Supply Excellence — The Why and How of Sourcing e-Sourcing Solutions

The Why and How of Sourcing e-Sourcing Solutions

July 31st, 2006 · by Tim Minahan · No Comments · supply management

Last week I revealed recommendations for evaluating contract management solutions. I also directed Supply Execellence readers to a new industry initiative to deliver a request for proposal (RFP) template that builds on best practices for contract management solution selection and that can serve as a foundation for such evaluations.

This post spurred inquiries for assistance in evaluating other supply management automation solution areas. One area of particular interest is online sourcing management automation (”e-sourcing”), largely because this is a market in transition.

Research I conducted while at Aberdeen Group revealed that nearly 90% of the Global 2000 have at least kicked the tires of e-sourcing, particularly in the area of online negotiations, including reverse auctions and electronic requests (e-RFx). Thanks to tightening supply market conditions and pressures to drive repeatable success, large enterprises are looking to adopt e-sourcing solutions that provide alternative and more collaborative total-value based negotiation approaches, project management and knowledge management capabilities, and advanced optimization-based decisions support. In fact, nearly half of the Global 2000 are now planning on investing in broader e-sourcing suites.

A research project I executed earlier this year, portended an even greater boom in e-sourcing adoption among mid-market companies, most of whom missed out on (and bore the brunt of) the first wave of supply management automation. Mid-sized enterprises emphasized selection of e-sourcing suites that incorporated support services (e.g., process and domain expertise) and supported integration to compliance tools, such as contract management.

The industry initiative I referred to last week when discussing contract management solutions, also developed an RFP for e-Sourcing solutions based on industry best-practices culled from actual RFPs and consultations. The Excel-based template is available for free (although registration is requried) and can be configured to match any unique requirements of an individual enterprise. (In full disclosure, my employer is just one of the sponsors of this industry RFP initiative.)

The e-Sourcing RFP site also includes valuable recommendations from global sourcing consultancy A.T. Kearney Procurement Solutions for selecting an e-sourcing solution. Some of A.T. Kearney’s key recommendations include:

Make sure the software supports the sourcing strategies you employ
Be sure the software is user-friendly, enabling widespread adoption for your company
Find out if the technology is supported by best-in-class content and templates
Find out if the provider can support you globally, if desired, with category and/or supply market experts with tangible procurement experience
Make sure the technology is flexible enough to handle complex negotiations and last-minute changes
Be sure the provider offers a 24/7 help desk for technology users
Make sure the technology is intuitive enough that you don’t have to be dependent on the provider
Ensure that the provider offers proper technology training for your internal users and suppliers
Be sure the technology allows you to import/export data and provides flexibility in manipulating the data
Find out how the provider uses any intellectual capital they gather

A.T. Kearney’s complete e-sourcing solution selection tips and other research are available at the www.sourcingrfp.com site.

The RFP template is intended to provide a foundation for e-sourcing solution selection and by no means reflects every unique nuance of your organization. I would recommend that enterprises augment their solution evaluations with input from other resources, including industry analysts, industry associations, and leading consultancies, like A.T. Kearney and Denali Consulting, which is a co-sponsor of the e-Sourcing RFP Template. Denali also sponsors the other supply management solution RFP templates in the series, including spending analysis, supplier management, and contract management.

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