance Management

Post sourcing it is essential to measure the performance of supplier and decide the future of your relationship with your supplier. A Supplier Performance Management system automates the entire process of supplier performance management and helps provide a platform to help define, measure and analyze performance parameters (KPIs, Score cards and Surveys). Features/Advantages of Supplier Performance Management Design KPIs, Score cards and surveys The system allows the user to design KPI, score cards and surveys. The performance parameters can be designed from scratch, from pre-approved templates or from prior KPIs and surveys. The customer can also define KPI formulas and set KPI specific weight-age for defining supplier scorecards. Set benchmarks Supplier Performance Management system also enable users to configure benchmarks to evaluate supplier performances. Model ranking system- Supplier Performance Management allows users to rank supplier performances to segregate the top performing suppliers from those performing poorly. The supplier performance management system can pull data from the existing ERP system to be analysed or to be fed into the score cards and KPIs. The organization work flows and authorities can be mapped into the system to allow the data to be drawn from various sources and thus be used for analysis.

Supplier Information Management

Supplier Information Management system offers a system to manage the information of the supplier and extract the information when ever needed to carry out analysis and evaluation. This also simplifies the process of on-boarding vendors. it ensures that de-duplicated data related to all aspects of supplier information is available to all across the departments.

Supplier Discovery
Supplier Discovery is a tool which can be used to find new supplier, look for potential suppliers in new geographies and for new businesses. The data related to the supplier is stored on on-line data bases. This cuts down the effort required to shortlist new suppliers.

Advantages of Using E-Sourcing Tools

Use of E-Sourcing generates additional savings because of the online live bidding environment tends to exert a greater pressure on the suppliers to out-bid their competitors. These cost savings increase if there are more number of suppliers bidding and the environment is more competitive. E-Sourcing applications can save a lot of time. By automating many of the tasks associated with sourcing, these applications significantly cut down on the time the processes require. Some studies indicate that E-Sourcing software can reduce the time involved in the procurement cycle by as much as one-fourth. As the E-Sourcing auctions are online and live they bring more transparency into the whole process of the award of contract.

 E-Sourcing data can be studied and can be used find interesting trends related to supplier behaviour the average discounts that the supplier offers etc. The tools like contract management help in tracking compliance and also reduce the time related to authoring of contracts. They allow the managers to have information on configurable dash boards. It helps in timely renewal of contracts prevents evergreening of contracts. Supplier Discovery tools help stream lining the process of finding new suppliers in new geographies. Tools like spend management allow the organization to have a greater visibility into spend. This would allow the business to classify the purchased items into different categories according to market potential and importance of the material to the business.