Question

E-Sourcing has become a key procurement tool, allowing companies to connect, screen and shortlist suppliers, irrespective of whether they are present at the same location or at the same time – often allowing category managers to secure better outcomes than from traditional negotiations.

(a) Define and elaborate on e-Sourcing. [10 marks]

(b) Describe any THREE (3) advantages of the company in e-Sourcing. [30 marks]

Answer 1

Answer to the question (a):

E-sourcing is a form of outsourcing where online biddings are invited from the bidders all across the world, and further purchasing of goods and services is done through this process. This enables a firm to choose from a wide variety of goods and services all over the world which provides the managers of the firm a wide view to make better decisions for procurement of the said goods and services. Also, this process provides a real time platform between the purchaser and number of sellers and they can negotiate for the price on real time basis. This provides a transparent form of procurement with eligible sellers from all over the world get to sell their products and purchaser from other parts of the world get quality products from them at reasonable price.

Answer to the question (b):

The three advantages of the company in e-sourcing are discussed below:

1. Cost Reduction: This process speeds up the procurement for a company which reduces time and ultimately cost for procurement. This process allows to purchase from different sellers across the globe on a single platform, which also helps in cost reduction in printing and paper costs.
2. Improvement in relations with suppliers: This process brings transparency in the procurement process and brings openness between buyer and seller. All the sellers can see the tender opportunities on the company's portal and all the outcomes of the tenders are easily available on the portal. This transparency allows more sellers to get attracted for the bidding process thereby improving overall relationships with the sellers.
3. Improvement in compliance: The transparent and systematic approach in this process allow company to have a good control over the procurement process thereby helping in a solid compliance.