What is a sourcing software?

Sourcing is the foundation of the entire procurement process. It involves conversations with and analysis of product, material or service suppliers. A software designed for sourcing streamlines the process of identification and selection of suppliers offering the best value to the business.

In a nutshell, a sourcing software allows users to:

• Gather and store data about suppliers
• Compare supplier information and bids
• Assess supplier performance and compliance
• Manage and negotiate contracts

Such tools help e-commerce businesses maintain competitiveness in the market by acquiring best-fit goods and pricing. It also helps save supply chain managers time by automating tendering tasks and consolidating supplier interactions in one place.

Price to get started:

Sourcing solutions are usually web-based. On-demand access is available as monthly subscriptions starting at 75 USD per user. Annual licenses may be purchased at 20 percent less. To decide on compatibility, free trials are usually offered for 14 days.

Benefits of using a sourcing software

Speeds up supplier acquisition process. Finding the right supplier can take a rather long period of time. With a sourcing tool, tendering processes can be done more efficiently. It allows product and supply chain officers to send inquiries in bulk. By hosting forms and document templates, data gathering processes are standardized and doing supplier comparisons are made easy.

Reduce total purchase cost. Choosing suppliers for most e-commerce businesses means finding quality products and services at the lowest possible price. With a sourcing software, decision makers are able to spot the most competitive options. It assists in easier contract review and management which helps in negotiating deals for maximum long-term profits.

Bolster compliance and transparency. Serving as a centralized supplier information hub, sourcing solutions can provide managers with a clear picture of the tendering and supplier qualification activities. Auditors are easily able to reference on its contents for integrity checks. The tool also helps in ensuring that suppliers are in compliance with company policies through due diligence surveys and performance analysis.

Features to check when comparing sourcing software

1. Standard features to review

Contact database. A sourcing tool stores all pertinent supplier data from contact information to updated rates. It serves as a reference point for supply chain officers and decision-makers where documents and transaction records are conveniently colocated. All in all, this facilitates the vetting process and long-term relationship management.

RFX builder. RFX in sourcing constitutes Request for Information (RFI), Request for Proposal (RFP), Request for Quotation (RFQ), and Request for Bid (RFB). A sourcing software presents creation tools to standardize the format of these documents (e.g. producing templates the supplier should follow in submitting bids). With this, data gathering and side-by-side supplier comparisons are made easy.

Supplier scoring. Questionnaires can be created in a sourcing platform to facilitate easy extraction of information from supplier candidates. When they fill these out, the tool would score responses according to criteria set by the decision makers. Part of the logical evaluation is therefore entrusted to the software. This way, an e-commerce business can assess many suppliers to find the best option without losing so much time.

Spend analysis. Sourcing solutions seek to assist in optimizing expenses for e-commerce businesses. By charting spend by category, managers can make informed decisions when choosing suppliers, renewing contracts, and devising cost-effective procurement strategies. This includes the capacity to review expenses across multiple locations where different sources may apply.

1. Additional features for next level sourcing

Contract management. Aside from serving as a contract repository, there are tools that can notify users on upcoming expirations. This helps in preventing issues with delayed renewals and unwanted extensions. Given that these documents could be of sensitive nature, being able to set access permissions may also be necessary to some businesses.

Collaboration. This feature may work for internal and external stakeholders. In some tools, users are able to collaborate with suppliers regarding innovations. It helps in tracking ideas that are worth exploring to enhance offers or spending. For e-commerce businesses with multiple people involved in sourcing, having the capacity to coordinate considerations, deadlines and updates in-app would help.

Auction events hosting. Reverse auctions provide businesses a unique opportunity to drive costs downward. Some sourcing tools provide the technology to host such events to help in strategic supplier acquisition. With this feature, it is easy to create a secure web interface where bidders can offer their products or services live online. Decision makers can also review and communicate with suppliers in real-time, then award contracts manually or automatically.

Cost of setting up a sourcing software

Sourcing tools typically require subscriptions to use. Pricing is normally set per user with features such as contract management, e-auctions, and collaboration settings only enabled in premium plans. Multi-user licenses are usually offered at a discount, same as with annual subscriptions.

Monthly plans start at as low as 75 USD per user. To process significant volumes of RFQs, mid-level solutions which cost more or less 200 USD are available. Enterprise users are very much encouraged to discuss custom features and contracts with software providers.

Consultations and demos are offered to help in the decision-making process. In terms of getting set up, guides are usually provided in written and video format. In some cases, implementation may fully be taken care of by the provider as well at a reasonable cost.

Considerations when choosing a sourcing software

1. Business and process compatibility

Finding a supplier that can help turn product ideas into reality is key for every e-commerce business. There are multiple factors affecting the decision-making process from quality to cost to capacity. A sourcing tool systematizes data gathering and review processes, enabling entrepreneurs and managers to make wise investments when it comes to supplier relationships.

Sourcing tools are generally designed to help businesses reduce costs, increase team efficiency, and improve process visibility. Every user would have different needs depending on their product and sourcing method. Small and medium-scale businesses may benefit from contract management features while large enterprises may get great deals through reverse auctions hosted by such software.

