E-sourcing finds its place
Survey finds online buying tools steadily gain adoption.
By David Hannon -- Purchasing, 11/2/2006 7:00:00 AM
Purchasing’s annual Benchmark E-Sourcing Survey showed the percentage of spend going through e-sourcing tools almost doubled in the past year from 16% in 2005 to 31% in 2006. And buyers are shooting for up to 50% next year.
In its sixth year, the survey also showed increases in the percentage of buyers using e-RFx tools, data warehouses and cost estimating tools as well as an increase in the average number of online events held in the past year.
“We are looking at additional tool sets in order to run more complex bidding events,” said one buyer in the survey. “We are looking for a tool that will offer more bidding options and increase ease of use for our suppliers.”
Survey respondents said they held an average of 160 online events (e-auctions, e-RFQs, online sealed bids, etc.) in the past year, a dramatic increase from 45 last year. That may be due to the fact that more purchasing organizations (33%) are mandating the use of e-sourcing tools than a year ago (21%). Another 15% expect to mandate their use in the coming year.
Online reverse auctions saw a dramatic rebound this year with 31% of respondents saying they use them currently, compared with only 15% a year ago. (Last year’s number was well down from the 2004 number of 27%). The percentage of respondents saying they plan to use them in the future held steady at 26%.
Data warehouses are becoming more accepted in today’s purchasing organization, with 42% saying they use them currently and another 29% planning on it. That’s up from 32% using them a year ago.
Spend analysis software use remained steady at 38% but e-RFI and e-RFQ use both ticked up in 2006. Forty-three percent of survey respondents said they’re using e-RFI (up from 31% last year) and 49% said they’re using e-RFQs today, up from 35% in 2005. And 31% say they plan to use these tools in the future.
Training on use of e-sourcing technology is also increasing. The percentage of respondents reporting that their company dedicates resources to e-sourcing training increased by more than 10% in 2006. Sixty-two percent of respondents feel they are adequately skilled to make the best us of an e-sourcing tool, a 13-point jump from the 49% that felt they were a year ago.
For the first time, Purchasing asked if buyers were using cost-estimation tools. Eighteen percent said they were currently, and 41% said they plan to in the future. Another 41% said they have no plans to use them.
Security issues seem to be less of a concern today when buying online. Thirty-five percent of buyers feel comfortable having buying information outside the company firewall, up from 21% in last year’s survey. The percentage of buyers that said they are currently using on-demand or hosted applications increased to 22%, but 56% said they would not use a hosted or on-demand solution for production buying. Surprisingly, that is an increase from 45% last year.
The percentage of buyers using EDI decreased for the first time in 2006 from 50% to 46%. Use of e-marketplaces remained about even at 27%, with most being very niche or industry-specific. Use of supplier portals also remained flat at 48% this year.
Use of algorithm-based optimization tools ticked up to 11%, while the percentage that will not use the tools was 61%.
Use of e-sourcing tools by the years
(percent of buyers reporting use of selected tools)
| 2003 | 2004 | 2005 | 2006 | |
| Supplier directories/databases | 76% | 74% | 71% | 76% |
| Supplier-hosted Web storefronts | 45% | 52% | 40% | 57% |
| Supplier portals | 41% | 48% | 49% | 48% |
| Enterprise e-procurement for buying nonproduction items | 24% | 21% | 30% | 24% |
| Hosted e-procurement for buying nonproduction items | 14% | 22% | 19% | 23% |
| Enterprise e-procurement forbuying production items | 13% | 18% | 19% | 28% |
| Hosted e-procurement for buying production items | 3% | 5% | 19% | 22% |
| Web-enabled contract management tools | 13% | 19% | 13% | 19% |
| e-RFI | 31% | 31% | 20% | 43% |
| e-RFQs | 33% | 36% | 43% | 49% |
| EDI | 34% | 41% | 50% | 46% |
| e-auctions (reverse) | 15% | 27% | 15% | 31% |
| e-collaboration | 13% | 38% | 13% | 19% |
| Online sealed bid | 10% | 22% | 15% | 24% |
| Web-enabled sourcing/project management tools | 13% | 32% | 28% | 31% |
| Data warehouse | 10% | 28% | 32% | 42% |
| Web tools establishing negotiation history | 3% | 11% | 9% | 12% |
| Algorithm based optimization/decision support tools | 10% | 8% | 9% | 11% |
| Source: www.purchasing.com survey | ||||
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I would love to know what demographics are associated with this survey: population and...
Keith Clay - 2006-16-11 17:59:00
