Category Archives: B2B 3.0

B2B Marketplaces Have Their Place But …

… don’t look to them as a foundation for supplier collaboration! While it’s nice to see Procurement platforms and technologies getting noticed in Financial publications, the juxtapostion of the headline and subheading on this recent Financial Express article made us go “OI! YOY! YOI!”.

The headline was great:
Integration of B2B marketplaces into supply chain networks for increased efficiency

… it’s exactly what Finance needs to hear as B2B Marketplaces are a great solution for commodities or products typically bought spot-buy on the open market, and much more efficient than sending out an RFP for something you can find and buy quicker, easier, and cheaper online, and definitely better than searching half a dozen supplier sites to find the right product at the right price.

And the subheading started off great:
A notable opportunity for enhancing Supply Chain Management (SCM), as rated by 53% of businesses, lies in collaborative efforts with suppliers.

… because collaborative efforts are not only a great way to increase efficiency, but also increase value by lowering cost, increasing quality, adding capability, etc.

But the way the sub-header ended was head-scratching to say the least:
The answer lies in utilizing user-friendly and efficient B2B marketplaces.

NO! No, No, No, NO! If you want to collaborate with suppliers, you need a modern Supplier Management solution that focuses on supplier development, innovation, and collaboration.

B2B Marketplaces were created to help buyers find (new) suppliers to buy from and to help suppliers widen their potential customer base when buyers find their products in a search and check them out. They were not setup for collaboration and the extent of “collaboration” on the majority of these platforms is asynchronous messaging. That’s not collaboration! Not even close.

In comparison, a Supplier Management platform with

  • Relationship Management will not only support asynchronous messaging, it will also support collaborative project/product plans and a best practice/knowledge base for both parties
  • True Network Management and not just an integrated online marketplace will also support a true bi-directional graph, bi-directional search, classification, and anonymous (peer)
    reviews
  • Proper Discovery will not only support simple searches, but deep location, product, capability, and multi-factor searches; proactive web-search and web-site monitoring; anonymized ratings and reviews; and deep product sheets and history management
  • Orchestration Management will support multi-tier linkages, cascading onboarding, and multi-tier supplier support so that you can quickly and easily onboard the supplier onto your own personal Supplier Management instance that you can customize to your liking
  • Enablement Management will add an integrated supply-centric portal, sustainability guidance, and true supplier-led innovation support

In other words, this article, which could have focussed on the core value of B2B Marketplaces and introduced them as a first step into the Procurement world, with an entire suite of valuable tools to help an organization, missed the mark.

For more information on what a proper Supplier Management platform should do, as well as a list of vendors who offer these platforms, see parts 15 to 20 of our The 39 Steps … err … The 39 Clues … err … The 39 Part Series to Help You Figure Out Where to Start with Source-to-Pay.

Supplier Management

Part 15: Supplier Management is a CORNED QUIP Mash

Part 16: Supplier Management A-Side

Part 17: Supplier Management B-Side

Part 18: Supplier Management C-Side

Part 19: Supplier Management D-Side

Part 20: Over 90 Supplier Management Companies to Check Out

Have We Reached B2B 3.0 Yet? Part 7: Category Management Excellence

In the series so far we have:

  • defined the basics of B2B 1.0 in Part 1
  • defined the basics of B2B 2.0 in Part 2
  • defined the basics of B2B 3.0 in Part 3
  • defined the (basic) requirements for a B2B 3.0 Sourcing platform in Part 4
  • defined the (basic) requirements for a B2B 3.0 Procurement platform in Part 5
  • defined the (basic) requirements for a category management application in Part 6

in an attempt to determine whether or not we have reached B2B 3.0 yet. To that point, we haven’t reached a conclusion yet, stating that we needed to figure out just where we were in relation to where we should be and what B2B 3.0 really is. Plus, we’re still not ready to address this question because B2B 3.0 has to enable category management excellence, and this goes beyond just building the basic technical capability to support category management that was defined in our last post.

