eSourcing and eAuctions
The set of procurement processes related to sourcing of products or services are generally referred to “Source-to-Contract” or “Source-to-Procure”. Many different definitions exist; most are based on the same industry standards. The figure below shows the Source-to-Contract process as we use it at S2P Professionals.
Note it is depicted as a continuous cycle that interacts with contract- and catalog management processes. Processes and tools for Direct spend categories often deviate from the standard and differ per sector.
The Business Case for eSourcing is excellent
Research shows that modern eSourcing technology can substantially contribute to improving sourcing performance.
Research shows that more spend is sourced in a shorter period of time with 6% higher savings.
Contact us to see how you can manage save more in less time.
Complex categories of goods and/or services that are key to the organization’s overall success are managed by category managers and sourced using formal RFI/RFP processes; aka “Strategic Sourcing”. Many organizations use online tools as part of their strategic sourcing efforts. Only Procurement Leaders utilize all of the features and benefits modern eSourcing platforms have to offer. In areas like eAuctions, supplier discovery and contract compliance our LEAN methods and proven process models improve performance measurably in weeks.
What eAuction type?
Selecting the best eAuction method for your event is key for success. The number of participants, new vs existing suppliers, pricing spread, type of goods/services and no of lots & line items are input for determining the eAuction model that is likely to deliver the best results.
Types of eAuctions used in procurement include: Reverse, English, Dutch, Japanese, Vickrey, Multi-Lot and First Price Sealed Bid eAuctions.
The obvious parameter to eAuction is price. Note that it can also be very effective to negotiate other parameters in the (future) supplier relationship under commercial competition.
Commodity Procurement / Trading
In manufacturing a significant part of direct spend consists of commodities. Purchasing commodities often requires a specific approach for sourcing, risk management and reporting. Processes deviate from the standard workflow in the Source-to-Contract graphic on this page depending on the type of commodity and trading method. The market for automating these processes is fragmented with many niche players focusing on a limited set of categories and business sectors.
Tactical indirect services and products are sourced using more simple and straightforward processes often referred to as “Operational Sourcing” or “Spot Buying”. It is a general term for the simple process of getting a quote and purchasing; nowadays often online. In most organizations operational sourcing is performed by both procurement- and other company staff; whereas strategic sourcing is often the exclusive domain of procurement.
Modern Source-2-Pay suites offer direct integration with major ecommerce platforms such as eBay and Alibaba. In many organisations at least part of spot buying is not visible or under management of procurement. Modern P2P suites bring this spend under management. It is exciting to see how ecommerce technology is driving innovation and change in sourcing by corporate organizations.
A vast number of eSourcing solutions and services are available to corporate organizations. Selecting the solution that is fit for your purpose is key for success. Ensuring your organization and processes are effectively working with your eSourcing solution is even more critical. S2P Professionals supports and has experience with leading eProcurement technologies including:
Trends & key topics
– implementation of SaaS Suites for Source-to-Pay by large corporate organizations
– increase of spend sourced using supplier networks and spot buying platforms
– increase in the use of eAuctions by corporate organizations
– interim management: procurement professionals for both direct- and indirect categories
– consulting & training
– managed sourcing events and eAuctions
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