Recently there has been an increased use of the word Vendor-Sourcing Tool and many people are not aware of what this is so I will try to clarify it in this article.
Most people in business are aware of business directories. These have been around for a long time and Yell or yellow pages, are a good example. Before the advent of the Internet, businesses and customers used them to find businesses for a required service. They were sometimes very thick hard copy books that were delivered door to door and businesses would pay to be included into the business directory.
When the Internet took off, business directories moved online and the basic principle did not change. They were lists of companies separated by categories. PG cable glandThe big problem with Business directories is that the categories tend to be extremely broad so if you were looking for a company who sold cable glands for instance, you would search for companies under the category “Electrical Suppliers”. The electrical suppliers category would have hundreds of companies listed under them but they wouldn’t necessarily all sell cable glands. So you may end up contacting a lot of companies who can’t actually supply what you are looking for. And this is where Vendor-Sourcing Tools take over.
The main differential between a Business directory and a Vendor-Sourcing Tool is that Business directories work on the principle that people are looking for a business, while Vendor-Sourcing Tools believe that people are looking for products or services. Sure they will need a company who provide those goods and services but the company is not the prime factor in their search.
The concept of a vendor-sourcing tool was first seen in 2009 when it was used for the Oil & Gas and Petrochemical industries. These industries are extremely lucrative industries with projects having procurement budgets of many billions of dollars. Not only was the size of the projects and the amount of materials required a problem, but also more often than not the projects were being executed in remote locations. These factors made it extremely difficult for buyers.