How does e-Sourcing impact your Spend Management initiative?

1. e-Sourcing - A Key Component of Spend Management
Part One of Three – e-Sourcing is the Missing Link!
The Challenge
Spend Management initiatives are becoming more and more prevalent as organizations
increase their focus on overall Supply Chain Management efficiencies.
Spend Management initiatives focus on:
• sourcing strategy
• category expertise
• negotiation
• and purchasing execution
Key business drivers of improved Spend Management for organizations include:
• Continued and increasing pressure to reduce costs in the face of an overall rise in the
energy, transportation and supply prices, as well as supply constraints
• Increased pressure for ensuring compliance of supply contracts
• Adherence to new internal regulatory environments such as SOX
• Internal pressures to increase the value of existing system investments, e.g. ERP
• Lean management efforts to improve inventory levels and reduce obsolescence costs
• Increased availability of analysis and visualization tools and systems, e.g. Business
Intelligence, that facilitate the gathering, presentation and analysis of information.
The Problem
Spend Management is focused on the execution aspects of procurement, gathering and
considering data from systems such as:
• ERP
• e-Procurement
• Accounts Payable
• Procurement card activity, etc.
However, this often does not consider data from or drive alignment with the Sourcing effort
that ultimately sets the base-line for ongoing spend activity.
In many cases the lack of a formal e-Sourcing system results in buyers operating with a
combination of spreadsheets and emails, providing no systematic directional control for the

2. sourcing process, and no access to relevant data that should be a key component of spend
management efforts.
The Solution
In response to this gap in Spend Management initiatives, many companies are finding that
implementation of an e-Sourcing solution can enhance and improve those initiatives through:
• Buyer productivity increases through elimination of manual processes
• Access to an accessible RFQ database for analysis and reuse
• Providing the ability to track suppliers’ sourcing performance as a valuable supply chain
metric
• Building systematic alignment of sourcing with spend management direction
• Improving overall process and data standardization
Next – Part Two of Three – Best Practices