Strategic eSourcing: How to get it right

For Several years organizations who have deployed supply chain process have been throwing around the term "strategic eSourcing" connecting everything involved during the procurement process, in reality strategic eSourcing is looks at much bigger picture and should continuously improve and be evaluating your annual spend on each product category.

Strategic eSourcing is not only about getting cost effective suppliers, but to think in terms of quality, quantity produce and manage your buying risk to avoid delivery disruptions, one of the objective is to improve the value-to-price relationship (example: achieve cost reduction while maintaining or improving quality or service of a product) during all this activity centralizing of the sourcing data and make it available to procurement, quality and other concern teams, all this can be done easily on web base eSourcing & eNegotiation platforms which are fully cloud base and easy to use by Buyers & Suppliers, both.

Say for example, a company who is manufacturing Automotive component is looking to use Strategic eSourcing process to find Fasteners manufacturer who can supply one Million Custom designed Fasteners based on specification, the first step begins with eRFx process, discovering new potential suppliers, evaluate their production capability, sample evaluation and finally negotiate the pricing using eAuction process. Only suppliers who have been approved during the above technical qualification process should be considered to participate in eAuction process.

It is important that the Strategic eSourcing teams talks to the existing and newly discovered Supplier on day one and informs them about the qualification process the suppliers will have to go through, the ones who are reluctant to comply or are not keen to conduct business should be avoided immediately, we need serious suppliers not curious ones.

The same above Strategic eSourcing process was sued by one of our client based out of Troy, Michigan for sourcing 1 Million custom designed Fasteners, this allowed them to save considerable amount, around L1 saving 5.25%, L2 saving 4.85% & L3 saving of 4.25% additional compared to manual sourcing and negotiation process prior used, the Buyer had cleared during the eAuction process that the 1 Million Fasteners required will be split in ration of 50:35:15 between L1:L2:L3 suppliers. This split in quantity allowed the Buyer to maintain healthy relationship with Suppliers at the same time managed the risk associated with supply chain in fair and competitive manner, this was possible as the entire design engineering, sourcing and procurement team jointly created a eSourcing strategy and clear roadmap on objectives and deliveries required.