Basic eSourcing or Sourcing Optimization?

Kerrie Kennedy

January 3, 2024

The difference between basic eSourcing tools and advanced sourcing optimization is often a topic of discussion. It's a shift that mirrors moving from a traditional bicycle to a modern car – each has its place, but they serve different purposes, especially when it comes to the needs of large-scale businesses.

Traditional eSourcing tools work well for smaller businesses with limited spending needs. Like bicycles, they are great for a leisurely ride in the park, but not so much for a high-speed motorway.

These tools are adept at organizing data and providing simple feedback, but they lack the 'engine' and the power to drive through richer data collection, nuanced bid communication, and complex scenario analysis needed to remain competitive in today's complex supply chain market.

Traditional eSourcing tools are adept at organizing data and providing simple feedback, but they lack the 'engine' and the power to drive through richer data collection

Ultimately, legacy eSourcing solutions fall short in modern sourcing events, as seen in the case of Samsung.

By replacing Excel with Keelvar's solutions, Samsung achieved significant time savings and enhanced process management.

This is where sourcing optimization comes into its own. It's like jumping into a car with a powerful engine. It allows for the collection of rich data and builds a mathematical model that handles complex, conditional bids. It's not just about speed; it's about the capability to handle journeys that basic eSourcing tools simply can't.

Which sourcing technology? Basic eSourcing or Sourcing Optimization?

Here are some key differences between the two:

  • Workflow vs. rich data: eSourcing is great for managing workflow, but it doesn't capture structured data in a way that's easily understandable and actionable. Sourcing optimization, on the other hand, organizes data into structured tables, making comparisons and decision-making more straightforward and insightful.
  • Limited Control vs. nuanced decision making: eSourcing tools often can't handle the complexities of economies of scale or cross-product discounts, whereas sourcing optimization can model various scenarios, providing a comprehensive view of the trade-offs involved.
  • Simple logic vs. complex analysis: With eSourcing, you're limited to the basic data and scenarios you can manually handle. Sourcing optimization, in contrast, allows for deeper insights and faster evaluation of large bid events.
  • The ability for competitive and innovative bidding: The most significant advantage of sourcing optimization is the competitive and innovative offers it elicits from bidders. Suppliers, knowing they're up against similarly armed competitors, are more likely to bid aggressively, offering more attractive packages. This results in more efficient operations and win-win outcomes.

Mars's experience, highlighted in their case study, shows how sourcing optimization leads to substantial savings in complex events, going beyond what basic eSourcing tools offer.

Is sourcing optimization worth the extra investment?

So, returning to the initial question: why does sourcing optimization cost more? It's all about the total cost of ownership (TCO).

The hidden costs of eSourcing include missed opportunities for savings, insightful scenario analysis, and intelligent feedback. Sourcing optimization, with its comprehensive capabilities, offers a high return on investment, especially for large companies with significant spend under management.

Keelvar's user-friendly Sourcing Optimizer empowers sourcing teams to efficiently launch strategic RFPs, encompassing a broad spectrum of price and non-price bid information, including volume discounts and ESG requirements. The platform automatically validates bid data, and advanced algorithms within Keelvar's optimization engine process all business requirements.

Our solution generates recommendations and various scenarios for collaborative discussion with stakeholders, leading to further refinements and the final optimized outcome. Managed under the governance of the sourcing team in partnership with the business, this approach not only ensures greater value and cost savings but also enhances supplier engagement, all achieved with considerably less effort than traditional manual tender processes.

For large companies managing substantial spend, sourcing optimization isn't just an option; it's a necessity

Additionally, the expertise behind sourcing optimization solutions like Keelvar is unparalleled. Our team is a blend of AI and optimization PhDs, seasoned engineers, and customer-focused professionals, all dedicated to making this powerful tool user-friendly and effective.

In summary, for large companies managing substantial spend, sourcing optimization isn't just an option; it's a necessity. It's about choosing the right vehicle for your journey – and in the world of complex, large-scale procurement, the most powerful engine is sourcing optimization.

Don’t let your business get left behind in the rapidly evolving market of 2024. Speak to our experts to discover how you can unlock significant savings, increase efficiency, and gain a competitive edge.

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