Over the last year, one of the business developments with more impact was the growing of large-scale business-to-business digital marketplaces, the change of power from manufacturers and suppliers to customers, and the downturn of the economy from the dot.com demise. Besides the failures and monetary problems of some B2B marketplaces, digital exchanges have rapidly transformed the way enterprises operate, removed geographic barriers, and created new channels of customer acquisition and integration. B2B and supply chain solutions are no longer just about reducing costs. They have become the most important drivers for improving the competitiveness of an enterprise in the connected economy. Leaders in every market sector are responding to new business pressures by increasing agility and revenue growth through new B2B and supply chain management approaches.

All companies purchase goods and services, whether direct goods like electronic components and machined parts or indirect goods like office supplies and computers. Mergers, growing volumes of supplier and purchasing data, and disparate computer systems cloud the "big picture" of procurement. This makes it increasingly difficult for organizations to understand what they're buying, and from whom.

Within Purchasing, we can find two main components with distinct goals:

• Sourcing - Is the identification, evaluation, negotiation, and configuring of new products/suppliers. It is typically used for the negotiation of blanket contracts and strategic goods.
• Procurement - Ensures the acquisition of, payment for and management of materials, goods and services with the satisfactory on-going business requirements at lowest total cost and in a way that is aligned with company and operational goals and objectives.
  

Even with the benefits achieved with the implementation of procurement solutions, sourcing remains a long and tedious process at most organizations, having an average cycle of 3,3 months to 4,2 months.

Early sourcing solutions focused only on Dynamic Pricing (prices established in real-time by existing market conditions) and are effective just for standard and commodity products. Most enterprises purchase supplies and services from a wide variety of vendors. Price varies between vendors, and each may have different terms and conditions of sale, making analysis and comparison difficult. The purchasing process often varies, with individual departments or branches deciding which products and services to purchase, and negotiating contracts separately. The lack of standards makes it difficult or impossible to ensure that appropriate amounts of goods and services are purchased at a competitive cost and that contracts are enforced.

Pushed by tactical problems, pulled by strategic trends, overwhelmed by sourcing complexity, many enterprises are now struggling with their sourcing strategies.

Given the uncertainty of our business environment and the variety of product and service offerings, enterprises have to consider a number of other options besides whether to make or buy in their complex sourcing decisions.

While Procurement offers the largest opportunity for cost/productivity improvements, e-Procurement is one of the most effective ways to enhance the management of indirect, direct, and sourcing processes. An effective e-Procurement strategy will be key to competitiveness in the future.

Firms usually attempt to improve sourcing by increasing competition—soliciting additional bids and negotiating harder. While these are helpful, other strategies that can unlock additional savings are often overlooked. Innovative strategies include the following:

• Increasing price transparency by disaggregating bids;
• Reducing complexity by establishing uniform standards;
• Reducing the number of suppliers within a given category;
• Improving monitoring and enforcement of contract compliance;
• Creating a global procurement structure to leverage the organization’s global purchasing power;
• Working in partnership with key suppliers to jointly lower costs.

Strategic sourcing is a critical tool for financial institutions that want to achieve sustainable cost savings. A holistic approach to sourcing can not only reduce overall spending, but can also yield additional benefits including better service levels and improved access to the latest technologies. Strategic sourcing is more than a tactical cost reduction effort. Instead, it is integral to developing sustainable long-term competitive advantage.

Most enterprises today are debating these issues and searching for solutions that shorten time to market, reduce operating costs, free capital for investment and provide solutions to cope more strategically with continuous change. Ultimately, enterprises that implement these solutions successfully will attain long-term competitive advantage.

How Internet sourcing can benefit your organization

• Reduction in prices of materials/services (5% - 20%): Rapidly establish competitive bidding space, access new suppliers and expand geographical reach;
• Shorter procurement cycles (25% to 30%): Automate the RFP/RFQ process, streamline order-to-pay processes and faster Time to Market;
• Reduce administration costs: improve buyer productivity and reduce/eliminate paper-based processes for better services and quality;
• Improve ability to create/manage optimal supply base–Improved market data: minimize demand peaks;
• Improve ability to create/manage optimal supply base–Improved market data: minimize demand peaks.

Sourcing solutions must be based on technologies that support the following requirements, in order to respond to all strategic sourcing benefits:

• Openness and Standards – eSourcing tools, like any eProcurement solution, must be based on standard and open technology, in order to simplify integration between different systems that exist in buyers and suppliers environments. These technologies must also support extensibility, supportability, and interoperability.
  
• Security – These tools must guarantee the necessary security to ensure the privacy that involves these kinds of transactions, including technologies like SSL, that provides a secure connection between clients and servers.
  
• Scalability – eSourcing tools must have the ability to adapt to business changes. Adaptability allows these tools to grow and meet newly defined requirements that were not, or could not have been, identified in the initial design phase.
  • Modular design, Reusability
  • Scalable architecture
    
• Simplicity: These solutions must be simple to use and to maintain. If, for instance, suppliers that don’t have much experience using these tools cannot respond effectively to a Quotation Request, many benefits are lost. Additionally, these tools must be deployed, maintained and administered within reasonable cost and time limits.

For responding to these requirements our Strategic Source Solutions can be built on Microsoft or Java platforms, as well as Cold Fusion Technologies.