How much ROI can esourcing really bring?

How Much ROI Can eSourcing Really Bring?

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In recent years, businesses have become more focused on increasing efficiency and reducing tender timelines while ensuring maximum cost-effectiveness. This is where eSourcing plays a vital role, encouraging more and more individuals to switch to this method and away from email.

Whether you are a big corporation looking to streamline tender processes or a retailer handling complicated line item quotations, eSourcing has managed to make everyone’s life easier. The relevant vendors and suppliers are just a click away. 

Source: Freepik

In the past, negotiating the price and the terms of an agreement was a time-consuming process. Today, the job isn’t so simple which is why eSourcing is an extremely important tool. It enables procurement and sales teams to accelerate and streamline the full life-cycle of the sourcing process. 

In this article, we’ll take a look at how eSourcing helps companies improve their return-on-investment (ROI).

1. Better Supplier Management

According to a survey, 53% of the ROI made with eSourcing is due to reduced costs with suppliers. There are numerous reasons for this, including the convenience of supplier comparison and greater capacity to classify the suppliers providing value for money. 

With eSourcing tools, negotiations with suppliers also become more effective and you can achieve better deals. These tools empower you to better manage your supply, which will help you to make sure that you aren’t paying premium costs for resources that are ordered late.

Once you have several suppliers on the list, it can be tiring to find the supplier who promises to deliver the goods that meet your requirement. What if you choose the wrong supplier? That will be a waste of your precious time and effort and will hamper your production, adding liability and decreasing the ROI. 

To address the issue, eSourcing tools help you choose the supplier that is trustworthy and offers the best rates so that you can make the right decision. 

Kent County Council used eAuction to compare suppliers for an identification tracker system. The result was a huge success with their incumbent and preferred supplier offering a value that was 40% less than the previous price they had been paying.

2. Improved Cost-Effectiveness

The biggest benefit of eSourcing in terms of ROI is cost efficiency as it ensures more competitive supplier quotations. According to Aberdeen research, the yearly average savings from eSourcing are 16%. In fact, saving cost is the key driver of eSourcing. It allows access to a wider range of suppliers and different bidding methods, leading to highly successful results for purchasers.

At the same time, eSourcing also reduces administrative costs. That’s because process efficiencies that eSourcing systems bring decrease expenses for both purchasers and sellers, predominantly in print and paper expenditure.

If we look from a broader perspective, eSourcing also reduces labor costs as the company might have to hire fewer employees and spend less on infrastructure.

For example, by switching to eSourcing, Logitech secured their initial ROI within the first couple of projects they ran. They were able to generate an impressive £300k saving, decreasing their total spend in the category by one-third.

3. Greater Time Efficiency

Another important part of the ROI is the time saved on internal processes. Imagine the time it takes you to manually organise quotations from suppliers. That time is money, whether there is a direct invoice for it or not. 

By completely automating the process, you no longer have to spend time on routine and time-consuming jobs. Instead, you can focus more on tasks that add value to your business such as generating sales.

eSourcing speeds up the procurement process, decreasing the total time of tendering and reducing the number of hours procurement officers spend on the tender process. As a result, they get more time to concentrate on other mission-critical tasks. 

eSourcing reduces the entire procurement cycle dramatically, encouraging procurement teams to efficiently cover more and more categories in less time. This eventually benefits the company by utilizing resources to the maximum. 

In the past, Al Naboodah was caught between spreadsheets, emails, and long-standing suppliers. After switching to eSourcing, it was able to run events in a number of categories and saved on average between 15% to 20% on costs based on their previous purchases.

Source: Freepik

4. Stronger Supplier-Buyer Relationships 

eSourcing also strengthens the relationship between the suppliers and buyers. The transparency in the process allows individuals to bond well and work with each other, promoting relationships that last for years and are not restricted to one-time transactions. 

eSourcing does not only secure contracts but also makes sure that the ordered supplies are delivered on time. The status of the goods at any given time can be tracked easily. Through amplified transparency and openness between purchasers and suppliers, you can considerably improve vendor relations.

5. More Standardisation, Less Risk

eSourcing assists in the standardisation of calls for bids along with an audit trail to ensure compliance. Adherence to compliance leads to transparency in dealing with buyers and suppliers, eventually reducing the risk for both parties. 

For startups and smaller businesses that have limited sales and procurement capabilities, eSourcing can be an effective platform to show the value of goods and services. It helps to curtail procurement cycles with better supplier management and streamlined order processing. 

With the help of eSourcing, Cancer Research UK averaged a 28% yearly saving. That’s a massive ROI considering the competitive cost of an eAuction tool.

eSourcing helps sustain the contracted savings by using tools to monitor expenditure and compliance, to collect and dispense the information assimilated during the sourcing process, and to help the buying community understand how to procure using the contracts negotiated. 

Improve Your eSourcing ROI With Market Dojo

eSourcing is indeed the future of procurement. Businesses and individuals who are still relying on traditional sourcing are certainly going to lose the game soon since their competitors have managed to take a leap ahead and switch to methods that are not only time-effective but are cost-effective as well. 

Automation of sourcing and procurement procedures through eSourcing helps organisations to be more focused on devising and implementing business-critical strategies as compared to the time-consuming procedures of the past. 

eSourcing empowers teams to lead negotiations using data analysis and better supplier management, keeping the cost minimum and gaining a jump in profits. Eventually, it all adds up to result in greater ROI. All the money that you save can be utilized in other areas of business, giving you an edge over competitors and increasing overall profitability.

However, to reap all these benefits, the eSourcing tool you choose must be easy to adopt. If your team isn’t using the platform then you can’t save the time or money that was anticipated. For your platform to be adopted, it needs to be user-friendly and effective. 

To make the most out of your supplier engagement and procurement activities, Market Dojo offers fully on-demand services that modernise processes, reduce overheads, and effectively manage your supply chain decisions. Contact us to learn more about how we can help with your eSourcing needs.

February 27, 2021

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