Keelvar’s Complete Guide to eSourcing

eSourcing is the process of collecting, evaluating, and managing bids from potential suppliers via a unified digital platform. It enables sourcing and procurement teams to easily and efficiently assess all bids and analyze complex data to make the best decisions for their business.

The most innovative eSourcing tools—like Keelvar (that’s us!)—use a combination of AI and automation to facilitate strategic, tactical sourcing decisions and optimize the sourcing process from beginning to end.

What’s the difference between eSourcing and eProcurement?

Although eSourcing and eProcurement are both crucial parts of the overall procurement process, they play different roles. One of the main differences between eSourcing and eProcurement is where they fall in the purchasing cycle: eSourcing deals with identifying and choosing the right suppliers while eProcurement deals with the transactions that follow, from creating purchase orders to payment.

In other words:

• eSourcing focuses on finding the best suppliers by using a digital platform to collect, analyze, and evaluate bids and other important supplier information
• eProcurement is the process of working with your chosen suppliers to manage and carry out the transactions as agreed at the eSourcing stage

Or to put it yet another way: your eSourcing process lays the foundation for a smooth, efficient, and cost-effective eProcurement process—so it’s worth investing in the right tools to set you up for long-term success.

As we’ve already discovered, eSourcing uses digital technologies—like a consolidated online platform—to manage the sourcing process. It collects supplier information, such as quotations, proposals, and requests for information (RFIs), via an online portal, where they can be analyzed and assessed with AI-enhanced sourcing optimization software. 

Traditional sourcing doesn’t use these same technologies and instead relies on manual processes, siloed emails, and error-prone spreadsheets, making it more time-consuming and less efficient. While traditional sourcing can be useful for building individual relationships between you and a supplier, they’re inherently risky (as those supplier points of contact could leave at any time) and impossible to scale.

In order to get the most from your eSourcing platform, you should look for a tool that ticks all of these boxes.

1. Collaborative sourcing

Collaborative sourcing involves including relevant stakeholders in the eSourcing process as necessary. Collaborating with key stakeholders means you can incorporate their unique requirements and specialist knowledge when sourcing, enabling you to find the best possible supplier for your business needs.

‍Pro tip: In order to do this, you need a tool that your entire organization can use. Look for an intuitive, easy-to-use platform that’s accessible to everyone, from procurement professionals to time-strapped execs.

Keelvar’s intuitive, easy-to-use interface makes collaborative sourcing simple

2. Complete transparency

Transparency is essential for successful eSourcing. Not only do silos and a lack of transparency slow down the entire sourcing process, but they also leave your organization vulnerable to risk and fraud. 

By consolidating all of your sourcing into one centralized tool, everyone has full visibility into the sourcing process, enabling you to get real-time insights, make data-driven decisions, and create clear audit trails.

“Keelvar is a very user-friendly, simple system, with a lot of powerful things integrated into one solution. Our success here is the data transparency, and the structured way of the process.“

—Steffen Dencker, Director of Sourcing Excellence, KK Wind Solutions

3. Scalability

As your business grows, you’ll need an eSourcing solution that can grow with you. Look for a platform that allows you to quickly and easily create even the most advanced sourcing projects, regardless of complexity or size. 

Even better: find one that uses AI and automation to streamline your processes and increase efficiency, saving time for your entire procurement team even as you scale.

4. Standardization

Creating a standardized, repeatable process ensures you’re comparing potential suppliers against the same criteria. Standardization is a simple way to ensure that everyone involved in eSourcing is following your company’s best practices and is compliant with legal and regulatory requirements. As a result, it reduces time-wasting human errors and mistakes, speeds up your eSourcing workflow, and improves consistency, leading to better analysis and reporting.

‍Pro tip: Standardized doesn’t mean inflexible. With Keelvar’s Sourcing Optimization software, you can empower suppliers to offer the best bids by allowing them to bundle items, create conditional discounts, and even submit alternative bids, so you can collaborate more effectively—all within the same platform.

Standardize your eSourcing process while still making room for flexible bidding to ensure you get the best deals from suppliers

5. Automation

Sourcing traditionally involves a lot of manual, repetitive work—but eSourcing doesn’t have to. By automating low-value, high-volume sourcing tasks using easy-to-build workflows, you can remove up to 100% of the workload for your team. 

Sourcing Automation enables you to automate the tender process for lower value tactical and tail spends without compromising on cost savings or compliance, freeing up your sourcing team to focus on impactful strategic work.

Want to learn how Keelvar meets all of these criteria and more? Request a demo to see it in action→

So what does the eSourcing process actually look like, from beginning to end? Here’s a quick overview.

1. Pre-purchase questionnaire (PPQ) or request for information (RFI) 

The pre-purchase questionnaire or pre-qualification questionnaire (PQQ), also known as a request for information (RFI) in some industries, is used to assess whether suppliers meet your minimum standards and are eligible to move forward in the eSourcing process. 

These documents are used as a screener to understand more about the supplier’s company—such as their financial health, policies, and experience—allowing you to disqualify any unsuitable candidates before expending time and resources.

