Supplier Networks & eMarketplaces are not a Panacea

Charlotte Sutton
Charlotte Sutton,
In a recent article by Spend Matters, Jason Busch reflected on a view that Supplier Networks and eMarketplaces could "do away with the need to put in place good contracts and proactively manage spend from a category perspective".
Jason Busch: "The view that networks would somehow do away with the need for procurement basics such as good contract management processes, strategic sourcing, and the like, the more I realized this was a case of a network vision gone astray, one that could potentially lead companies that were drawn in by the thinking down a dangerous spend path."

Supplier networks and eMarketplaces are not the "silver bullet" their operators position them as being. In response, Simon Dadswell, Director of Marketing, PROACTIS commented:

When all spend categories are considered, the great majority of an organisation's suppliers will not be found on any one (or any) supplier network, and a large number of spend categories don't fit the supplier network or eMarketplace model at all e.g. services spend. In the end, most "best value" buyer-supplier relationships are based on well-negotiated agreements that may be different in a number of ways from any other relationship a given supplier has with any other buyer. This type of relationship always requires direct buyer-supplier integration that goes beyond what can be found in a public supplier network or eMarketplace.

At PROACTIS we have taken a different approach. We have focused on providing buyers with the tools they need to manage ALL of their spend from ALL of their suppliers not just commodity items that make it easily fit the eMarketplace model, or large suppliers with deep pockets and the IT resources required to participate in multiple supplier networks.

PROACTIS solutions are designed to make it easy for you to build your own "private marketplace". This  approach does however provide the most important capabilities of a supplier network or eMarketplace, including a central "commerce hub" where:
  •  Suppliers can register and maintain their profile and catalogue information
  •  Buyers can view registered suppliers and invite them to be part of their private marketplace
  •  Suppliers and catalogues can be made easily accessible within the buyers P2P system
  •  Buyers and suppliers can automate the exchange of electronic orders and invoice documents
The difference between the PROACTIS approach and approaches based on a public supplier network or eMarketplaces are:
  • There is NO CHARGE to suppliers (and therefore no added cost passed on to buyers)
  • Buyers define and control the details of their supplier relationships without the need for a third party
  • Specialised public networks or marketplaces can be incorporated as needed
  • A range of enablement, ordering and invoicing capabilities are provided to support all types and sizes in all PO and non-PO spend categories
  • Convenient employee access to all supplier and catalogue information is provided with a powerful search and compare capability that combines appropriate information from all sources
  • Supplier account status enquiry capabilities are provided with the same cloud-based destination
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