Are Supplier Networks the “Silver Bullet”?

Charlotte Sutton
Charlotte Sutton,
Clearly, the idea of connecting buyers and sellers with each other “in the cloud” where they can easily collaborate, share information and exchange transactions is an approach that can positively impact a company’s Spend Control efforts. 
Today’s Internet-based technologies have made that process far simpler than it was even five years ago.  Basic capabilities such as web portals, email, and XML enable organisations to communicate and collaborate with suppliers in ways that would have previously required specialised technology and a large IT effort.
One approach to enabling buyer-supplier connectivity in the cloud that has garnered attention lately is that of supplier networks and eMarketplaces - a concept that initially rose and fell in the “dot-com” era, and has recently been given new life by a number of solution providers. 
The Reality of Supplier Networks and eMarketplaces
On the surface, the concept seems great for buyers – a large number of suppliers already set up and accessible through a single “hub”. And in some cases, there are in fact advantages to this approach to dealing with suppliers. 
But supplier networks and eMarketplaces are not the “silver bullet” their operators position them as being. While access to certain specialised supplier networks and eMarketplaces can be a useful as part of an organisation’s overall strategy for supplier connectivity and enablement, the extent of that usefulness is often overstated by the operators of some such services. 
The Fundamental Goals of Supplier Connectivity and Enablement
Looking beyond the noise, what are buying organisations really trying to achieve with supplier networks and eMarketplaces? The organisations we work with are pretty clear – they tell us that their fundamental goals are:
  1. Reduce costs by introducing standard purchase-to-pay (P2P) processes
  2. Reduce the cost of transaction processing
  3. Reduce the cost of supplier enablement
Common Myths
You may perceive that the “biggest and broadest” public supplier network will enable you to achieve those objectives, but keep in mind that:
  • They don’t really come without a cost
  • They don’t cover every spend category
  • They don’t provide suitable capabilities for all types and sizes of suppliers
  • They don’t really relieve you of all supplier enablement tasks 
  • Most importantly… they don’t automatically put more spend under management or transform your procurement process  
In a recent PROACTIS white paper, we identified and addressed nine common myths about supplier networks and eMarketplaces.  Download the paper: Supplier Enablement: Myths and Realities about Supplier Networks and eMarketplaces to learn more about the realities related to each of these myths as well as an overview of how PROACTIS provides the capabilities for practical real-world solutions to supplier connectivity and enablement. 
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