We recently met up with a small french consultancy, Effixens at cafe Lala in Hammersmith. On the menu was some fantastic mediterranean food as well as a healthy dose of eSourcing discussion. Over the obligatory espresso, conversation turned to whether the majority of procurement professionals really understand the returns of eSourcing. To put this in perspective, in France eAuctions are not very popular so the primary use of eSourcing is for eRFx’s (such as Request for Information/ Proposals/ Quotations).
(Source iSource report by University of the West of England, 2010)
Earlier that day I had had a discussion with our insurance company who asked to confirm that our software is a back office operation. And as you can probably guess, it isn’t. This is a very pertinent point.
eSourcing is a more complex beast to Contract management for example where the Return on Investment (ROI) is more difficult to judge. The difference being that contract management is more of a back office operation whereas eSourcing is used for collecting prices and information from the suppliers and also negotiation in real time. It is on the front lines, the vangard of the procurement department. The knock on effect is that eSourcing has the potential to deliver a much higher ROI more quickly. Thus the adoption of eSourcing is crucial for any organisation.
Even if eSourcing is only used for eRFx’s, rather than eAuctions there are many benefits over the traditional approaches.
1. Scalability and efficiency
Processes can be standardised. This enables repeatability and especially scalability of any tender activity delivering higher savings without an increased workload.
2. Centralisation of data
All data is held in one place. Should anyone leave or be off sick all the data can be easily picked accessed. Supplier databases can be centrally controlled helping rationalisation.
Secure electronic records of all activities are maintained which can be accessed easily many years after the event.
Thus the adoption of eSourcing is crucial for any organisation. Recently we discussed on Thomas.net how we can beat email, eSourcing’s greatest competitor especially for eRFx’s. The main driver has to be to make a platform that people want to use. It will need to have a gamification element, excellent reporting and has to make life easier. Combined with the obvious benefits, it’s got to be a must for any organisation.