Enterprises Are Using Online Esourcing Tools To Save Millions Every Year!
Enterprises all over the world are struggling with spend reduction and control of expenses.
While automation of procurement and accounts payable has been an area many organisations have already tried out, e-Sourcing is now being tried out first time by many enterprises.
Automation of spend management and accounts payable (A/P) has typically addressed areas like indirect spending, sourcing management, travel expense management, employee expenses, branch imprest management (petty cash), asset management, supplier contracts and e-Invoicing.
One of the key players in this space of automating procure-to-pay and expense management processes, offers Expenzing Sourcing which enterprises use for online reverse auctions with shortlisted suppliers for rate negotiations. The highlights of this solution are that the team conducting the reverse auction can specify the rules of the auction in an easy manner. For example, in some auctions you may want suppliers to see what the lowest bid is, while in others, you may want to simply show the “current rank” of the supplier but not give an indication of what the lowest bid at present is.
Reverse auctions have an interesting effect on the psychology of the supplier. Research has shown that suppliers feel under pressure to give lower rates than in a face-to-face negotiation meeting. In a face-to-face meeting, suppliers feel more in control of the situation since they can read body language cues, while in an online negotiation they are not able to, and hence prefer to offer a lower price than risk losing the deal.
Effective products for eSourcing allow for easy management of activities as diverse as spend analysis, auctions, RFX management, purchase requisitions, purchasing categories management, and building vendor relations, all within the same solution. With an end-to-end sourcing management solution, users have the option to interact with suppliers, get vital information to base their selection on pre-set criteria, engage suppliers with proposals, compare offerings and prices. Finally, users can zero in on the shortlisted suppliers and then negotiate and decide the final terms of procurement. Following this, the documentation is handled on the system and POs are raised through the platform.
Typically, a mature Sourcing solution helps you to manage each of these processes.
RFX indicates Request for Information as well as Request for Proposals. These are online documents which include subjective and objective information which helps shortlist and select suppliers.
An effective RFX management solution helps to make the process smooth and effective, right from collaborating with user groups and suppliers to supplier mapping and recording of supplier credentials.
The RFI format needs to be templatized- it should be easy to create, use and modify the templates to gather the right information from the suppliers. The structured approach helps an “apple-to-apple” comparison across suppliers.
Reverse auctions are used best for competitive and optimal pricing. Typically used by large organizations, solution providers like Expenzing have made it possible for organizations of all sizes to run their own Reverse Auctions.
Companies can now send supplier invitations, schedule auction events, open live online bids and analyse bids and actionable data.
Supplier empanelment is a process which is critical to any enterprise, and yet it is often manual, error prone, and can take over a month to empanel a new supplier! With statutory compliance around supplier empanelment being a key risk perceived by enterprises, it is essential that all relevant supplier information be captured before purchasing from any supplier.
Automated, online solutions provide a self-service portal that is used by suppliers to create their profiles and list themselves along with their products and services. Suppliers build up their own profiles and register with the sourcing organization. The system ensures that required mandatory documents are uploaded and submitted to ensure completeness of the registration and reduce risk to the sourcing organization as well as the vendor.
On completion of empanelment, the suppliers get registered with the company for the selected set of goods and services per their profile with pre-negotiated prices and contracts, ready for use by the business users.
Benefits of an Automated Sourcing Management Solution
Time taken to on-board and register suppliers is significantly reduced
Lean and effective sourcing and supplier management teams can manage sourcing online
Companies save by using pre-negotiated rates with the on-boarded suppliers
Complete audit trail is available for all entries made
Powerful workflows manage rules and templates and maintain flexibility without compromising on process
Cost and time are the two most important factors that are moving global enterprises towards automated sourcing solutions. With the most significant change in the Indian tax system in the form of GST and the soon to be implemented VAT in the GCC market like UAE etc., it is important to have sophisticated systems to manage and engage suppliers and ensure they are compliant with the laws and taxes of the land.
The Sourcing management software by Expenzing focuses on these critical aspects while providing companies a convenient and easy to use, end-to-end system which positively impacts profitability.
