Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

eSourcing — Definition, Comparison, Process + Examples

What is eSourcing?

eSourcing, also known as electronic sourcing, is a digital approach to identifying and selecting suitable suppliers to meet a company’s procurement needs. Its main objective is the same as traditional sourcing: finding the best suppliers for materials or services. The key difference lies in the use of specialized digital tools to manage the process.

Unlike traditional sourcing, which can take days or even months, eSourcing significantly reduces the time required to select suppliers. The software uses predefined algorithms to compare suppliers and their offers quickly. As a result, procurement teams can identify the most suitable suppliers within a very short time.

7 Steps of eSourcing Process

Step 1 – eSourcing Methodology

Before we start discussing how an eSourcing methodology is applied, it is important to first differentiate it from an eSourcing strategy and an eSourcing policy. The eSourcing methodology is the structured, digital framework for conducting sourcing activities. Simply put, it is the roadmap that guides how sourcing is executed using electronic tools and platforms.

The eSourcing strategy differs in that it defines the specific digital approaches and tactics, such as online RFx events, eAuctions, or supplier portals, that are used within the methodology to achieve sourcing objectives. On the other hand, the eSourcing policy serves as the overarching set of rules and guidelines that govern how electronic sourcing activities should be carried out, ensuring compliance with internal standards, data security requirements, and external regulations.

Now that we have clarified the differences between these three concepts, it is time to explain how the eSourcing methodology is conducted. The first step in establishing an eSourcing methodology is to clearly define the sourcing assignment in a digital context. This includes specifying sourcing objectives, categories, timelines, and the eSourcing tools or platforms that will be used, ensuring all participants understand the scope and purpose of the process.

In addition, securing management commitment and stakeholder support is essential, as successful eSourcing initiatives often require changes in processes, increased transparency, and adoption of new technologies.

Once the eSourcing objectives are clearly defined and management support is secured, the next step is to form a cross-functional eSourcing team. This team is responsible for managing the digital sourcing process, engaging suppliers through electronic platforms, and ensuring that sourcing goals are achieved efficiently and transparently.

Step 2 – eSourcing Market Research

The assignment to source goods or services through eSourcing can originate from top management, business units, or procurement managers themselves. This will be discussed further in Step 3, but before initiating any eSourcing activity, there must first be a clearly identified need for the required goods or services.

Therefore, it is the procurement manager’s responsibility to identify this need and to conduct market research using digital tools and data sources that support eSourcing activities.

eSourcing market research enables the procurement manager to determine the exact specifications, quantities, and scope of the required goods or services while leveraging online databases, supplier platforms, and market intelligence tools.

For example, an IT company plans to onboard 40 new employees but currently has only 20 computers available. Through eSourcing market research, the procurement manager can analyze online catalogs, compare suppliers digitally, and assess market availability to determine how many additional computers are required and under what conditions.

The eSourcing market research should include reliable data and insights that allow the procurement manager to fully understand the digital supplier landscape before launching RFx events or eAuctions.

Some of the key questions a procurement manager should address during eSourcing market research include the following:

• Does the company already have an approved supplier available on the eSourcing platform?
• Are there alternative or backup suppliers registered digitally in case the primary supplier is unavailable?
• Is there an allocated budget that aligns with current online market prices?
• Is there a supply shortage reflected in digital marketplaces or supplier platforms?
• If yes, how will this impact pricing and budget allocation in the eSourcing process?
• Are there viable digital alternatives if the required supply is not immediately available?

In addition, eSourcing market research should focus on identifying and onboarding new potential suppliers through electronic channels. Depending on the organization, sourcing specialists may support the procurement manager by using supplier databases, online marketplaces, and benchmarking tools.

Finally, this market research phase provides the critical input needed for the next steps in the eSourcing process. Key information such as digital price benchmarks, supplier capabilities, lead times, and product or service quality should be clearly documented and used to support data-driven sourcing decisions.

Step 3 – eSourcing Request for Information (RFI)

The third step in the eSourcing process involves requesting information not only from potential suppliers, but also from internal stakeholders such as department heads or branch managers who require the goods or services.

Before initiating any purchasing activity through an eSourcing platform, it is essential to determine the exact requirements. This includes information such as the required quantities, current inventory levels, and indicative pricing, all of which can be collected efficiently through digital RFI tools.

At this stage, the procurement manager should address the following key questions:

• Which department or branch within the organization requires the goods or services?
• What quantity is required?
• For what duration should the supply cover the organization’s needs (e.g., one month, six months, one year)?
• Does the department already work with an approved or preferred supplier within the eSourcing system?
• Is there an opportunity to identify and evaluate new suppliers through the eSourcing platform?
• What budget has been allocated for this requirement?
• Are there specific quality standards, technical specifications, or other product or service requirements?

