Types of eSourcing: eSourcing Process & Methods

Fundamental to the success of a strong eSourcing event is identifying which type of eSourcing strategy is going to be more appropriate for your objectives. 

An eSourcing software solution is more than a single solution to your tender activities, and actually encompasses a range of different options for arranging supplier services and managing tenders and contracts. In this eSourcing resource, we’ll look at the eSourcing process and the available types of eSourcing strategies and methods. 

Types of eSourcing

If we break down the kinds of eSourcing events regularly conducted by buyers seeking to optimise their procurement process and onboard new suppliers, there are four primary types of eSourcing events your business can take advantage of: 

Requests for Information

A Request for Information (RFI) is an eSourcing process that helps you understand the viability of supplier candidates for a contract. You can request details pertaining to things like certifications, financial standing, health and safety policy and so on. Such information allows you to identify businesses suitable for your jobs. 

Requests for Proposals

Requests for Proposals (RFPs) are used in eSourcing activities to determine the quality of an opportunity. As a buyer, you outline what you are looking for and the supplier formulates a proposal of delivery based on your requirements. Proposals can cover all manner of delivery elements, from the workforce and teams involved to timelines and deadlines. They also typically include pricing information.

Requests for Quotations

Requests for Quotations (RFQs) are a type of eSourcing event whereby you submit requests to suppliers for quotes on your available contract, based on a set of criteria outlined as part of your RFQ. Suppliers can review the contract opportunity, consider what you’re looking to purchase, and then provide you with a quote for the request. Through eSourcing platforms, you can send out multiple RFQs to multiple suppliers, helping you understand your market, what’s available and which business you want to work with.

Market Dojo allows for a multi-stage RFQ process, which enables more rounds of RFQ bidding. Once all your quotation bids are in, you can send out further rounds of RFQs, which allow suppliers to compare previous bids from competitors and update their quotes to offer better pricing.

Reverse eAuctions

eAuctions place different suppliers against each other in an environment that allows them to place bids for a contract and compete to win the work. 

Weighted Tenders

A weighted tender is one where the final decision is made up of price and non-price criteria. A questionnaire score and price score can be combined for an overall score for an RFQ or auction. Or you can look at transforming non-price factors, such as payment days, to a price element using advanced lot functionality and then keep the tender based solely on price.

Which is the Best Type of eSourcing?

Many businesses that run questionnaires and quotations will take this information and use it to build an eAuction, but this is not mandatory. 

You can use information requests, proposals or quotes to make your final decisions and rank your bids without going to auction, and plenty of buyers do. You can also use multiple types of eSourcing events to secure suppliers. For example, you can request quotes after running RFIs. Multi-stage RFQs can be a powerful way of encouraging suppliers to offer lower and lower tender bids until you reach an optimised price point. Weighted tenders can be used when non-price criteria need to be taken into account.

Among the available options, eAuctions stand out as a powerful negotiation tool. They allow suppliers to adjust their bids in response to competition, as eAuctions often provide feedback on submitted bids. For more help on choosing which eAuction is best for your tender, see our handy infographic.

How to Get the Most from Your eSourcing Process

Optimisation of your procurement strategy requires understanding the types of eSourcing events available and identifying which eSourcing process is going to be the most productive and beneficial for your tender.

eAuctions can find the market price easily and provide more options, but are not your only way. Requests for quotes may be a better choice if you have a set budget and you’re eager to work with specific suppliers within an established contact pool and your time is limited.

The best way to get more from your eSourcing process is to define your goals and expectations and examine your category and supplier base to determine which type of eSourcing will work for you.  

Consider the following when thinking about how to run your eSourcing process.

What is the most important factor for making your decision? Is it budget, quality control, risk prevention, long-term strategic partnership building or any other type of requirement. With that in mind, how can you use the eSourcing processes outlined above to get the most of your procurement efforts? 

For example, if your highest priority is risk prevention, then RFPs and RFIs may be essential for determining the value and suitability of your suppliers. However, if your requests yield a number of candidates of similar quality, you may then want to consider an eAuction process to take advantage of the ability to standardise the specification. Although if there may be greater challenges with stakeholders or supplier liquidity, then it may be a multi stage RFQ or a face to face chat to negotiate. 

Our bespoke eSourcing software allows your business to develop a range of eSourcing processes, including RFQs, RFIs, RFPs and eAuctions. Get started today with our on-demand tools that offer unbeatable flexibility and easy to use features. Book a tailored demo or explore for yourself using the Market Dojo Sandpit.