e-Sourcing is the use of internet technology used by purchasing professionals to find suppliers and negotiate prices or reduce cost for a wide range of goods and services. A variety of online negotiation tools are used – including RFI (Request for Information, RFQ (Request For Quotation), RFP (Request for Proposal) and electronic auctions.
It is important to understand when and how each should be used to achieve the best results. Incorrect use can bring about unsatisfactory experiences and can lead to “bad press” for e-Sourcing.
This article focuses on the criteria which should be applied to determine the most appropriate e-sourcing tool to use.
Strategic importance of the category
An auction is generally recommended for those products with a high value and a minimum or small risk. High spend, low complexity is the ideal scenario for this type of price negotiation. The level of spend which will attract suppliers will differ from category to category but as a rough benchmark we generally look at spend over