More specifically, while the requirements of:

  • multi-dimensional category taxonomies
  • global virtual “product” masters
  • centralized master data management
  • centralized risk (and compliance) management
  • supplier development and innovation program management
  • real-time on-line collaborative category plan creation

are necessary conditions for category management excellence, they are not in and of themselves sufficient conditions. Why? First of all, simply creating categories by lumping similar products into groups based on some arbitrary characteristic (such as proximity in the UNSPSC taxonomy) is not true category management, so it’s more than just taxonomy support – it’s the right taxonomy. Similarly, centralizing data in a global product master is pointless if that master cannot be used to accurately and informatively analyze category spend. Centralized risk and compliance management is good, but only if the right information gets back to the right systems that are used day-in-and-day-out by people in the field (that certainly aren’t using the Supply Management source-to-pay platform). Program management is good, but only if it is the right program being managed. And the plan has to be a strategic plan that generates value, not a tactical plan that just keeps the wheel turning.

As such, the platform also has to enable:

  • true category spend analysis
  • market analysis
  • forward-looking category requirements
  • linkages between the external customers, sourcing, and internal customers
  • deep workflow linkages with SRM and S2P

And it has to support the best practices that get result. For deep insight into what those are, we recommend the three-part series on Getting a Grip on Category Management by the doctor and the maverick over on Spend Matters+ (membership required).

Part 1: A History Lesson
Part 2: Some Basic Approaches
Part 3: Advanced Approaches

Have We Reached B2B 3.0 Yet? Part 6: B2B 3.0 Foundations: Category Management

In part 3 we exemplified our definition of B2B 3.0, simply defined as the first generation of technology that actually puts business users on the same footing as consumers, as the first generation of B2B technology that adds real content, community, and open-connectivity to B2B platforms through cutting edge technology like:

  • web services
  • intelligent agents
  • meta-search
  • real-time collaboration
  • semantic technology
  • mashups
  • analytics and
  • workflow

But we didn’t explicitly map these technologies to the different Supply Management technologies or workflows that you as a Supply Management professional have to use on a daily basis. That’s why Part 4 tackled some of the necessary, but not necessarily sufficient, requirements of a modern Sourcing platform (defined as the platform that is typically used from the time a need is identified until the contract is signed, covering the “planning” and “sourcing” phases of the strategic sourcing execution lifecycle if you will) and Part 5 tacked some of the necessary, but not necessarily sufficient, requirements of a modern Procurement platform (defined as the platform that is used from the time the first order needs to be placed until the time the last order is placed, received, paid for, and gone out of warranty). But it’s not Sourcing or Procurement, … It’s Sourcing And Procurement, and the organization not only needs an integrated Source-to-Pay process but a foundation for that process (and the execution that comes beyond). That foundation is Category Management, and today’s post is going to outline some key requirements that modern Source-to-Pay suites should possess if they are going to be considered B2B 3.0 platforms that support modern category management.

As with our last post, this list is not all inclusive, and simply possessing all of this capabilities will not make a suite B2B 3.0 (because it’s not a suite, it’s just the Source-to-Pay component of Category Management), but if these requirements are missing, then the suite will not make the cut. In mathematical terms, these are necessary, but not sufficient, conditions.

In order to avoid confusion, we are going to define a Source-to-Pay category management platform from a technology perspective as one that, possibly by way of multiple (seamlessly integrated) best-of-breed platforms, supports end-to-end category management throughout the Source-to-Pay process and enables key aspects of the execution phase of the strategic sourcing lifecycle. (For more details, download the free e-book written by the doctor and sponsored by Trade Extensions, registration required.)

From a historical perspective, the primary “capabilities”, organized into one or more modules, that such a platform would possess would include all of the capabilities described in the last two posts plus centralized master data management, collaboration portals for internal and external collaboration, and centralized risk and compliance management, among other advanced capabilities.

