JD Edwards EnterpriseOne Operational Sourcing Overview

Sourcing is the process of identifying a company's purchases (both historic and future) and then defining the optimum supplier mix for those purchases. Different activities can trigger a sourcing event, such as a new product introduction (NPI), the expiration of a contract for an item or commodity group, a cost savings effort by the company, or a buyer's decision to reduce the supply base of the company. The sourcing process includes analyzing historic spending patterns and future demand (planned requirements) and rationalizing suppliers for developing long-term agreements. Other tasks include evaluating supplier offerings, making comparisons, optimizing total cost, and improving and establishing long-term relationships with suppliers. The result is finding the best deal, the right products and services, sufficient availability, and favorable prices.

Sourcing involves two types of events:

• Requests for information (RFI)

• Requests for quote (RFx)

RFIs are used when you are seeking general information about suppliers' capabilities, products, or services or the industry in general. RFxs are used when you are seeking prices and supply attributes for identified materials or services. The RFx business process enables buyers to aggregate total enterprise requirements for the purpose of negotiating long term partnership relations, thereby reducing material cost through volume pricing. The objectives of operational sourcing are to:

• Streamline manual tasks, interactions, and the sourcing process to drive down sourcing costs.

• Make better decisions based on quote evaluations that provide the lowest total cost alternative.

• Negotiate better prices and more favorable terms through volume pricing.

• Build a company knowledge base on market suppliers and commodities.

• Accelerate time to market for new products.