What is eTendering and Its Process?
eTendering has become a must in today’s global economy, particularly in the supply chain and procurement. You may find that if you’re talking about global markets that eTendering is the more common term, but if you’re talking about tendering just within the United States, eRFX is the more commonly used term. While there are very slight differences, in essence, they hold the same meaning: electronic tendering or electronic sourcing.
What Is eTendering and Its Process? What Is eRFX?
The “X” in eRFX is just a placeholder. It may be a request for proposal, a request for information, a request for a quote, and so on. RFX.
The X is just an easy stand-in for any feeler you put out along the supply chain. eTendering doesn’t necessarily mean that money has exchanged hands yet. If you’re wondering, “What is eTendering and its process?”, it covers the process from pre-sale through the evaluation afterward when you’re dealing with your supplier. This is in part why eTendering and eRFX are easily overlapping terms, as the X covers most of these things, too.
What Is eTendering and Its Process?Types of eTendering
There are several different types of eTendering, some of which may or may not apply to you, as some are more applicable if you’re in the governmental sector and are submitting those types of bids. The most common types of tenders are:
- Open tender: This is used by both the governmental and private sectors and, in some cases, encourages the most competition between suppliers. It essentially offers an equal opportunity for anyone to submit a tender. You’ll see this the most in construction and engineering.
- Negotiated tender: This type of tender is also very common in the engineering and construction industries. This is a negotiation with a single supplier, and this contractor is usually in on the project from day one. Communication is usually top-notch, and costs are often reduced because you’re partnering with a familiar supplier, and together you can find ways to reduce costs on both sides of the table. The only downside is the lack of competition for an even lower price.
- Selective tender: In this type of tender, you only invite suppliers that you want to bid. This works well for complex contracts or strategic categories, and you can pick and choose who you feel may be a good fit. On the supplier side, this often excludes smaller companies who may do a good job and come in at a lower price but are under your radar.
- Single-stage and two-stage tendering: When these types of tenders are used, not all available information may be available when tendering begins. Negotiations may need to commence one or two times before a fixed price is agreed upon.
What Is eTendering and Its Process? The eTendering Process Itself
As you think about the question, what is eTendering and its process?”, depending on what type of eTender you decide on, they usually have a typical flow, which happens in four stages
- Issuance of tender to suppliers
- Receipt, review, and award of tenders
- Award of contract
How to start eTendering begins with prequalification. Prequalifying refers to finding suppliers that may be qualified to handle the job.
Of course, if you are working with one supplier, such as with negotiated tender, you would skip this stage. During the issuance of the tender phase, you’re gathering information about your potential suppliers and evaluating your risk. Similarly, on their side, they are evaluating risk as well. It is wise to note that, during this phase, the lowest bid is not always the best. It’s also important during this phase to include enough information to the suppliers, so they completely understand your needs, your specs, and the project so they can provide their best bid.
Many people have learned this the hard way because they didn’t ask, “what is eTendering and its process?” first. During receipt, review, and award of tenders, you may begin to narrow your choices down. There may be an additional negotiation phase. You may be continuing to evaluate risk. Finally, you will award the contract to the supplier(s) you think will provide the best value, best quality and lowest risk to the organization.
What Is eTendering and Its Process? Benefits of eTendering
There are many benefits of eTendering. All of this will be performed electronically to ensure you have an adequate eRFX software suite with everything you need to handle every aspect.
Overall, benefits of eTendering include:
- Increased efficiency. Provided you have the right software; the automation should streamline your sourcing process by at least 35 percent.
- eTenders & ROI. You should see an increase in bandwidth in your department along with an uptick in efficiency, which should culminate in an increase in ROI.
- Better vendors. Over time, not only will you have better quality suppliers, your relationships with your suppliers will improve.
- Better data insight. With good software and analytics, the transparency you should have into handling your eTendering process and supplier maintenance should help you perform better.
- Knowledge transfer. With the right kind of software, all important sourcing data to justify all decisions is available for anyone with access rights. This can be especially useful if internal auditors visit you or if you have staff turnover in your team.
The efficiency and savings are the top takeaways of eTendering, but there are quite a few benefits that can’t be ignored.
If you still have questions about “what is eTendering and its process?” or you’d like to request a software demo about eSourcing, contact EC Sourcing Group today at 973-936-9672. We want to help you reimagine the way you think about procurement.