7 Ways eSourcing Can Save Time & Money

If you have a long driveway full of snow you need to clear, would you rather use a shovel or a large snow blower? I’m guessing you’d opt for the snow blower. Because why do something manually when there’s a tool that does it better and faster?

Through the use of eSourcing, there’s now a better way to source and purchase products for your business. In fact, eSourcing is so effective that research has shown it reduces requisition-to-order cycles by 66% and costs by 58%.

So let’s explore what eSourcing is, how it works and why more and more organizations are saying goodbye to manual sourcing techniques to deliver improved ROI on procurement.

What is eSourcing?

Short for “electronic sourcing,” eSourcing is a web-based process for obtaining bids, comparing supplier information, and selecting appropriate vendors to meet your company’s needs for services and supplies. 

You may be thinking, “Hmm, eSourcing sounds a lot like plain old sourcing.” Well, yes — in both cases, you’re aiming to locate the best product from the best suppliers with the best price and terms. However, there’s a huge difference in the tools they use to do so.

In traditional sourcing, you’re using spreadsheets, Word documents, emails and who knows what else to keep track of what you’re doing. In contrast, eSourcing is a comprehensive online portal with advanced capabilities. With the use of eSourcing software, you can see and manage all aspects of the sourcing process in one place. 

eSourcing is also a key component of strategic sourcing — a systematic approach that emphasizes improving purchasing practices and the supply chain. By facilitating competitive bidding, improving visibility into the sourcing process and streamlining time-consuming tasks, eSourcing plays a huge part in:

• Reducing operational costs while improving the quality of goods & services acquired
• Improving the bidding experience for suppliers
• Improving the overall speed and efficiency of the sourcing process

How eSourcing works

eSourcing software centralizes and automates the interactions between your company, your suppliers and various stakeholders. It uses AI and other technology to help you collect and compare information about suppliers so you can confidently evaluate, select and begin relationships with the right vendors.

The basics steps of eSourcing are:

• Identify needs: Gather the specifications and requirements for what you wish to purchase.
• Find suppliers: Collect information about potential suppliers by creating and sending questionnaires, requests for information (RFI), requests for proposals (RFP) or requests for quotes (RFQ).
• Host an eAuction: Invite selected suppliers to participate in an eAuction, a live, open, electronic auction where vendors can outbid each other for your business.
• Evaluate suppliers: Compile and compare supplier information and eAuction results to assess quality, price, reliability and compliance.
• Contract with suppliers: Award contracts to your supplier(s) of choice.

Top benefits of eSourcing for businesses

As a sophisticated tool designed for the nuances of modern sourcing, an eSourcing solution is a powerful partner for teams that are under constant pressure to cut costs and deliver faster results in procurement departments.

Repetitive task automation

Thanks to technology like AI, machine learning, OCR and RPA, eSourcing automates parts of the sourcing process that would typically take up much of a human team member’s valuable time, such as:

• Creating and distributing RFX
• Selecting the most suitable supplier based on evaluation criteria
• Automatically generating contracts with pre-approved terms 
• Analyzing spending patterns across different suppliers and categories to identify cost-saving opportunities

It can also automate many of the administrative tasks that are part of sourcing. For example:

• Maintaining accurate contact information and documentation for suppliers
• Identifying and addressing supplier performance issues
• Generating reports on supplier performance for stakeholders
• Updating procurement systems with new supplier details and contract information

By taking on this labor-intensive work, an eSourcing platform lets your team focus more on high-value efforts such as supplier relationship building, process improvement and strategy creation.

Bid award optimization and eAuctions

Using some of the same technology mentioned in the previous section, eSourcing performs side-by-side comparisons of bids from various suppliers. Instead of spending weeks wading through bid results and conducting lengthy, conventional negotiations through email and Excel spreadsheets, you can select your supplier and award the business in mere hours. 

Plus, by making the overall sourcing process faster and more streamlined, eSourcing allows you to collect bids from more suppliers in less time, generating more competition that results in better pricing for your company.

Reduced sourcing cycle time

With collaborative workflow technologies, eSourcing tools reduce typical sourcing cycle times by more than 66% in an initial wave. A “wave” in sourcing is when different product categories are grouped together based on shared characteristics like similar suppliers or procurement priorities. Today’s eSourcing platforms help decrease procurement lead times by grouping information into waves, helping sourcing teams achieve economies of scale and streamline the procurement process.

Additionally, eSourcing yields additional incremental time savings in subsequent cycles. Because all the information from an initial sourcing effort is captured and easily accessible within the eSourcing platform, sourcing professionals can get up to speed quickly and start another wave in as little as 20% of the time needed to set up the first one.

Sustained savings

In a conventional sourcing setup, any savings you might initially capture in a new supplier contract erode rapidly over time. Why? Because contract compliance is challenging to monitor and implement using a manual approach. 

In addition, any specific information from the sourcing and contracting process with a particular supplier isn’t saved and organized in such a way that your team can reference it and reuse it for future activities. So trying to reproduce those initial cost savings (or any savings, for that matter) becomes problematic and labor-intensive.

On the other hand, eSourcing helps you maintain contracted savings by tracking outlay and compliance, collecting important information from the sourcing initiative, and helping your procurement team understand how to purchase using the contracts you’ve negotiated. This approach to eSourcing gives you more control over your bid requests and an audit trail to stay compliant.

Empowered sourcing team members

An eSourcing tool acts like a force multiplier that helps your sourcing team achieve much more than they could on their own. 

eSourcing’s robust features take on the grueling grunt work of the sourcing process, improving the speed and precision of finding, evaluating, monitoring and working with suppliers. As a result, your team can find more suppliers more quickly, conduct more RFx and eAuctions, and acquire more product for less money.

