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Benefits of E-Sourcing: a Look at the Numbers

August 06, 2015 by Hillary Ohlmann

According to Aberdeen, mid-market companies miss $134 billion in supply savings opportunities due to inadequate sourcing processes every year.

However, the industry’s research leaders have found implementing an e-sourcing solution is one of the best ways companies can capture those savings.

Traditional Sourcing vs. eSourcing
A.T. Kearney's guide for e-sourcing best practices, Jumpstarting Your eSourcing Initiative, indicates that e-sourcing is an essential part of any strategic sourcing process:

E-sourcing increases % of spend sourced from 0-35% to as much as 98%.
The time per sourcing event decreases from weeks/months to hours/days.
Cost savings may be 15%+ after e-sourcing implementation.

After interviewing over 400 enterprises, Aberdeen’s E-Procurement Benchmark Report found that e-sourcing provides the following benefits:

Requisition-to-order costs decreased by 49%.
Requisition-to-order cycle time decreased by 65%.
Spend under management increased by 43%.
Percentage of maverick spend decreased by 39%.

The Hackett Group performed an e-procurement poll recently and discovered e-sourcing led to improvements in the following areas:

Compliance to indirect preferred contracts increased by 20% on average.
Number of orders processed per buyer increased by an average of 38%.
Data management efficiency increased by 15% on average.

Hackett also states that as more organizational spend comes under management, companies will see an increase in savings due to gains in compliance, cycle time, and data management. For example, for $1 billion in spend with 75% under management, savings of $3,500,000 can be expected, with the majority of savings coming from increased compliance.

e-procurement savings

When it comes down to it, e-sourcing is an essential part of procurement best practices. According to a recent survey by Aberdeen, 68% of best-in-class organizations use e-sourcing. With all the benefits that have been shown over the past 20 years, any company striving to achieve procurement savings must implement an e-sourcing solution.

 

    Sources

1. Aberdeen Group; Strategic Sourcing in the Mid-Market Benchmark; December 2005
2. A.T. Kearney; Jumpstarting Your eSourcing Initiative; 2010
3. Aberdeen Group; E-Procurement Benchmark Report; August 2008
4. The Hackett Group; Understanding E-procurement, Part I; May 2014
5. Aberdeen Group; Strategic Sourcing: The Future is Now; July 2013


 

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Hillary Ohlmann

Written by Hillary Ohlmann

Hillary is DeltaBid's resident writer, copy editor, researcher, and all-around procurement enthusiast. She holds a degree in Journalism and Spanish from UW-Madison.

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