Once sufficient information has been gathered, a formal purchase request is submitted electronically to senior management for budget approval. Management then evaluates the request and determines the approved budget based on the insights generated from the initial market research and the RFI data.

In the context of eSourcing, the RFI is a structured, digital process used to collect standardized information from internal stakeholders, sourcing specialists, and multiple suppliers simultaneously.

Based on practical experience in sourcing roles, RFIs offer several advantages in an eSourcing environment. One of the most significant benefits is the ability to distribute identical information requests to multiple suppliers at the same time, ensuring consistency and efficiency.

An alternative approach, engaging with only one supplier through informal discussions, can lead to limited market visibility and biased decision-making. By using eSourcing RFIs, procurement teams expand their market perspective, compare a broader range of suppliers, and gain access to more competitive pricing and innovative solutions.

Step 4 – eSourcing Request for Quotation (RFQ)

The RFQ is a key step in the eSourcing process in which suppliers are asked to submit their initial pricing and commercial terms through a digital platform. Instead of traditional letters or emails, RFQs in eSourcing are created, distributed, and managed electronically, allowing for faster communication and greater transparency.

At this stage, the procurement manager sends a standardized RFQ to selected suppliers via the eSourcing system, and suppliers respond by submitting their quotations directly within the platform. This ensures consistency in responses and simplifies comparison across multiple suppliers.

To obtain meaningful and comparable quotations, the procurement manager should request information such as the following:

• Does the supplier have warehouse facilities for the requested goods?
• Where are the goods currently located?
• If the goods are supplied internationally, what is the expected delivery lead time?
• If the goods are supplied locally, what is the delivery lead time?
• What is the initial price per unit or per service?
• Is there currently a shortage or limited availability of the requested goods?

Once the RFQ responses are received through the eSourcing platform, the procurement manager can organize a structured evaluation or review meeting. During this phase, quotations are analyzed and compared using digital tools, dashboards, or automated comparison features available in the eSourcing system.

Each quotation is assessed in detail, with particular attention paid to pricing, delivery times, and availability. The initial market research conducted earlier provides valuable benchmarks, enabling the procurement manager to evaluate whether the quoted prices align with current market levels.

Once again, the insights gained from market research play a critical role at this stage. They provide the procurement manager with a strong negotiating position and a data-driven foundation for progressing to the next steps in the eSourcing process, such as negotiations or eAuctions.

Step 5 – eSourcing Negotiation Phase

The negotiation phase is often considered one of the most challenging, yet most strategic, stages of the eSourcing process. At this point, the procurement manager aims to secure the required goods or services under the most favorable commercial and contractual conditions by leveraging digital negotiation tools.

In an eSourcing environment, negotiations may take place through online negotiation modules, messaging features within the platform, or structured eAuctions. These digital formats enable real-time interaction, transparent bidding, and data-driven decision-making.

Negotiations may also involve offering concessions to suppliers, such as longer contract durations, higher volumes, or future business opportunities, in exchange for better pricing or improved service levels.

During the eSourcing negotiation phase, the procurement manager should carefully consider the following questions:

• Is there sufficient supply available to fulfill the required order volume?
• Are there volume-based discounts, early payment discounts, or other digital incentives available?
• Who are the designated contact persons on both the supplier’s side and within the organization?

This phase is where the competencies of a professional procurement manager truly come to the forefront. Successfully navigating digital negotiations demonstrates strong analytical skills, commercial awareness, and the ability to use eSourcing tools effectively to create value.

Throughout the negotiation phase, it is essential to rely on the data collected during earlier steps, particularly market research and RFQ results. Having accurate, up-to-date information readily available within the eSourcing platform strengthens the procurement manager’s position and supports confident, well-informed negotiation decisions.

Step 6 – eSourcing Contracting Phase

The contracting phase in the eSourcing process focuses on managing and formalizing all contractual and commercial documentation in a digital environment. At this stage, the procurement manager ensures that contracts, invoices, delivery notes, and other relevant documents are properly created, signed, and stored electronically.

In an eSourcing context, contracts are often generated, negotiated, and approved through integrated contract management or e-signature tools. This enables faster cycle times, improved compliance, and greater transparency throughout the contracting process.

To ensure a smooth and effective contracting phase, the procurement manager should review the following key points:

• Were the goods or services delivered in accordance with the agreed specifications and in good condition?
• Were there any delivery delays compared to the contractually agreed timelines?
• If delays occurred, what corrective actions can the supplier implement to prevent future issues?
• Has payment been processed and settled according to the agreed terms?

