Chief Procurement Officers are being asked to deliver even more. Organizations are seeking procurement-based savings to offset some of the impact caused by an economic slowdown. At the same time, globalization, decentralization, and merger and acquisition activity have made it more difficult to implement best practice standards and create a common information infrastructure for sourcing and procurement.
To further complicate matters, it is unclear how quickly or completely B2B eCommerce platforms will be able to deliver the benefits many companies thought were imminent.
This quote is from “A Case for eSourcing: The Strategic Side of Procurement”, a 2003 Supply Chain Perspective from Accenture. Reading the recent article What future for e-Marketplaces, a topic discussed recently by JP Massin in his recent posts Why industry-led eMarketplaces failed and What future for e-Marketplaces, I am inclined to agree with Alain Andreoli on the surface, and with JP Massin in one of the details, but still think something is missing in both analyses.
In Alain Andreoli’s view, summarized in the article, in order for B2B to take off, consolidation, which takes the market down to two or three global supplier networks, is required. Apparently, businesses are waiting for that three letter household name that they’ll never get fired for selecting. Furthermore, those providers must increase the network supply base (mass on-boarding) and roll-out value-added services.
According to JP Massin, e-B2B applications are not yet mature enough. A key yet-to-be invented capability is missing. Furthermore, the cost and lead time of deployment, the lack of interoperability of current marketplaces, and the lack of proven reliability is holding current marketplaces back. Not to mention the fact that the applications need to be user-centric, and not process centric like current instantiations.
Basically, it all comes down to value … and right now, the marketplaces don’t really have the value. From a supplier’s viewpoint integration isn’t easy, there’s no cross platform standard, not a lot of buyers, and no guarantee that a buyer will even use the platform. From a buyer’s viewpoint, the platforms are not always easy to use, there’s no integration to their e-Sourcing or e-Procurement application, and a limited supply base. From both viewpoints, there’s no obvious financial incentive or other reason to use the system.
Value is going to require, as Alain points out, a large user base, which will likely mean consolidation within verticals to a handful of primary marketplaces and user-centricity, as JP-Massin points out, but it’s also going to require community and standards. It has to be easy to integrate into from a suppliers viewpoint, but, more importantly, it has to be easy to integrate into from an e-Sourcing and e-Procurement provider’s viewpoint, since buyers are going to want to tap into it using the tools and interfaces they already use. And it has to offer community – so people feel like they are part of a network. Then e-MarketPlaces might take off.