The e-commerce space is very competitive, and it is important to optimize stock levels. By storing all pertinent information, contracts and performance reports, a sourcing tool may also help anticipate potential issues with supply. In this sense, it would be important for users to assess how their tool of choice can fit in the entire procurement and supply chain process. Should there be multiple internal stakeholders involved, negotiating with software providers on a customized solution and pricing is advised.

1. Adoption concerns

Technicalities. Creating a process that fits the business’ needs is necessary to turn supplier data to insights. Configuring templates and scoring may get a bit technical, but there is a client-facing interface that should be intuitive enough even to new users. More complex features are usually explained by account managers, especially parts where security is paramount.

Integrations. A sourcing software may best be integrated with enterprise resource planning tools to cross its data with other businesses metrics. This may complete spending assessments, and improve cost-optimization strategies. If e-commerce businesses can tally its supply costs with its sales, then it would be able to review return on investments accurately.

Scalability. With some tools limiting the number of quotations and contracts it can manage in each plan, it is important for supply managers to have a clear understanding of its needs for short- and long-term. As the business grows, it may also be necessary to onboard suppliers into the software for collaboration purposes, hence, this capacity should be looked at.

Frequently asked questions

1. Would an e-commerce business need a sourcing tool?

Sourcing is essential for e-commerce businesses to reach out to a wide range of suppliers. A sourcing software makes the supplier tendering and qualification process simple for internal and external stakeholders.

1. What can I do with a sourcing tool?

Sourcing tools make it possible for businesses to find and evaluate suppliers in bulk. By systematizing processes and consolidating all data (e.g. offers, contracts, performance reports) in one place, managers are able to ensure that they are making cost-effective decisions.

1. How can a sourcing software help my team?

Aside from being able to organize data gathering from suppliers, teams benefit from sourcing tools with collaboration features that allow them to share documents with each other and set deadlines on related activities. Auditing and deciding on supplier reacquisition also becomes easy for internal members with the transparency provided by such centralization.

1. Can a sourcing tool cut my costs?

Yes. Sourcing tools cut down the time spent in supplier qualification by programmatically going through their submitted data and scoring them according to preset criteria. With features that scale quotation requests and bidding activities, sourcing tools are able to score e-commerce businesses the best deals.

1. Is there a free forever sourcing tool?

Mini tools may be found online to aid sourcing. For a true comprehensive solution, subscriptions must be looked at by e-commerce businesses looking to unify processes. In this case, it is possible to take advantage of free trials to make sure that the right investment is made.

1. What is the best sourcing software?

Identifying the best sourcing software for a specific e-commerce business would depend on multiple factors including:

• Number of users
• Sourcing method
• Volume needs
• Budget

1. What sourcing tool subscription should I get?

There are sourcing tools with features specifically made for e-commerce businesses. Some plans offer integration with manufacturer and B2B buying channels which makes the supplier acquisition process flow seamlessly in one platform.

1. What feature should I prioritize when choosing a sourcing software?

A sourcing tool should prioritize RFX builder capability. Extracting data and comparing RFXs (especially Request for Quotations) eat up resources when done manually, so finding a solution that can automate this part for the company would certainly be advantageous.

1. What reports can I generate using a sourcing software?

Sourcing tools provide supplier performance reports. This type of report aids in reacquisition processes. With it, decision makers can tell whether it is best to renew contracts or find new suppliers. Several other tools also include spend analyses and savings trackers to boot.

1. How do I set up a sourcing solution?

A sourcing tool may be integrated with an existing ERP system to sync with other business processes. For new users, data from spreadsheets may be imported into the platform to consolidate information and jumpstart processes.

1. How can a sourcing tool expedite the process of procurement?

Sourcing tools typically have supplier scoring features which basically increase visibility of the best suppliers in the system. What it does is assign weighted values to submitted data based on standards set by the user. There are also some platforms that can host e-auctions. In both cases, e-commerce businesses are able to find the best offers faster than usual.

1. Can I create templates for proposals and quotations in a sourcing tool?

Yes. Sourcing tools have built-in RFX builders that help users standardize the format of these documents for suppliers to comply with. This reduces back and forth, and ensures that all important information would be ready for side-by-side comparisons.

1. Would I be able to analyze savings in a sourcing tool?

One of the primary goals of sourcing solutions is to help businesses find the most cost-effective supplier. Such tools provide insights on savings by contrasting costs of awarded contracts with other bids. This also applies when reevaluating existing relationships.

1. How can a sourcing tool help in document collaboration?

To collaborate with internal and external stakeholders on documents such as contracts and agreements, sourcing tools may securely host files, track logs, and control versions. Permissions and approvals may also be configured.

1. Will a sourcing tool help in improving business process visibility?

Yes. A sourcing tool implores transparency with proper documentation of supplier correspondence and other activities. Spending is reflected in real-time, and factors affecting every decision may easily be referenced. These become very helpful in conducting compliance checks and audits.

Sources and related articles

Sourcing Software for Real-Time Business

The Five C’s of a Good eSourcing Tool

e-Sourcing Software, How it Leads to Supply Chain Efficiency

The Modern Supply Chain: Why Multi-Vendor Sourcing Needs To Be The New Norm