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• Strategic sourcing is a critical element of any successful organization. Organizations rely on strategic sourcing in meeting short-term and long-term needs. To sufficiently meet the ever-changing customer needs, you need a reliable and strategic procurement process.
• It’s critical to know what a strategic RFx process is in procurement planning and management. Well, RFx is an acronym for “Request For” where X is any of these three elements or aspects: Request for Information, Request for Proposal, or Request for Quotation.
In a typical procurement process, buyers, mostly organizations or institutions, identify the products they need from specific vendors and suppliers. After identifying these products, the procurement department drafts the purchase order PO form and sends it to suppliers.
An RFx may include a request for information about these products. Also, it may denote a request for a quotation about these products or a request for a proposal. The RFx provides a critical benchmark for determining what specifically a buyer (organizations, businesses, or institutions) needs from a seller or a vendor.
Strategic RFx Process
Before the advancement of modern technology, the RFX or request for proposal, quotation, or information, was sent by mail, fax, or telephone. Businesses would exchange RFX requests via these traditional communication channels. While these channels served immediate procurement needs, digitization of sourcing practices shifted the narrative.
The ‘e’ was later added to the RFX process to show that the procurement processes were being conducted electronically. The eRFx, therefore, refers to the request for information, quotation, or proposal electronically by using procurement software. The eRFx capabilities are being embedded in modern-day software, opening opportunities and pushing boundaries in strategic sourcing processes.
So, what are the benefits of using a strategic RFx or eRFx Process? Let’s delve.
1. Business Continuity and Sustainability
Perhaps the most important benefit of automated procurement and RFx processes is cost reduction. However, beyond costs, having reliable and strategically sourced suppliers enables you to enjoy other complimentary benefits, including timely deliveries, discounts, reductions in product defects, fewer service interruptions, and ultimately business continuity.
What most enterprises don’t realize is that the procurement function is a strategic, long-term function. This means using strategically sourced suppliers goes beyond saving costs. Leveraging a strategic RFx process is essentially a growth strategy due to business continuity.
2. Aligning Sourcing and Business Objectives
Sourcing objectives must conform to established business goals. Enterprises that succeed recognize that procurement processes are central to business growth. Managing procurement involves managing a critical component of the business. A strategic RFx process allows you to contact different vendors, obtain information, obtain quotations, and make timely procurement decisions.
A strategic RFx process is the cornerstone of streamlined and efficient procurement. By using the RFx process, enterprises can align their purchasing goals with long-term business objectives. For instance, a business that uses a cost-centric model may use strategic RFx processes to identify vendors with cost-friendly deals. The strategic RFx process aligns your buying objectives with your long-term business goals, ensuring business continuity and creating long-term value.
Time is money. This saying applies to many things, procurement included. A strategic RFx process contains three requests: a request for quotation, a request for proposal, and a request for information. These requests allow you to submit inquiries and obtain feedback from multiple perspective suppliers. By using the strategic RFx process, you’re automatically able to analyze markets and compare suppliers. Using the strategic RFx process allows you to send inquiries and obtain feedback in a time-to-value fashion.
The strategic RFx process is a cost-saver for cash-strapped businesses. Utilizing a strategic RFx process eliminates the labor required to process and submit procurement requests to suppliers. As your personnel saves time, they also save money by fax, mail, and telephone. Digitization of the procurement function has proved to be a cost-saver, particularly for routine administrative tasks: telephone, office support, mailing, fax, hardware repair, and app maintenance.
5. Improved Procurement Structure
A strategic eRFx or RFx process automatically leads to an organized and structured process when receiving formal replies from suppliers. These replies may include quotations, prices, offers, payment, and delivery information. Today, there is software that provides RFx or eRFx functionality, allowing enterprises to submit procurement requests. Leveraging a strategic RFx process allows you to enjoy structured and organized responses, ensuring accountability and transparency in supplier bidding and selection processes.
6. Competitive Positioning
Regardless of your preferred option (quotation, information, or proposal), you will enjoy cost savings, learn about your market dynamics, and inject creative solutions into your business. Using a strategic RFx solution offers you competitive benefits that differentiate you from the competition.
The RFx targets enterprises seeking creative procurement solutions. And once you experiment with your first RFx solution and witness its positive results, you can deploy this innovative procurement solution to your business strategy. The strategic RFx process provides a host of benefits that sets you apart. Using a strategic RFx process means staying at the top of procurement and edging out of the competition.
Other advantages of the strategic RFx process
- Business scalability, adaptability, and agility
- More innovation in business processes
- Less supply chain and procurement risks
- Reliability and security of procurement functions
- Better control due to enhanced visibility of expenditures
- Enhanced compliance with fiscal and procurement regulations
- Centralization because all three requests are in one place
- Suitability in controlling and managing indirect expenses
- Visibility of end-to-end supplier processes
- Better knowledge and insight into supplier activities
The sourcing and procurement function is changing with digitization, and businesses must change too. The emergence of new procurement solutions is evidence of a looming future for those reluctant to adopt new solutions.
ProcurePort – Providers of Strategic RFx Solutions
Already, eProcurement is shaping sourcing processes, allowing businesses to be agile and proactive in their routine purchasing processes. At ProcurePort, we help enterprises bridge the sourcing gap through strategic RFx solutions: RFI, RFQ, and RFPs. You can contact us for any inquiries about strategic RFx processes.
Contact us today to take advantage of strategic sourcing.