How to Gauge the ROI of eTendering
The eTendering process is an integral part of procurement and the overall supply chain. So, what is eTendering and its process? eTendering, also known as eSourcing, is simply the act of conducting procurement online—namely, receiving and sending tenders using an online platform, like tender process software. No software is locally stored on anyone’s computer, as the eTendering software is conducted through an eTendering portal on the internet.
So, what is the eTendering process? At its core, the eTendering process consists of pre-qualifying suppliers by announcing project needs, issuing the tender documents, reviewing and receiving tenders, and awarding the contract.
However, there is a bid/tender difference, during the process of eTendering. What is the difference between bid and tender? A bid is a document that outlines the quantities and materials needed for a project, while a tender is a request for proposal (RFP) to solicit bids from suppliers.
While there are many benefits of an eTendering system, it’s still important to calculate your ROI tender using software. It should be a part of your overall eTendering process.
The eTendering Process: Benefits of eTendering
It is difficult to answer, “What is eTendering?,” if you don’t talk about the advantages of eTendering. One advantage is time- and cost-saving, which contributes to the importance of eTendering. However, when calculating ROI, you must look at the tangible and intangible benefits of the eTendering process. Tangible benefits include:
- Reduced cost of purchases
- Reduced cost of operations
- Reduction and elimination of maverick spend
- Auditing and tracking
The intangible benefits of eTendering include:
- Stronger relationships with internal stakeholders and suppliers
- Improved project velocity
- Improved visibility
- Reduced turnaround time
The eTendering Process: Calculating Tangible Benefits
Calculating the tangible benefits of ROI during the eTendering process is fairly straightforward. Of course, you want to look at compliance savings first. This is where you have eliminated tail (rogue) spend and only use contracted suppliers. Also, implementing and optimizing eSourcing, even with the cost of software, offers a savings of roughly a 41 percent reduction on maverick spend.
In addition to compliance savings, you must also look at labor savings. If you’re using digital software instead of performing procurement processes manually, you should be saving in labor costs. It’s estimated by Gartner Group that 70 percent of procurement professionals are now using digital tools, but what about the other 30 percent?.
Calculating intangible benefits can be difficult. However, it is important to include them as much as possible because of their great impact on ROI.
The eTendering Process: Determining ROI
Determining the ROI takes several steps. It’s important not to skip a step. Ideally, you will be using digital tools for measurements and calculations. Spend analytics and other analyses should be included in your eTendering software. Steps of determining ROI include:
- Be clear on your company’s goals and objectives
- Measure business risk, costs, and objectives
- Complete an ROI analysis
- Measure what returns are expected
- Determine how the success of a project is measured
The ROI analysis shouldn’t include too many factors or variables, or it may not be easy to track and measure going forward effectively.
To learn more about the eTendering process, calculating ROI, or to schedule an eTendering demo, contact EC Sourcing, a Simfoni Company, through our web form located here. We want you to reimagine the way you think about procurement.