The business world is often slow to warm to new ideas, especially when they disrupt processes that have existed for many years. The world of supply chain is no different. Procurement departments have been utilizing things like purchase requisition forms for years and years.
The problem? We don’t live in the same world as we did years and years ago! The advent of modern technology like computers and smartphones has led to the digitization of much of our lives– and that includes commerce.
In recent years, the modernization of business processes has led to efficiencies unimaginable to companies of the past. We have access to insane amounts of data about consumers, what they like, and how to get them to make a purchase. When we want to buy something, we can compare sometimes hundreds of sellers of that item. We can read product reviews, and have the items shipped to us in as fast as one day. We are connected like never before, and this has obviously changed business practice forever.
There is no reason that the supply chain world shouldn’t benefit greatly from the digitization revolution!
E-procurement systems made headway as a technological system that would revolutionize procurement– and they did, to an extent. All of a sudden, supply chain professionals found themselves with more free time. Companies found their paperwork free from accidental human errors. Compliance became a bit easier, and some paperwork moved online. P2P and ERP are undoubtedly useful, especially for the direct spend category, for purchases related to business functions.
Yet, P2P systems are not the perfect solution for the indirect spend category. In this category, there are typically way more vendors selling low-value, high-volume items like computers, office furniture, and stationery products. Most large enterprises spend a lot of time finding suppliers that meet their criteria, negotiating quotes, and completing paperwork for approvals processes. There is a lot of value in the indirect spend category that has yet to be realized because of the lack of innovation.
The question is, why are some corporate enterprises avoiding the upgrade to a procurement marketplace?
Business-to-business (B2B) procurement marketplaces are online interfaces, much like B2C websites Jumia, Takealot, and Konga– but, designed specifically for corporate procurement. These platforms are easy to use, in that they are set up like the online shop windows we are already accustomed to using. However, these systems have special filters and features that businesses can use to stay compliant with their regulations and policies.
Modern B2B marketplaces will integrate with existing ERP and P2P systems. They’ll also complete your purchase request form and your order generation form, sending them to the appropriate approval entity. All invoices are automated, too. These marketplaces provide maximum value by removing red tape and tedious processes associated with tail spend buys.
These marketplaces also allow corporate entities to build and maintain supplier relationships more easily, without piles of paperwork and months of back and forth. The competitive and transparent prices offered by various vendors on these platforms also ensure that buyers get the lowest possible price (without having to get the arbitrary, traditional three quotes).
What’s more is that B2B marketplaces are often optimized with screening for sustainability. Buyers are able to filter suppliers based on their location, their qualifications, and their registered ESG information. This means that companies can filter not only by their own qualifications, but also by any required governmental regulations. As the world moves towards a sustainable future, features like this will no longer be desired, but necessary.
As more enterprises join in on the new generation of B2B online marketplaces, they will discover lower prices, lower overhead, and increased efficiencies in their supply chain. These benefits will give them a competitive edge, ultimately increasing their bottom line. Businesses that hesitate and avoid the growing world of B2B marketplaces will be the last to benefit from the cost, time, and energy savings available.
As with any historical innovation, there are those hesitant to get on board. In the case of B2B marketplaces, the proof is in the pudding! Companies are already realizing cost savings and efficiencies thanks to the help of B2B marketplaces with moving their processes completely online. To stay competitive in times of economic turmoil or instability, finding that financial edge could be critical. Perhaps the next edge will be those that take advantage of the unrealized benefits B2B marketplaces have to offer.