Your Supply Chain is Inefficient: Here's the Solution

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Insights for ProfessionalsThe latest thought leadership for Management pros

Thursday, May 28, 2020

Find out why e-sourcing could be the answer to your supply chain headaches.

Article 3 Minutes

An effective supply chain is essential for any business, but it's often one of the least efficient parts of its operation.

Over the last few years, supply chains have become increasingly complex, with many moving parts and goods being sourced from all over the world. As the recent coronavirus disruption has shown, a delay in one part of the chain can quickly cause ripple effects throughout a business.

But while there may be little you can do to prepare for external events like the global pandemic or other natural disasters, there are steps you can take to adapt quickly to any changes, streamline your supply chain management and save money, and the answer lies in technology.

What is e-sourcing?

To make their supply chains more efficient, a growing number of companies are turning to e-sourcing. This uses web-based systems to collect and compare various suppliers to identify the most appropriate partner for key items.

Having a comprehensive range of information on your available options is vital in today's complex environment, where headline price is just one of the many factors to be considered. For example, sustainability is now a major driver behind many purchasing decisions, which in turn means businesses will need to know about the logistics practices of their suppliers, the steps they take at their manufacturing or warehousing facilities, and how exposed their operations are to the impact of climate change.

E-sourcing also improves transparency between buyers and suppliers. The use of an online portal allows providers to see all tender opportunities, including details such as deadlines, current status and expectations for the final outcome, which allows them to tailor their bids much more accurately.

How does the e-sourcing process work?

E-sourcing solutions simplify the process by creating a single location for a business to publish its request for quotations (RFQs), doing away with manual processes such as emails and spreadsheets. Suppliers are also able to fill out detailed documents regarding other aspects of their policies, practices and processes, and how the evaluation process will be managed.

Approved suppliers are then invited to take part in an e-auction, where the potential sellers are the bidders. These are intended to stimulate competition among suppliers in order to get the best possible deal for the buyer, and give organizations access to a much wider pool of options than traditional procurement methods.

The advantages of using e-sourcing

One of the biggest advantages of this method is that it can greatly reduce the amount of time and effort needed to manage your supply chain. Instead of manual tendering processes that require you to engage directly with each prospective supplier, much of the work is automated. This also means negotiations can be made much quicker, and final contracts can be easily drawn up directly from the bids.

There’s also great potential to cut costs. As suppliers are competing directly against each other, they're incentivized to offer you a better deal. For example, the UK government was able to reduce the cost of sourcing new mobile phones by almost 60%.

Finally, the improved transparency and supplier relations offered by e-sourcing enables companies to better ensure they're meeting compliance requirements - both for their own internal policies and wider industry or government rules. This in turn can greatly reduce the level of risk businesses are exposed to, plus, as all the information is in one place, it makes auditing much simpler.   

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