What is eSourcing Software?
eSourcing software is a subset of the broader Procurement software market designed to streamline the process of evaluating, selecting and collaborating with current and potential suppliers, thus enabling buyers to select the optimal providers of goods and/or services needed to reach their business goals. The technology is a collection of digital workflow tools that can help speed up and simplify a company's strategic sourcing activities, enhance collaboration, and save valuable time for sourcing teams by removing some tedious manual steps in favor of automating elements of the supplier evaluation process.
eSourcing software can help businesses with supply chains to gather and manage their flow of data throughout the entire sourcing process and to maintain electronic records of important information, such as:
- Who gets what documents?
- When do they get them?
- How are they collected?
- And the provision of speedy bidder feedback.
By enabling strategic sourcing teams to collect and share information on their suppliers on a centralized platform – such as available products, services, pricing and custom-set criteria – sourcing professionals can make more informed purchase decisions while also seeing a reduction in the time it takes to award a contract.
Who is eSourcing Software suitable for?
At its heart, traditional sourcing and electronic sourcing (eSourcing) are very similar as in both cases, procurement and strategic sourcing teams want to find the best product/solution within an optimal pool of suppliers with the best price and terms. However, the critical difference between Sourcing and eSourcing is the tools used.
In traditional sourcing, teams are often limited to emails, phone calls and excel spreadsheets. These tools limit collaboration, transparency, scale and automation.
eSourcing software is best suited to procurement and strategic sourcing teams that often manage multiple, complex projects. These sourcing professionals may be seeking to simplify the tendering process and strengthen their supplier network through digital means to augment their sourcing strategy from negotiations to contract management with speed, flexibility, and less potential for error.
Many eSourcing software solutions have strong integration capabilities and can complement a business's technology infrastructure, including ERP systems, transportation management systems (TMS), and legacy software systems already in place.
For example, as an SAP Application Extension Partner, Keelvar's eSourcing software solution, Sourcing Optimizer, directly integrates with SAP Ariba Sourcing via an API. As a result, when more advanced features for collecting flexible supplier information and bids, cost modeling, and award scenario analysis are required, data can flow seamlessly from SAP Ariba Sourcing to Keelvar through this integration.
The right sourcing software technology should meet the demands of both small and large sourcing events. It should help team members arrive more easily at a timely, high-quality supplier decision that optimizes cost compression and business risk in a highly competitive marketplace.
However, eSourcing software may not be feasible for a business if budgetary constraints are an issue, there is significant sourcing team pushback against adopting new innovative technology or if the business's sourcing event size, complexity, or frequency don't necessitate the investment in an eSourcing tool.
Certain eSourcing software solutions – such as those backed by optimization – have been shown to have an impressive ROI after the first event, so it is important to research, compare and discuss the potential benefits that leveraging sourcing software can unlock with team members and stakeholders.
How does eSourcing Software Work?
When the sourcing process takes place using eSourcing software, different proposals, quotes, and bids from suppliers can be analyzed via an online platform, enabling the buyer to decide what to purchase from which vendors and at what price points.
When a need for sourcing is identified, an organization's current and new suppliers may be invited to an online tendering event. Depending on their business's goals, procurement teams will have different strategies for deciding which suppliers to use, when and where. A supplier's suitability is typically determined through a Request for Information (RFI) questionnaire, which outlines certain criteria about the supplier's capabilities that must be met before formally using their products or services.
Additional information may be requested through a Request for Proposal (RFP), and a narrowed-down list of suppliers that meet these criteria may then be invited to submit prices via a Request for Quotation (RFQ) document.
Traditionally this information would have resided in Word or Excel documents, leaving it much more open to potential errors. But sourcing software streamlines the process by enabling the documentation to be uploaded and submitted via an esourcing platform to be analyzed, scored and evaluated by the buyer.
Why Has eSourcing Software Grown in Importance?
With procurement being tested by emerging supply chain challenges, digital transformation has become a top priority to help navigate the disruption and keep businesses moving forward. In recent years, Sourcing has also moved far beyond simply cost reduction, with more sophisticated means of tapping into supplier innovation increasingly being sought after.
Sourcing is becoming more complicated as:
- Different spend categories have different needs
- Disruptions and unpredictability require greater agility and speed
- Teams are flat or shrinking, not growing
- Skill sets vary (expertise shortages)
All of this happens while sourcing leaders are struggling to consider sustainability targets and Corporate Social Responsibility objectives that are more frequently included in stakeholder ambitions for their businesses.
eSourcing software can help better manage these and other challenges, including supplier capacity limitations, freight volatility, and supply chain pinch points, by enabling teams to conduct robust analytics on large volumes of data. But for sourcing functions still relying on Excel spreadsheets and email to manage their events, a very high level of manual effort is required, from gathering bid responses all the way through to making the final award decision.
An additional bonus for organizations looking to attract young talent into their procurement functions is that sourcing software can be a helpful arsenal in their toolkit to attract a more tech-orientated, digitally native generation of sourcing professionals.
Key Features of eSourcing Software
eSourcing software should satisfy the critical needs of the business and enable the running and management of sourcing events. This can include:
- Easy creation of RFPs for a variety of spend categories
- Provide a competitive bidding environment for sourcing events
- Data validation rules on bid submissions to ensure "clean data" and coherent bids
- Cost models that can be configured to reflect business preferences
- Scenario analysis tool to run "what if" options
- Reporting and central archiving/tracking
Key Benefits of eSourcing Software
Some of the key benefits of using eSourcing software can include:
- Template-based RFPs that reduce the amount of time to initiate a sourcing process
- Better sourcing outcomes and award decisions
- Greater compliance and risk reduction
- Better stakeholder visibility of processes
- Improved transparency and relationships between buyers and suppliers
- Fully leveraged supplier capabilities
- Centralized and auditable repository of information, messaging and award decisions
Keelvar and eSourcing Software
Critical to improving sourcing outcomes is selecting the right esourcing software to support business requirements and goals. Keelvar is a software-as-as-service vendor (SaaS), and our advanced Sourcing Optimization sourcing platform, Sourcing Optimizer, is perfect for teams looking to upgrade from basic sourcing software or first-generation optimization tools. Our solution can handle all spend categories with benefits that include:
- Cost Savings average 15-22% as more spend categories are optimized
- Operational Time Savings averaging 50% by supporting process excellence
- Sourcing Risk Reduction by improving supplier award decision quality
Keelvar's eSourcing tool can enable your sourcing team to go beyond simplistic supplier award decision-making driven solely by a lowest-cost model. With Sourcing Optimizer, buyers can collect a wide range of price and non-price bid information from suppliers and then analyze multiple awarding scenarios based on those criteria and other constraints and preferences.
The solution uses easy automation to improve the quality and efficiency of Sourcing Optimization events, with rapid event design driven by AI, bid data validation, auto-piloting, and more.
As outlined above, eSourcing software represents a powerful application for those looking to upgrade their sourcing efforts, but not all eSourcing software is created equal. For more information on making Keelvar's sourcing software solutions work for you, get in touch with our team for a chat or a custom demo.