Most organizations rely on eSourcing or procurement software to centrally store all contracts, invoices, receipts, and related documentation. Digital storage reduces the risk of document loss, improves accessibility, and supports audit and compliance requirements. In less digitized organizations, the procurement manager may still be responsible for maintaining physical records, although this approach is increasingly being replaced by electronic systems.

The eSourcing contracting phase also plays a critical role in future sourcing activities. When additional purchases are required from the same supplier, historical contracts, performance records, and commercial terms stored in the system can be reused as valuable inputs for future market research, negotiations, and sourcing decisions.

Step 7 – eSourcing Supplier Relationship Management (SRM)

The final step in the eSourcing process is SRM. After completing all prior eSourcing stages, the focus shifts to assessing, managing, and nurturing relationships not only with the contracted suppliers but also with those who were not awarded the contract.

Maintaining strong relationships with non-contracted suppliers is crucial, as they may serve as alternative sources in future sourcing initiatives or eAuctions. Having these relationships ensures flexibility and competitive leverage in subsequent eSourcing activities.

In this phase, active collaboration with contracted suppliers is essential to ensure they meet their commitments, deliver goods or services as agreed, and maintain high performance standards. Tools within eSourcing platforms often allow tracking supplier performance, automating feedback collection, and monitoring compliance digitally.

Regular communication, performance evaluations, and structured feedback exchanges help address issues promptly, identify areas for improvement, and support continuous supplier development. Digital dashboards and SRM modules facilitate these activities, providing visibility and actionable insights.

Moreover, eSourcing SRM emphasizes building strong, transparent partnerships based on trust, shared objectives, and long-term collaboration. By investing in these relationships and leveraging digital tools to manage supplier performance and engagement, organizations can strengthen their supply chain resilience and secure successful, sustainable partnerships with their suppliers.

The 5 Key Differences Between eSourcing and E-Procurement

3 Real‑Life Examples of eSourcing 

1. WOQOD – Using eSourcing Reverse Auctions to Save Cost and Time

In Qatar, WOQOD, a downstream oil and gas company, adopted an eSourcing platform (Market Dojo) alongside its existing ERP system to bring transparency and efficiency to its supplier sourcing process. By implementing digital reverse auctions, the procurement team was able to invite suppliers to a structured bidding event, centralise negotiations, and evaluate competitive pricing more quickly than traditional methods. The introduction of eSourcing also helped organise documentation and contracts in one online system, significantly reducing administrative burden.

The benefits were notable: the team could analyse sourcing results in minutes rather than hours or days, with clear visibility over spend on regularly purchased items like lubricants and consumables. This streamlined approach also helped identify new reliable suppliers and achieve cost savings that exceeded the team’s expectations, demonstrating the value of transparent, competitive digital sourcing in large organisations.

2. Zebra Technologies – Streamlining Strategic Sourcing with eSourcing Tools

Zebra Technologies integrated an eSourcing solution (Workday Strategic Sourcing) to transform its strategic sourcing processes, especially for RFx creation and supplier collaboration. Previously, sourcing was managed through a mix of spreadsheets and standalone tools, causing delays and inefficiencies. With the eSourcing platform, Zebra consolidated RFx events, supplier responses, and negotiations into one digital workspace.

This implementation increased transparency and ensured all suppliers could participate in RFPs on time, standardising the sourcing workflow across the company. Post‑implementation, Zebra’s procurement teams could forecast sourcing events more reliably, prioritise work based on real data, and collaborate effectively with internal stakeholders and external suppliers. Overall, the eSourcing adoption accelerated strategic sourcing cycles and improved decision‑making across the enterprise.

3. Multichoice IT Category – Transforming RFP Processes with eSourcing

Multichoice, a major media and broadcasting company, leveraged an eSourcing platform (Market Dojo) to overhaul its RFP process for its IT category. Before adopting eSourcing, the company’s RFP cycle typically took 4 to 6 months due to dispersed documents and manual evaluation. By moving to a digital eSourcing platform, Multichoice reduced this timeline dramatically to around 5 weeks, centralising all RFP documents into one manageable online system.

The implementation also enabled better archiving and retrieval of sourcing documents, improving compliance and institutional knowledge retention. In addition to speeding up the sourcing process, eSourcing made it easier for procurement teams to compare supplier responses, collaborate with stakeholders, and ensure transparency throughout the selection cycle, demonstrating how digital sourcing tools can drive agility in competitive and fast‑moving categories.

