The big question I still want to ask about e-sourcing is: does it really work?
Let me explain.
E-sourcing is the phenomenon that enables buyers and suppliers to interact online. On the surface, it may seem an ideal tool to expand the supply base and open up a myriad of new supply options.
Online shopping is dramatically on the rise. We might expect to see a similar increase in ‘shopping’ in the workplace and procuring goods and services for the company, using similar technological methods. But this isn’t happening. Why not?
Let me explain.
E-sourcing is the phenomenon that enables buyers and suppliers to interact online. On the surface, it may seem an ideal tool to expand the supply base and open up a myriad of new supply options.
Online shopping is dramatically on the rise. We might expect to see a similar increase in ‘shopping’ in the workplace and procuring goods and services for the company, using similar technological methods. But this isn’t happening. Why not?
Let’s look at e-sourcing itself. A study by the Bristol Business School and the Chartered Institute of Procurement and Supply found that one problem was the interaction between the user and the application. This was confirmed by the Sand Hill Group when 70 per cent of survey respondents said that user adoption was the most critical factor in e-sourcing success.
Put simply, customers want a ‘plug and play’ application with very little set-up and training costs. They don’t want to go through a lengthy process to get the benefits they’ve heard about.
The likes of Amazon and Expedia have known this for some time. They have made their applications so user-friendly that even my mother, who is 71 and very computer illiterate, can easily book a package holiday.
What about the outside challenges that e-sourcing faces? First, there’s online fraud. This is on the increase and businesses and governments are in an ever-escalating battle to keep our online business activities secure and safe.
In addition, we are on the verge of what I call ‘reverse globalisation’ where protectionism seems to be on the increase. This could well make buyers procure closer to home. This would reduce the benefit of real international e-sourcing from cheaper areas of the world.
Despite its problems, I think there is still a lot of hope for e-sourcing if organisations plan ahead and budget correctly. This includes recognising the long-term rewards that proper e-sourcing applications can provide. In some industries there is a real need to look past the initial cost outlay. Could this result in ‘open source’ packages with an annual fee instead? Maybe it could.
Whatever the future, one thing is for sure. The vast majority of e-sourcing packages on the market need to improve their user experience to make it easier. Especially if non-procurement personnel continue to absorb procurement activities into their existing responsibilities.
Put simply, customers want a ‘plug and play’ application with very little set-up and training costs. They don’t want to go through a lengthy process to get the benefits they’ve heard about.
The likes of Amazon and Expedia have known this for some time. They have made their applications so user-friendly that even my mother, who is 71 and very computer illiterate, can easily book a package holiday.
What about the outside challenges that e-sourcing faces? First, there’s online fraud. This is on the increase and businesses and governments are in an ever-escalating battle to keep our online business activities secure and safe.
In addition, we are on the verge of what I call ‘reverse globalisation’ where protectionism seems to be on the increase. This could well make buyers procure closer to home. This would reduce the benefit of real international e-sourcing from cheaper areas of the world.
Despite its problems, I think there is still a lot of hope for e-sourcing if organisations plan ahead and budget correctly. This includes recognising the long-term rewards that proper e-sourcing applications can provide. In some industries there is a real need to look past the initial cost outlay. Could this result in ‘open source’ packages with an annual fee instead? Maybe it could.
Whatever the future, one thing is for sure. The vast majority of e-sourcing packages on the market need to improve their user experience to make it easier. Especially if non-procurement personnel continue to absorb procurement activities into their existing responsibilities.