Don't Fall for These 6 Costly e-Sourcing Mistakes

When you want to increase efficiency in procurement and supply chain management, there are various ways e-sourcing can help.

Using web-based systems to collect, compare and analyze information from potential suppliers can lead to advantages, including:

• Saving time by automating key stages in the procurement cycle, including inviting tenders and managing the bids you receive
• Cutting costs through more effective and accurate comparison of bids
• Higher levels of transparency and better supplier relations

However, you won't get maximum benefit from e-sourcing if you regularly fall into some of the most common traps in this area.

1. Half-hearted implementation

Like any major business project or investment, e-sourcing needs the full backing of the entire company - from the C-Suite to frontline procurement staff and buyers - in order to deliver results.

If there’s skepticism or a lack of commitment to the concept among key stakeholders and team members who have a crucial role to play in its implementation, your chances of success will be diminished before you've even begun.

The most important goal is to get company executives and decision-makers on board, since they set the tone for the organization as a whole. It's also vital to ensure that experienced figures and leaders within the procurement department are committed to e-sourcing and ready to promote the practice to junior staff.

2. Lack of clear policy

Having transparent internal policies around procurement is crucial if you want to maintain consistent practices, achieve high levels of efficiency and reduce the risk of problems and disruption affecting your supply chain.

When it comes to e-sourcing, clear and unambiguous policies help to ensure that all employees working in this area are following the same processes and focusing on the same objectives.

Your business will also be in a better position to respond to problems and rectify errors, with documented procedures in place to help your staff find quick and effective solutions.

3. Unclear (or non-existent) goals

There are various objectives you might be hoping to achieve through e-sourcing, such as:

• Reducing costs by attracting and comparing bids from a wide range of suppliers on a single web-based platform
• Cutting the amount of time your team spends on sourcing vendors and awarding contracts
• Collecting and analyzing more detailed supplier information

The wide range of aims and benefits you can achieve through this process means it's particularly important to establish clear ideas about what you want to get out of it.

Using a method such as the SMART goal framework will help to ensure that your e-sourcing activities have a sharp focus, and also that you're able to measure performance and results accurately.

4. Not being prepared for challenges

E-sourcing can unlock a range of benefits for your business, but it can also present certain challenges. The more time you invest in researching and predicting potential risks, the better prepared you'll be to manage them, or to deal with any issues that do arise.

Common obstacles you might need to prepare for include:

• Resistance to a new, fully digital approach to sourcing from procurement professionals who are used to more traditional methods
• The need to provide flexible bidding options and incentives for suppliers to submit their most competitive offers
• Making sure the technology you use is up to date, reliable and doesn't put you at a competitive disadvantage

5. Going too big too soon

If the shift to e-sourcing is a step into entirely new territory for your business, the best strategy could be to move slowly and steadily, rather than rushing into a sudden, large-scale transition and expecting the rest of the business to follow your lead.

One approach that can deliver positive results is to start off with a limited number of trial partners. As well as making it easier for your team to make a gradual shift to a fully digital workflow, this will give you useful insights into the feasibility of rolling out these processes on a wider scale.

6. Poor communication

Effective communication is an essential ingredient in any successful procurement function. There are various channels of communication that need to run smoothly for you to get the best results, whether it's within the procurement team, between the team and the rest of the business or between the company and its suppliers.

From a management perspective, it's crucial to emphasize the importance of co-workers staying in constant contact with each other, with stakeholders in other departments and with external partners and vendors.

This could prove to be the difference between success and failure where e-sourcing is concerned.