Daily Archives: October 5, 2023

While A Good Procurement Tool, Amazon Business IS NOT The Answer to Increasing Revenue and Boosting Resilience in Procurement!

OI! This is yet another article the doctor shouldn’t have to write, but after encountering this thinly veiled advertisement for Amazon Business masquerading as a sponsored article on Thriving Through Disruption over on Supply Chain Dive, it appears he has no choice because simply transferring your Procurement to a third party, like a GPO (Group Purchasing Organization) or Outsourced Procurement Operation, doesn’t necessarily solve the problems you are having (it just changes ownership of them). Furthermore, no single organization, including Amazon Business, is going to even be aware of, yet alone work with, all potential suppliers, and, thus, no single organization is going to be capable of maximizing your options, especially around DEI (which is something else the article trumps up).

As the article notes, resilience is KEY to successful Procurement given that major sources of global supply chain descriptions — global conflict, changing climate, resource shortages, human error (and just plain incompetence), political unrest, and much more — have only increased since the transition from pandemic to endemic for COVID, and the rate of increase shows no sign of slowing down (especially with labour disruptions also heading towards all time highs along with natural disasters).

And, as the article notes, your Procurement department needs to be agile. Unknowns abound and disruptions, even high probability ones, cannot be predicted. And even the best laid plans for risk mitigation can be voided when those plans depend on alternate supply from a supplier or distributor that gets impacted from the same natural disaster, border disruption, or labour strike. As such, an organization needs near real-time supply chain monitoring, a diverse supplier base, and the capability to react quickly when the unexpected, but inevitable, happens.

And, as the article notes, with the backing of an e-Procurement system … organizations can discover new insights that could help them adapt effectively to a changing supplier landscape, fostering flexibility and enhancing robustness.

But, and this is a key point, Amazon Business is NOT an e-Procurement system. It’s a marketplace. More specifically, it’s a very good marketplace, and one that EVERY organization should have in its arsenal for low-volume/tail spend/indirect Procurement (because, like a GPO, the volume it can deliver to suppliers can make it very attractive for suppliers to advertise its best prices up front to win all of the customers on Amazon Business), but it’s NOT a modern e-Procurement platform. (And if you want to understand what this is, and which vendors may provide this to you in a marketplace/vendor agnostic fashion, check out Parts 3 to 7 of Sourcing Innovations 39 Part Series to Help You Figure Out Where to Start with Source-to-Pay, where Part 7 contains a list of over seventy [70] e-procurement companies to check out.)

Similarly, when the article says supplier diversity is a powerful way to enhance service, quality, and value by promoting an inclusive, proactive approach to purchasing from individuals or groups who are members of a traditionally underrepresented or under-utilized group. it is also dead on. Furthermore, as the article says, with the right solutions in place, Procurement leaders can extend equitable access into their sourcing practices, creating a transformative opportunity for small, local, or diverse businesses, as well as their own organizations. And, yes, DEI suppliers can build capabilities, create opportunities, and strengthen community and, yes, a DEI program focussed on including diverse suppliers in sourcing events will help an organization broaden its supply chain, but Amazon Business alone will NOT be sufficient to identify and validate all of the diverse suppliers an organization should be considering. It is true that it is one of the few marketplaces that has designed features and tools to streamline the identification and validation of diverse suppliers, but it’s also true it only has so many vendors on the platform, and the majority are for indirect and MRO — not direct and not services. So it’s NOT a complete solution.

Now, let’s be clear that we’re not trying to dismiss Amazon Business here, because, for many mid-size organizations, it should be part of their Procurement Toolkit and even part of their tail-spend / non strategic purchasing strategy as it can really simplify a Procurement buyer’s life by offering verified products from verified suppliers with reliable delivery dates at good prices. But it’s not an e-Procurement platform and definitely no where close to a complete solution. Understand it for what it is, use it as appropriate for the great value it will give you, but don’t have unrealistic expectations, or the disruptions that eventually be arise will be much more damaging and shocking then they should otherwise be with an appropriately managed multi-pronged organizational Procurement strategy.