Smart Procurement – Everything a Procurement Professional Should Know

The E-Sourcing Process

For this section, we are going to check each of the steps of the e sourcing process.

The process is as follows:

1. Request for Information

This is the part where your e sourcing program asks for information from the potential sellers/suppliers. Information is exchanged about the products, such as price, quality, number of stocks available, and others.

2. Tender Invitation

Once information from the supplier is received, the program then presents all data collated to the procurement/sourcing team for discussion. 

3. Evaluate Tender

This is where the sourcing team picks which of the potential suppliers can handle the actual project/procurement. The ones picked will then be sent an invitation for the upcoming auction bidding.

4. eAuction Bidding

This is the part of the process where the suppliers gather and try to win the bidding against the other suppliers.

And since we are talking about bidding, there seem to be three types that are consistently being used:

• • Reverse Auction – here, bidders compete to offer the lowest, acceptable price against a pre-set starting price. The auction ends when only one bidder is left with the lowest offered price.

• • Dutch Auction – The start of this auction has prices so low that it would not be acceptable to any bidders. At set intervals, the price is increased marginally for bidders to accept. This cycle continues until there is only one bidder who has accepted the new price. At this point, the auction is over for the other invited suppliers.

• • Japanese Auction – This is a reverse of the Dutch auction, where the buyer’s starting price is so high that all participants accept it. A time frame is set for each bidder to accept the price and once this time has passed, a new price is set, which is usually lower. Again, the bidders are given time to accept the new price. The cycle repeats until there is only one bidder left who has accepted the new lower price at which point the auction is closed.

5. Award Contract

Once the winner is declared after the bidding, the sourcing team then awards the supplier and discusses further the procurement/project.

Software For E-Sourcing And E-Procurement

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

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

The features of Ivalua’s 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 e sourcing 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.