Ensure eSourcing integrity with transparency and fairness. Discover strategies for equitable supplier selection, streamlined evaluations, and ethical procurement. Gain insights on fostering trust, compliance, and optimal outcomes. Elevate your sourcing approach through proven methods that promote transparency and fairness.
The procurement process is under increasing scrutiny as buyers and suppliers want to know more about the companies they work with, as well as how every penny is spent to ensure they get full value for money. Buyers must also prove that bidding on and awarding contracts was carried out fairly, with all proposals judged on the same criteria, to the same standards. As a result, buyers must ensure that every step in the eSourcing process, indeed across the entire supply chain, is completely transparent.
Fortunately, there are several strategies they can employ to ensure transparency in eSourcing. We’re going to find out more about how buyers can use transparency in supplier selection to award contracts to companies that have a proven record of ethical sourcing and procurement. We’ll also look at the importance of integrity and trust in eSourcing and eProcurement.
Setting Up a Fair Supply Chain
The first thing you need to do is decide what a fair supply chain looks like to you, for example, which factors carry the most weight and how scores will be determined. You’ll need to adjust requirements to suit different contracts, especially if you have several small contracts on the go simultaneously or one large contract with multiple suppliers.
Supplier Selection Strategy
A comprehensive supplier selection strategy consists of several elements. We’re going to look at some of them below.
First, figure out where you are now in terms of sourcing; are there shortfalls or obstacles, are you getting your money’s worth, are you happy with your current suppliers’ performance?
Weigh that against future sourcing needs. What do you need to be more efficient, to cut costs, and meet goals?
Your needs will determine the type of supplier required and your eSourcing software will help you categorise and evaluate suppliers according to preset criteria, including financial stability, regulatory compliance, performance, and dependability.
This helps to minimise supplier risk and identify suppliers with potential for sound working relationships.
Supplier Evaluation Methods
Each contract has specific needs that might only be met by using different supplier selection processes. For example, some contracts are better served through restricted tendering, when you invite chosen suppliers to bid on the contract.
On the other hand, sometimes selecting the right supplier takes a broader approach that requires potential suppliers to respond to a blanket request for information (RFI). Responses can be evaluated by eSourcing software according to preset criteria, after which, automation features will send requests for proposals (RFP) and/or requests for quotes (RFQ).
Communication and Collaboration
One of the best ways to ensure transparency is through open and honest communication. As a buyer, you need to make your requirements perfectly clear. You need to make it easy for bidders to ask you questions about anything related to the contract or tender and for them to submit their proposals.
ESourcing software, with its central hub that manages, categorises, and assesses bidding parties, keeps lines of communication open and facilitates collaboration among parties concerned.
Potential suppliers are assessed according to predetermined key performance indicators (KPIs). Those that tick the boxes can be shortlisted and go through a final review to determine who ultimately is awarded the contract.
Assessment continues beyond the initial selection stage. It’s an ongoing process that tracks performance and picks up on potential problems, like slipping standards when it comes to materials used. Problems can be addressed proactively and warded off without causing any damage to the supply chain.
Additional steps to include in strategic supplier selection
You can optimise the eSourcing system by taking certain steps to better understand your options in the supplier pool.
- Determine market share. This is a great way to find the top performing suppliers in your category. It also indicates their pulling power which informs your bid prices and chances of successful negotiation.
- Analyse risk. Supplier risk analysis is important because it determines the likelihood that suppliers will have a negative impact on your business. This could be ethically, financially, or environmentally.
- Verify compliance. All industries have regulations and qualification requirements which must be met. You should always choose a supplier that is 100% compliant and properly accredited.
- Re-evaluate suitability. Suppliers should be evaluated regularly to ensure they’re still on track with service delivery and that they’re maintaining a high standard of work.
- Provide feedback. Fairness requires feedback so that suppliers can address any issues that cropped up or have the potential to crop up. The most important part of this step is giving suppliers the opportunity to improve. Aside from the benefit to the supplier, it saves buyers from having to source brand new suppliers, which sets projects back and can add significantly to the cost of the project.
Who Evaluates Suppliers?
This is a very important question because it’s essential that you choose only people who can make fair and unbiased selections. The group, or evaluation committee, must have a predetermined scorecard that includes detailed contract information, including contract requirements, and how scoring works. All evaluators must use the same scoring system throughout the supplier selection process to ensure the final decision is made fairly.
The best way to achieve this is to use standard templates. Not only do they facilitate fairness in awarding contracts, but they also make it easier to process proposals. ESourcing software can manage most of this process, but the real time-saver is the ability to automatically send out standardised requests for proposal (RFPs).
In the interests of transparency, evaluators must record the decision-making process, especially the path that led to the selection of a specific supplier. There must be consensus on the final decision. It needn’t be unanimous, but the recommendation must be made by the majority.
Ethical Sourcing and Procurement
Ethics in procurement processes can be divided into two factors.
1) Ethical people
2) Ethical business practices
It is impossible to operate an ethical business without people who share a sense of ethics and are committed to transparency, honesty, and fairness. Anyone on the other side of the ethical line could be swayed by unethical tactics, such as accepting gifts from suppliers, favouring friends and family, breaching confidentiality, and favouritism or prejudice in the selection process.
It only takes one person in the supplier selection process to behave unethically for a business’s reputation to be tainted.
But, there’s more to a business’s integrity than its employees’ behaviour.
Ethical sourcing covers every stage in the supply chain – including suppliers’ integrity. For example, if one link in the supplier’s chain is iffy – perhaps there are rumours of fraud – it can have a knock-on effect on your business. This is one of the reasons why buyers should thoroughly investigate their suppliers.
One way to avoid problems like this is to create and religiously implement an ethical sourcing policy. This provides a reference buyers can consult if there is any doubt about a potential or even a current supplier.
A comprehensive policy is also necessary from a legal standpoint. Following the policy can keep you on the right side of sourcing and procurement regulations, so you can avoid potential lawsuits and other penalties.
Integrity and trust are bound inextricably together. Buyers that conduct themselves with integrity develop a reputation that attracts other businesses that value ethical supply chains, looking for a trustworthy and reliable partner.
Trust is also earned through consistently transparent and fair sourcing and procurement processes that favour suppliers with the most to offer at competitive prices.
Unlock Transparency, Fairness, Integrity, and Trust
No one said that maintaining a transparent supply chain that embraces the principles of fairness, integrity, and trust is easy. However, it can be made easier with the efficient use of eSourcing software. The automation features in most eSourcing software packages can be invaluable when it comes to the first few stages in eSourcing and procurement.
Automation assists in the accuracy and transparency of contracts, bidding processes, and supplier selection, leading to a shortlist that can be evaluated by a committee according to a detailed scoring system.
ESourcing software can take a lot of the risk out of supplier selection and can save buyers a significant amount of time, effort, and costs. Delta eSourcing provides solutions for buyers and suppliers, ensuring transparency and fairness on both sides of the supply chain. Book a free demo to find out more about transparent sourcing and other aspects of fair supply chain management.