The ROI on eSourcing: How Much Does It Really Deliver?

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

Be it a big corporation looking to streamline tender processes or a small retailer handling complicated line-item quotations, eSourcing has managed to make everyone’s life easier with relevant suppliers just a click away.

Previously, negotiating the price and terms of an agreement was a time-consuming process. Now, the job isn’t so simple. This is why eSourcing is such an important tool. It enables procurement and sales teams to accelerate and streamline the full lifecycle of the sourcing process. In this article, we’ll explore how eSourcing helps companies improve their return on investment (ROI).

1. Effective Supplier Management

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

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

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

Fixing the issue is simple with the right technology. eSourcing tools help you choose suppliers that are trustworthy and offer 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. Greater 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 helps to reduce administrative costs. That’s because process efficiencies delivered by eSourcing systems help to decrease expenses for both purchasers and sellers, primarily in print and paper expenditures.

From a broader perspective, eSourcing also reduces labor costs as the company may no longer need to increase headcount and can spend less on infrastructure.

For example, by switching to eSourcing, Logitech secured its initial ROI within the first couple of projects it ran. The company was able to generate an impressive £300k saving, decreasing their total spending in the category by one-third.

3. Improved time efficiency

The ROI of eSourcing also includes time savings on internal processes. Imagine the time it takes you to manually organize quotes from suppliers. That time is money, whether there’s a direct invoice for it or not.

Automating the entire process means you no longer have to spend time on routine and time-consuming jobs. Instead, staff 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 time spent on the tender process for procurement specialists — that means more time to concentrate on other mission-critical tasks.

eSourcing significantly reduces the entire procurement cycle, encouraging procurement teams to efficiently cover more categories in less time and benefitting 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 past purchases.

4. Stronger supplier relationships

eSourcing also bolsters the relationship between suppliers and buyers. Process transparency allows both parties to collaborate easily and work with each other, promoting relationships that last for years and are not restricted to one-time transactions.

eSourcing both secures contracts and makes sure that the ordered supplies are delivered on time. The status of the goods at any given time can be tracked easily. Through enhanced transparency and collaboration between purchasers and suppliers, you can considerably improve these vital relationships.

5. More standardization, less risk

eSourcing helps to standardize calls for bids along with an audit trail to ensure compliance. Better compliance leads to transparency in dealing with buyers and suppliers, eventually lowering the risk for both parties.

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

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

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

How to improve your eSourcing ROI with Market Dojo

eSourcing is the future of procurement — there’s no denying it Organizations and individuals still relying on traditional sourcing are certainly going to lose the game sooner or later 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 platforms helps businesses to be more focused on devising and implementing business-critical strategies as compared to the time-consuming, manual procedures of the past.

eSourcing gives teams the tools they need to lead negotiations using data analysis and improve supplier management, keeping the cost minimum and gaining a jump in profits. In the end, it all adds up to result in greater ROI. Money saved can be utilized in other areas of the business to sharpen your competitive edge and increase overall profitability.

To reap all the benefits of eSourcing, you must choose a platform that is easy to adopt — you can’t save the time or money that was anticipated if your team isn’t using it. You need a user-friendly and effective interface to maximize user adoption.

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