Beyond that, eSourcing’s transparency enhances your data analysis and supplier management efforts. Knowing what’s happening in every corner of your sourcing process, seeing the historical performance of your suppliers as well as your sourcing team, and being able to look at your sourcing function as a whole helps you improve your process and your relationships with suppliers. When your sourcing process and supplier collaboration are humming along smoothly, that translates into lower costs, higher productivity and happy sourcing staff.

Efficient tendering process

By speeding up the various steps in the tendering process (without sacrificing accuracy), an eSourcing platform shaves days to weeks off the time it would normally take to complete those tasks. So not only does your company receive the products and services it needs more quickly, your sourcing team can spend less time on tenders and more time on actions that provide greater strategic value to the business. 

More efficient tendering also decreases costs for both buyers and sellers. Faster tenders means less time employees must spend shepherding the process on both sides. And because the entire tender is done electronically, print and paper expenditures are a thing of the past.

More investment opportunities

All the time and money companies save by using eSourcing is something they can reinvest into introducing even more sourcing initiatives. When that happens, they compound eSourcing’s advantages — kinda like compound interest. 

Reinvesting into the sourcing process to achieve better efficiency has a substantial and direct impact on the overall bottom line. And since sourcing (and procurement) are integral in maintaining profits when sales decline, that improved efficiency from reinvestment is more important than ever.

Want to learn more about Esker eSourcing? Watch the demo.

eSourcing software features

To understand what an eSourcing platform includes, let’s take a closer look at the key characteristics of the Esker eSourcing solution as an example.

Advanced sourcing functionality

Perform all your tender activities in one simple-to-use platform:

• Run eAuctions, RFIs, RFPs and RFQs with scoring all through the eSourcing software
• Upload all documents related to your eAuction or RFX in one place and view them at a glance
• Assign weights to various evaluation criteria to ensure the most critical ones are given greater consideration when comparing bids 
• Leverage advanced pricing tables that allow for complex price calculations beyond simple unit costs
• Create advanced lots for more nuanced price comparisons and supplier evaluation

Esker eSourcing captures everything you would in a traditional spreadsheet plus more — transforming typically static, siloed information into centralized, organized, decision-ready data.

Integrated questionnaires

Collecting and compiling supplier information is arguably one of the most labor-intensive parts of sourcing. But not in eSourcing. Generative AI helps you create weighted questionnaires with different question types, tables and document uploads in seconds. You can send out the questionnaires and monitor their status directly from within Esker’s eSourcing solution. 

Once you receive completed questionnaires from potential suppliers, automatic scoring assigns points to each response based on pre-defined scoring rules you set up. It then generates a consolidated score for each supplier so you can compare apples to apples. Of course, Esker eSourcing also lets you manually review and score supplier responses if needed. 

Event cloning & templates

Why re-create the wheel? Easy-to-use templates make building events a breeze (not to mention they help everyone on your team maintain consistency across all events). Plus, once you build a sourcing event in Esker eSourcing, you can easily replicate part or all of it to use again, enabling you to launch new events that much more quickly. 

Easy adoption

Getting started with Esker eSourcing is super simple. Test out its functionality free of charge in our Sandpit (a controlled environment where you can play around with the software). If you like what you see, you can try it on demand by paying for and using it one sourcing event at a time. It’s a great way to demonstrate the value and ROI of eSourcing before investing more heavily.

Plus, Esker eSourcing seamlessly integrates with the rest of the Esker Source-to-Pay platform that includes Supplier Management, Contract Management, Procurement, Accounts Payable and Expense Management.

Excel import & export

Esker eSourcing is fully integrated with Excel. That means suppliers participating in sourcing events can submit their bids via spreadsheet. And you can export detailed summaries as Excel documents to create post-even summaries or import the results into other systems.

Centralized data

You can’t expect good visibility into your sourcing activities when documents, activities and communication are spread out across emails, chat logs, computer desktops and shared folders. An eSourcing tool like Esker’s houses all of your supplier information and tender activities in one place. All the data is fully auditable and can also be easily exported as a spreadsheet for reporting and post-event reviews.

Multi-stage RFQs

Complex sourcing situations that require multiple criteria be met or involve a large number of potential suppliers can be a lot easier with multi-stage requests for quotes (RFQs). This type of RFQ breaks down the process into various stages that progressively narrow down the list of potential suppliers by evaluating different aspects of their offerings at each stage of the quoting process.

With just a few clicks, you can set up a multi-stage RFQ that includes specific suppliers, bid deadlines for each new round and even the option for participants to see their ranking at the end of each round. Implementing an eSourcing software simplifies the collection and management of RFQs.

Multi-scoring

Whether you’re conducting an RFI, RFP or RFQ, you can run complex, weighted events using multi-scoring with ease in Esker’s eSourcing solution. Multi-scoring (also called weighted scoring) allows you to assess suppliers based on more than price alone, including quality, technical capabilities, customer service, financial stability and environmental impact. You can choose to automate the scoring process or allow users or groups to score supplier answers.

Start your eSourcing success story with Esker

Considering all the advantages of eSourcing, doesn’t it make sense to give it a try? Esker’s on-demand eSourcing solution means you can start small with one sourcing event at a time and scale up from there. It’s a low-risk way to experience the power of eSourcing for yourself and begin to build a more competitive sourcing function at your company.

And the transformation doesn’t have to stop with sourcing. Esker eSourcing is part of a complete Source-to-Pay and Order-to-Cash suite of solutions that brings the entire cash conversion cycle into one AI-powered, easy-to-use platform with across-the-board visibility.

Ready to get started with Esker’s eSourcing platform? Contact us now.