E-sourcing in Africa: The Pathway to Better Supplier Management?

E-sourcing in Africa is not a new concept. However, it has quickly gathered momentum ever since the pandemic. In 2018, it was just getting started in Rwanda, but it has spread to other countries across the continent.

Businesses saw the value of quicker and better sourcing, and now they canโ€™t get enough of it.

The term is a derivative of its parent discipline, e-procurement, which was first coined by IBM in 2000. Today, it is used to build and foster vendor relationships across the globe.

But what is it, and how can it help African supply chains? We will explore all of that in this article.

 

What is E-Sourcing?

Defining e-sourcing without first touching on sourcing might be unfair. So, we will start by defining sourcing.

Sourcing is the process of finding potential goods and service providers for any business. You get introduced to various suppliers, their offering, and their prices through sourcing.

E-soucing is the electronic and faster version of sourcing, which leaves the entire process to computers through tech applications and solutions.

With e-sourcing, businesses can delegate their sourcing processes, such as RFI, RFP, and RFQ, to robust and capable computer systems.

 

Why is E-sourcing so Important to Businesses or Supply Chains in Africa?

There are several reasons African businesses are clamouring for the technology or platform.

๐Ÿ. ๐ˆ๐ง๐œ๐ซ๐ž๐š๐ฌ๐ž๐ ๐„๐Ÿ๐Ÿ๐ข๐œ๐ข๐ž๐ง๐œ๐ฒ: The platform helps businesses streamline operations and simplifies procurement. It reduces the time required for supplier identification, negotiation, and other procurement activities.

๐Ÿ. ๐‚๐จ๐ฌ๐ญ ๐’๐š๐ฏ๐ข๐ง๐ ๐ฌ: E-sourcing helps supply chains identify cost-effective suppliers, optimize bids, and negotiate favourable terms. With this, it ends up reducing procurement costs and increasing cost control.

๐Ÿ‘. ๐–๐ข๐๐ž๐ซ ๐’๐ฎ๐ฉ๐ฉ๐ฅ๐ข๐ž๐ซ ๐๐จ๐จ๐ฅ: E-sourcing platforms enable access to a broader and more diverse pool of suppliers across Africa, which can be particularly advantageous in regions with a shortage of local suppliers. It can also help promote competition and a variety of options.

๐Ÿ’. ๐“๐ซ๐š๐ง๐ฌ๐ฉ๐š๐ซ๐ž๐ง๐œ๐ฒ ๐š๐ง๐ ๐•๐ข๐ฌ๐ข๐›๐ข๐ฅ๐ข๐ญ๐ฒ: With e-sourcing, businesses now have real-time visibility into the procurement process, enhancing transparency and traceability, which is important for addressing issues related to corruption and fraud.

 

Why Arenโ€™t More Supply Chains or Organizations in Africa Using E-sourcing?

Although it is gaining momentum in Africa, some businesses are still wary. Here is why

๐Ÿ. ๐“๐ซ๐ฎ๐ฌ๐ญ ๐š๐ง๐ ๐“๐ซ๐š๐ง๐ฌ๐ฉ๐š๐ซ๐ž๐ง๐œ๐ฒ ๐ˆ๐ฌ๐ฌ๐ฎ๐ž๐ฌ: Concerns about the reliability and trustworthiness of the platform and its digital transactions may arise often, particularly in regions with a history of corruption.

๐Ÿ. ๐”๐ง๐ซ๐ž๐ฅ๐ข๐š๐›๐ฅ๐ž ๐๐จ๐ฐ๐ž๐ซ ๐’๐ฎ๐ฉ๐ฉ๐ฅ๐ฒ: Power supply is problematic in many African regions. Frequent power outages in certain areas can disrupt e-sourcing activities and lead to data loss. This can make it very expensive and complicated to manage. Other infrastructural challenges, such as limited access to the Internet, can negatively impact the efficiency of the process.

๐Ÿ‘. ๐ƒ๐ข๐ ๐ข๐ญ๐š๐ฅ ๐ƒ๐ข๐ฏ๐ข๐๐ž: For e-sourcing to work properly, supply chains and organizations have to interact with different suppliers through computer systems. The problem is that not all potential vendors for this business in Africa have the necessary infrastructure.

 

How Can More Supply Chains Can Adopt it?

Thanks to an increasingly interconnected world, e-sourcing can transform supply chain management in Africa, promoting economic growth and access to international markets.

Despite numerous challenges, e-sourcing, or electronic platforms for procurement and sourcing, holds immense potential for transforming supply chain dynamics in Africa.

This digital shifting has the ability to lower expenses, increase efficiency, and make it easier to access a larger pool of suppliers.

However, to fully reap these advantages, a multifaceted strategy is required to persuade other companies to use e-sourcing.

1. Promoting Digital Inclusion

This is a long game but one worth playing. The digital divide is a significant concern in Africa, where there is a limitation of access to reliable, high-speed internet and other digital paraphernalia.

To address this issue, governments, international organizations, and the private sector should strongly emphasize promoting digital inclusion.

This includes initiatives to enhance digital literacy and digital skills development. By bridging the digital divide, Africa can ensure that a broader segment of the population, including SMEs, can effectively participate in e-sourcing.

2. Affordable Tech Solutions

Technology solutions for e-sourcing must be customized to African companies’ requirements and financial limitations, particularly SMEs.

Many more supply chains or organizations can participate in e-sourcing operations simply by creating and marketing cost-effective e-sourcing platforms and solutions.

More organizations can profit from e-sourcing’s advantages if the cost of technology is not an impediment.

3. Cybersecurity Measures

Building trust and security is another critical facet of promoting e-sourcing adoption. African governments, organizations, and businesses must establish and enforce robust cybersecurity measures.

These measures help build trust and confidence in digital transactions, emphasizing the importance of protecting sensitive data and ensuring the security of e-sourcing platforms.ย 

By addressing cybersecurity concerns, businesses can engage in e-sourcing with greater peace of mind, knowing that their digital transactions are secure.

 

FAQs on E-Sourcing in Africa

Q1: What security precautions should a supply chain consider when implementing e-sourcing?

It is imperative to provide strong access controls, user authentication, and data encryption. Additionally crucial are regular security audits and adherence to data protection laws.

 

Q2: How can African companies use e-sourcing to guarantee vendor quality and compliance?

Employing e-sourcing platforms with capabilities for vendor evaluation and management allows companies to keep an eye on compliance, evaluate vendor performance, and preserve the calibre of their supplier relationships.

 

Q3: When using e-sourcing in Africa, what financial implications should firms consider?

Although e-sourcing can result in long-term cost benefits, it is important to consider the upfront costs associated with system integration, training, and technology. Companies should set aside money for regular upkeep and software upgrades.

 

Q4:ย Which technology is most frequently employed in Africa for e-sourcing?

Commonly utilized are e-auction tools, e-procurement software, and e-sourcing platforms. The electronic submission of bids, requests for proposals, and other procurement tasks are easier when using these systems.