Supplier organizations are often hesitant to participate in a RFP or an eAuction because they feel a supplier may have already been selected, and they may just be a placeholder for the process. Of course there are times where this can occur, but as long as the cost of participating is less than the potential benefit from participating, a supplier can/will benefit from participating in eSourcing.
Below are 8 benefits eSourcing can provide suppliers:
#1. Increased transparency in purchasing process – Participating in eSourcing helps companies better understand a potential supplier’s culture by improving transparency and providing a clearer framework for how an organization is going to market with their goods or services.
#2. Insight into buyer organization’s culture and structure – Suppliers can benefit by better understanding a buying organization’s mission, vision, and values (diversity requirements, CSR, company goals) as stated in the requirements of the RFP or eAuction. Put simply, it helps determine if you prefer to do business with the buying organization in the future.
#3. Improved diligence in validating product or service differentiators – The formal RFP and reverse auction process forces buyers to spend more time upfront in creating and communicating product specifications, contract specifications, and delivery requirements, therefore better preparing suppliers for the formal negotiating and contracting process.
#4. Creation of discipline/synergies within the supplier organization – eSourcing events force discipline in the supplier’s sales process. Sales, marketing and product management must collaborate to provide one face to the customer.
#5. Reduced customer acquisition costs (CAC) – eSourcing can help reduce the time it takes to get in front of the customer. Rather than waiting weeks or months to get a response from a marketing campaign, an eSourcing event is a direct channel that can improve a sales and marketing team’s capital efficiency; (i.e. reducing the number of months required to recover the cost of acquiring a customer).
#6. Leveling of the playing field – For smaller companies in particular, with limited number of sales or marketing resources, eSourcing can help level the playing field by providing one platform or framework for demonstrating the value of goods or services.
#7. Better competitive intelligence – Participating in eSourcing provides a means to better understand your competition and creates competitive intelligence whether you’ve won the business or not.
#8. Adoption of technology / innovation – eSourcing provides a means to leverage new technology for working with a potential buyer in the future. For instance, the eSourcing platform may extend beyond an RFP or eAuction into areas of supplier onboarding, supplier performance, contract management, etc. As a supplier, familiarizing yourself with the tools may also help with future events of other buying entities using similar tools/platforms.
Can you think of additional benefits eSourcing can provide suppliers? Share your thoughts by commenting below or tweeting @iasta.