Top 10 Software for eSourcing

As mentioned earlier, eSourcing is sourcing done electronically through the use of software, since it saves time and money. As such, we’ve also decided to bring out some of the best software tools available for eSourcing:

1. Zycus

Zycus can help buyers reduce costs by 15-45%. Its custom-built RFX templates save time for buyers by speeding up the process of creating and sending RFXs to suppliers.   Zycus also helps buyers plan for the future with what-if scenarios.  This is important for supplier analysis as it is not based on opinions, which can be biased.

2. GEP Smart

GEP Smart, which is cloud-based, easily provides real-time data on spending habits by analyzing all the available information. It also offers various RFx tools, with an interface that is simple to use while providing in-depth functionality.

3. Ivalua

Ivalua’s features in project management software are known as one of the best in the industry.  Multiple users can input their requirements during the initial phase of RFI, which ensures no details or requirements are forgotten. Ivalua can also be configured to support existing workflows.

4. Coupa

Coupa offers both eSourcing and e-procurement tools to help you from your initial spend analysis to contract management. The spend analysis feature has built-in report templates, but users can also create custom reports easily with its user-friendly interface.

5. SAP Ariba

SAP Ariba is a globally recognized eSourcing and strategic procurement platform that connects businesses with a large supplier network. Its features include automated RFx management, advanced bid analysis, and AI-powered assistance to accelerate procurement processes. Integration with SAP ERP systems enhances efficiency and reduces costs across procurement, finance, and operational functions. Ariba also facilitates supplier discovery and collaboration through its Business Network platform.

6. Jaggaer

Jaggaer offers a comprehensive Source-to-Pay suite with strong tools for strategic sourcing and category management. AI-driven analytics help perform detailed cost and supplier performance evaluations for informed decision-making. The platform enables contract automation, risk management, and compliance monitoring. Jaggaer is widely used in complex industries such as high-tech manufacturing, healthcare, and the public sector, where detailed sourcing processes are critical.

7. Oracle Procurement Cloud

Oracle Procurement Cloud integrates eSourcing features directly with ERP systems, enabling centralized management of procurement, supplier qualification, and contract lifecycle. It automates key processes to reduce manual errors and speed up procurement decisions. The platform provides strong compliance and cost-control support through real-time analytics and reporting. Oracle Procurement Cloud is designed for large organizations with complex procurement needs and scalable requirements.

8. Basware

Basware primarily operates as an AP automation and e-invoicing platform, but also includes e-procurement and eSourcing tools for transparent spend management. It centralizes suppliers and cost data, helping companies make strategic decisions and reduce maverick spending. Basware enables risk identification in the supply chain through advanced spend and supplier performance visibility. It also ensures internal policy compliance and streamlines procurement workflows for greater efficiency.

9. Proactis

Proactis provides modular eSourcing and spend management solutions that can be tailored to mid-size and large organizations. It focuses on cost control, contract compliance, and procurement process automation through P2P integration. Its features allow teams to monitor supplier performance, run RFx events, and analyze costs while maintaining internal process oversight. Proactis is often used in the public sector and organizations requiring high transparency and standardization in procurement procedures.

10. Esker eSourcing

Esker eSourcing combines traditional RFx tools with powerful e-auction features to help companies manage procurement events and negotiation rounds more efficiently. It supports simple and complex tenders, bid tracking, and supplier evaluation through a centralized platform. Integrated reporting and analytics help teams quickly identify the best offers and optimize procurement costs. Esker also enhances supplier collaboration through automated data exchange and shared sourcing workflows.

Conclusion

eSourcing has transformed traditional procurement by digitizing supplier selection, market research, and negotiation processes. By leveraging specialized software tools, organizations can save time, reduce costs, and gain a more transparent view of the supplier landscape. The structured methodology ensures that sourcing decisions are data-driven and aligned with strategic objectives.

The key difference between eSourcing and e-procurement lies in their focus: eSourcing emphasizes strategic supplier analysis and selection, while e-procurement centers on transactional efficiency and order fulfillment. Digital tools streamline RFx events, negotiations, contracting, and supplier relationship management, enabling procurement teams to operate with greater speed and accuracy. Real-life implementations show that organizations can achieve significant cost savings, faster sourcing cycles, and improved supplier collaboration through eSourcing platforms.

Ultimately, eSourcing supports long-term strategic goals by fostering transparent, competitive, and sustainable supplier relationships. It allows organizations to adapt quickly to market changes and leverage digital insights for informed decision-making. As procurement continues to evolve, integrating eSourcing with other digital systems will remain a critical factor in achieving operational excellence and supply chain resilience.