supplier engagement
Revolution to Evolution: Is the B2B Marketplace Undergoing a Major Transformation? by Russell Darling
For years, eProcurement has been about supplier consolidation, to strategically limit the supplier base, to partner with content “aggregators”, to leverage those aggregators’ technology, volume pricing, and terms. However, during those same years, when I reviewed my client’s marketplace pricing (ok, maybe it was my mom reviewing the price of a MacBook Pro) I was often left scratching my head…this is a deal? Maybe, bringing the smaller, leaner, hungrier supplier into the mix will increase the competition within certain categories and yield better pricing or service? Maybe VA is on to something.
As someone who has worked in the public sector for more years than I would perhaps care to admit – with the dawn of another new year I am reminded how relentlessly quick time moves on – I took particular interest in a recent blog post by Scott Walls titled “Is eProcurement About to Evolve?” Specifically his emphasis on the benefits of improving as opposed to impeding buyer access to what he referred to as being “smaller, leaner, hungrier suppliers” (see excerpt above).
In heading up finance shared services for Bristol City Council, helping to deliver millions of pounds of savings using the cloudBuy platform, Walls’ recount of his discussion with the brain trust of the highly successful Commonwealth of Virginia eVA initiative was without a doubt most interesting.
The fact that Virginia is one of the first governments to comprehend the power of a truly open and free marketplace in which both contracted and non-contracted suppliers can come to the table, is perhaps the first sign that an evolution is indeed at hand.
Enthusiasm for this much needed change notwithstanding, Walls was quick to point out that there is a major hurdle in Virginia’s realization of its bold, new vision. The hurdle to which he made reference is the purported paucity of SaaS suppliers who are capable of facilitating an effective win-win engagement of the broader supply market. I was surprised by this simply because Virginia, unlike most public sector organizations, has what has been described as a transparent, content-focused, supplier-agnostic model. In other words eVA, and in particular it’s architects approach to supplier engagement, appears to exemplify the true spirit of the kind of open and free B2B marketplace about which Ronald Duncan wrote in his recent post “Risk awareness versus risk aversion in the emerging B2B Marketplace.”
So here is the question; are there SaaS suppliers, or for that matter a discontinuous innovator, who can step up to the plate and help to drive this evolution?
My answer can be found in my success while with Bristol City Council.
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Risk awareness versus risk aversion in the emerging B2B Marketplace by Ronald Duncan
In a recent radio interview I was asked how my career as a World Cup and Olympic downhill skier influenced me in terms of my entrepreneurial zeal. Specifically, did my willingness to take such tremendous risks to compete in what is one of the world’s most exciting yet dangerous sports better equip me to handle the risks and challenges of the business world?
Likening the career of a downhill racer to that of a fast jet pilot, I responded that most of us are really quite safe in our approach – after all I reasoned, you are either safe or dead!
Of course the best way to be safe is to have an equal measure of talent, passion and training or preparation. In essence you do not avoid the risks so much as you are keenly aware of the risks and are therefore better able to manage them. Or to put it another way, no skier ever won a Gold Medal by looking down a steep slope and walking away.
Unfortunately, when it comes to a B2B free and open market most businesses have up until very recently, chosen to walk away. When I say walk away, what I mean is that organizations have attempted to avoid supposed risks by limiting the number of suppliers with whom they work. The end result – or lack thereof – speaks for itself in the form of increased costs, cycle inefficiencies and burgeoning consulting budgets related to fixing fictitious problems such as maverick spend.
The challenge in recognizing this truth is that in the past there was no contextual reference point to clearly demonstrate the problem of what I call limited engagement, let alone how said problem could be addressed. This all changed as a result of the growing and continuing dominance of the B2C world [1]. Specifically, people started to ask the question “why can’t we have the same experience sitting at the office as we do at home?” Consumer experience it is safe to say has forever changed the business world’s approach to B2B engagement.
This recent development has opened the door to organizations such as cloudBuy, who 15 years ago built a platform based on the premise that being able to bring all suppliers up to speed in terms of real-time B2B capabilities was the wave of the future. And the future is now.
The end result is that the warfare that has been waged against off-contract buying is all but eliminated in today’s B2B world, centered on the fact that with the now recognized robust source to settlement platforms, all players are truly on a level playing field relative to service capabilities.
While this expanded field can be daunting – especially for those organizations that are looking maybe for the first time ever to expand their supply base rather than rationalize it ̶ the fact is that while there are always risks in life, being fully prepared and equipped with the right tools means that you can focus on pushing out of the gate with confidence towards that Gold Medal. In the procurement world this means a best value outcome with each and every purchasing decision.
With upcoming posts, I will delve into the subject of maverick spend, the VISA connection, improving contract management, as well as stock, pricing and goods synchronization.
[1] According to the data from a BDO study it was another stellar Christmas for online sales, with non-store sales leaping 31.1%, rising to growth of 55.7% in the week before Christmas.
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In The Cloud 