How to Measure eTenders and ROI
If you’re using eTendering as part of your procurement software solutions, you’ve probably already noticed that there is a positive outcome between eTenders and ROI. However, just seeing that tenders are executed faster isn’t good enough when you’re talking about financials and spend—you need to know exact numbers and savings to determine your specific ROI accurately.
Measuring the two is a part of spend analysis—if you find you’re not receiving enough return on investment, it’s time to make some changes in the supply chain team, your processes or both.
What Is eTendering and Its Process?
To put the eTendering process simply, it means that you’ve taken your procurement process to a digital platform. You find your suppliers digitally and go through negotiations online, as well as the contract process. Generally, you will find an eTendering system that has available suppliers.
From there, you will:
- Announce that you have needs for goods or services
- Have suppliers apply (depending on the type of eTendering used)
- Vet suppliers and choose
- Negotiate, if needed
- Enter the contractual process
The digital process of eTendering is not very different from one that you’d find on paper. Still, there are many benefits of eTendering, as it saves time and is very efficient versus manual methods. It also allows you to build stronger relationships with your suppliers and, over time, build a database of strategic suppliers, so you have a go-to list when you need things accomplished.
There are many different software types for eTendering and eProcurement, and many have an easy learning curve, so you have a simple contract management tool to work with. Other advantages of eSourcing include better spend visibility, higher savings, and therefore higher ROI.
If you run spend analytics, you can see where your money is going across the board. Even if you think everything has been accounted for, there is always maverick spend, and running reports can help improve the relationship between eTenders and ROI to avoid savings leakage.
Measuring eTenders and ROI
Many people think that the total profit when you measure eTenders and ROI is the investments’ return divided by the cost. However, that calculation leaves out many other data that should be accounted for if you want an accurate representation of the relationship between eTenders and ROI. If you’re truly going to crunch the numbers, count in things such as:
- How many tenders you perform per month
- Spend in each tender
- Savings generated on each tender
- Cost avoidance per tender
- Administration days spent on etenders versus tenders performed manually
To get the big picture with eTenders and ROI, you must make sure all of these other costs are truly considered to understand your returns. If you’re coming up short after you recalculate, it may be time to make some changes.
To learn more about eTenders and ROI, or if you’d like to see an eTendering demo, contact EC Sourcing Group to schedule a demo today by calling 973-936-9672. We want to help you re-imagine procurement.