5 reasons why you should start using eSourcing
The construction sector worldwide has had ups and downs through the years. Despite several crisis impacted by activities that collapsed and companies that went bust, we have seen signs of recovery in the last decade. Yet, there are actions to be taken in order to improve and the role of eSourcing is life changing.
In the last years, supply chain management has improved thanks to cloud-based solutions which allowed a better management of procurement, saving time, increasing savings and reducing risks. Therefore, the access to an international community of qualified suppliers, increasing competition and more transparent tendering processes cannot be overlooked.
There are a few explanations that may clarify a certain resistance to adopt eSourcing solutions in this sector, such as more complex construction projects, legal concerns, large investments, or the fact that there are many smaller companies that do not feel ready for the transition.
Nonetheless, the clear advantages should overcome this hesitation. Companies competing in this sector, regardless of size, particularly benefit from reduced supply costs, more streamlined processes and efficiency gains.
Increased competitiveness
Companies have access to a larger number of suppliers and more competing suppliers promote more competitive bids. Average bid prices should fall as a result of this competitiveness. Reverse eAuctions are an example of this competition in real time to win business. In addition, access to an international community makes it possible to transcend borders and open up the range of opportunities.
Administrative efficiency
Hardcopy tenders are a thing of the past. Suppliers proposals and all the required documentation becomes available with a click, reducing errors in proposals and saving time with proposals evaluation, ensuring that time is not wasted with non-compliant bids. eSourcing platforms are able to gather and rank bid information which makes the processes more efficient and less time consuming, reducing resources and operating costs.
Sourcing cycle time
Starting and awarding contracts in a shorter period of time represents a significant time-saving gain. Compared to the traditional approach from within the construction industry, an ERP (Enterprise Resource Planning) is a popular management tool used to form a list of quantities that includes material and labor needed for a construction project, to be distributed to potential suppliers. eSourcing can increase the efficiency of this process by replacing current methods with electronic requests for proposals, easily compiled and published to a range of contacts of current and new suppliers. Cycles will be shortened and bids will be compared on an equal basis.
Compliance and Corporate Governance
Ensuring compliance with standards and regulations is crucial in the construction industry. eSourcing is a means by which construction companies can strengthen corporate governance and promote best practices. It is essential that organizations have a transparent view of where money is being spent and what value is being delivered. Through eSourcing, companies will have an automatic record of their transactions and do a better job in spend analysis. This results in more transparency and auditable processes and, in short, will contribute to profitability strategies across the supply chain.
Big data and analysis
Big Data is already a reality and represents new opportunities to support companies in evaluating spending patterns. It has thus contributed to supply chain management and performance evaluation based on benchmarks or industry standards. Monitor, evaluate and better manage your purchases and spends in a more consistent and easily adaptable way.