2. Invitation to tender (ITT) 

If a supplier meets the criteria outlined in the PQQ or RFI, they receive an invitation to tender (ITT). This is where the buyer invites various suppliers to submit their proposals and provide all the information the buyer needs to make an informed decision.  

3. Request for quotation (RFQ) 

A request for quotation (RFQ) focuses on the price of the goods or services offered. This can be part of the ITT phase or requested as a separate document, depending on the buyer’s specific needs and workflow. 

4. Holding eAuctions or evaluations

Once the buyer has all of the data they need, it’s time to assess their options. Depending on their procurement needs, they can do this in a number of ways.

One popular method is eAuctions. eAuctions are online, real-time negotiations in which qualified suppliers bid against each other to secure a contract with the buyer. A transparent bidding process can encourage competitiveness across a global marketplace and shorten sourcing cycles, leading to improved negotiation times and better results. 

Alternatively, sourcing teams may conduct evaluations based on internal criteria. Using a powerful Sourcing Optimization tool like Keelvar, teams can leverage vast amounts of collected data and analyze different award scenarios to make more strategic decisions.

“Keelvar, at the click of a button, will tell you the best-case scenario based on everything that has come through in just a few seconds.”

—US tech company

5. Contract award

After evaluating everything, the buyer selects the supplier (or suppliers) they want to award the contract to. The winning bidders are notified, and the sourcing team high-five each other on another job well done.

For busy sourcing teams caught in a cycle of repetitive tasks, eSourcing is a major game-changer. Here are five ways eSourcing benefits your whole business.

Reduces costs

eSourcing encourages competitiveness between suppliers, improving negotiation and reducing prices. The enhanced ability to prevent and minimize future costs drives even more savings: with Keelvar, one client was able to save $60 million in cost avoidance over 12 months. 

Simplifies supplier management

Managing bids and chasing up multiple suppliers can easily become a full-time job for teams, especially when you’re trying to build positive supplier relationships. With eSourcing, everything is centralized in one platform, so you can see at a glance what needs to be done and when. 

Increases efficiency

Save time at every stage of the eSourcing process with repeatable workflows, AI-powered analysis, and automation. Reduce—or even remove—manual admin and repetitive tasks with Autonomous Sourcing, winning back hours for your team to focus on strategic work. Follow Samsung’s example: they used Sourcing Optimizer to save a whopping 85% of time on their RFQs (and generated an extra $5 million in savings).

Enhances visibility into supplier data

eSourcing captures and centralizes important supplier data so you can make more informed, data-driven decisions. Break down silos from emails and spreadsheets and provide cross-functional visibility into key data, identify and mitigate risks, and surface important considerations that go beyond cost, such as environmental impact.

Promotes compliance, transparency, and accountability

Effortlessly implement consistent, repeatable processes that meet your company’s compliance standards and best practices. eSourcing reduces mistakes with standardized templates and approval workflows, and ensures you have a clear audit trail for accountability and data analysis.

If your business is just starting out on its eSourcing journey, you might be wondering what challenges to expect. The good news is that once you have a solid platform in place, eSourcing solves challenges instead of creating them. That said, there are a few things to bear in mind to help you make the transition to eSourcing as smooth and efficient as possible.

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Choosing the right tool. This is probably the biggest challenge in eSourcing: with so many platforms on the market, how do you pick the one that’s right for your business? When you’re weighing up your options, consider factors like features (such as intelligent optimizations and automation capabilities), ease of use, innovation, and customer support.

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Adopting new technology. Sure, your old legacy systems are brutally unforgiving and exhausting to use—but it’s better than spending months learning a whole new tool, right? Don’t worry: switching systems doesn’t have to be painful. Find an eSourcing platform that makes it easy to get up and running, with an intuitive interface and onboarding resources to help you and your team ramp up quickly.

Integrating with your existing tech stack. No tool is an island. To get the most from your eSourcing platform, make sure it integrates with the rest of your procurement tech stack. With the right integrations, you can synchronize your data in real time and trigger sourcing events from upstream systems, making your processes even more seamless and efficient.

As with any new tool or software, putting a few best practices in place can help you get even more from it. Here are our top tips.

Stakeholder engagement: Collaborate with key stakeholders for more efficient sourcing. Understanding stakeholders’ requirements and involving them in the eSourcing process enables you to make more comprehensive sourcing decisions that better meet their needs.

Establish eSourcing policies and procedures: Map out your ideal process for each type of sourcing, then use your eSourcing tool to turn them into easily repeatable templates. Ta-da: efficient, scalable workflows that use your business’s best practices as default.

Ensure data security and compliance: To protect your data (and your suppliers’ data), look for tools that meet the highest security standards, like GDPR, CCPA, and other key data protection legislations.

Data management: Use templates and standardization to ensure your data stays clean, accurate, and easily manageable.

Effective communication and collaboration with suppliers: Keeping suppliers in the loop about the status of their bid is a simple way to build strong, trusting relationships from day one. Communicate with suppliers right from your eSourcing tool to provide updates or request information while still keeping everything centralized and visible. 

‍Continuous improvement: Regularly review the data from your eSourcing tool to find new opportunities and ways to improve your sourcing processes—like using sourcing automation to optimize even more workflows.