From this viewpoint, some key capabilities that such a suite must possess include:

  • multidimensional category taxonomies

    Sauron may have forged the one-ring, and hackers may be searching for the one ping, but there is no single one-size fits all taxonometric wellspring and there will never be – not even for a single organization; sometimes you’ll want to bury installation services under IT, sometimes you’ll want to bury them under services, and sometimes you’ll want to analyze them with contingent labour and BPO spend … and so on … the system must allow for a detailed multi-dimensional taxonomy that allows every piece of spend to be tagged with all relevant identifiers (location, department, spend type, spend sub-type) and rolled-up into the taxonomy de-jour (d’acheteur) … because nothing is static

  • global virtual “product” masters

    not just a centralized catalog, but a centralized master data system that captures each product description (and virtual product identifier) needed by the organization and each distinct supplier product that can meet that need (e.g. in F&B, tomato sauce can be canned or bagged, room temp or frozen, condensed or not, and packaged in different quantities; a supplier might offer three different FPGAs that do the trick, each with advantages and disadvantages [memory vs processing power vs battery tradeoffs]; etc) this will “power” the catalog, but the catalog visible to organizational users will only contain current(ly available) products (that are approved)

  • centralized master data management inc suppliers

    centralized virtual product masters are just the start, the organization needs centralized supplier data, centralized spend data, centralized performance and usage data, and everything needed to do meaningful category analysis to find opportunities beyond spend

  • centralized risk (and compliance) management, cross indexed by category
    including mitigation plan tracking and event monitoring

    there must be a place to define all types of organizational risks, the standard monitoring (and mitigation plans), and to cross index those risks against categories (and specific products) and then flesh out those risks on a category and product basis and evaluate the potential impact and cost of the risk as the drill down occurs (in a detailed risk taxonomy); similarly, there must be a way to track compliance requirements across categories and products independent of sourcing events, with added details upon drill down and cross-correlation to suppliers providing products and compliance status

  • supplier development and innovation program management

    relationship management is good, relationship development is better – whether in the core sourcing suite, core procurement suite, or the SRM bolt-on, this capability has to be there … it’s too often overlooked despite it’s essential nature

  • real-time on-line collaborative category plan creation

    planning is often the most critical phase of the strategic sourcing lifecycle – it doesn’t matter how well you source or execute if the plan is bad and will prevent you from ever realizing the value that exists in the supply chain; the best way to get a good plan, or at least a plan that will be accepted and implemented by all affected parties is to involve them in the process – there must be way for all parties to come together, share their piece, collaborate, and jointly work on a plan that will be accepted by all … as the musketeers said, it’s all for one (plan) and one (plan) for all

In other words, the requirements for a modern B2B 3.0 Procurement platform, even from this short list, are well beyond what has traditionally passed for an Category Management platform that, in the early days, was anything that incorporated sourcing and procurement capabilities and had the concept of a category. Do any of the platforms out there make the cut? We’ll get to that. But first we had to provide more food for thought.

Have We Reached B2B 3.0 Yet? Part 5: B2B 3.0 in Procurement

In our third post we exemplified our definition of B2B 3.0, simply defined as the first generation of technology that actually puts business users on the same footing as consumers, as the first generation of B2B technology that adds real content, community, and open-connectivity to B2B platforms through cutting edge technology like:

  • web services
  • intelligent agents
  • meta-search
  • real-time collaboration
  • semantic technology
  • mashups
  • analytics and
  • workflow

But we didn’t explicitly map these technologies to the different Supply Management technologies or workflows that you as a Supply Management professional have to use on a daily basis. That’s why our last post covered some of the necessary, but not necessarily sufficient, requirements of a modern Sourcing platform (defined as the platform that is typically used from the time a need is identified until the contract is signed, covering the “planning” and “sourcing” phases of the strategic sourcing execution lifecycle if you will), and today’s post is going to outline some key requirements that Procurement suites should possess if we are going to consider them as B2B 3.0 platforms.

As with our last post, this list is not all inclusive, and simply possessing all of this capabilities will not make a suite B2B 3.0 (because it’s not a suite, it’s just Procurement), but if these requirements are not missing, then the suite will not make the cut. In mathematical terms, these are necessary, but not sufficient, conditions.

In order to avoid confusion, we are using Sourcing Innovation’s standard definition of a Procurement platform from a technology perspective, which is defined as the the platform that is used from the time the first order needs to be placed (after a contract is signed, or the need for a spot-buy that does not have to be strategically sourced identified) until the last order is placed, received, paid for, and gone out of warranty. Such a platform will often be used alongside an SRM platform, but will not necessarily contain SRM as that is not a key capability in the procure-to-pay cycle, which is the latter half of the larger source-to-pay cycle.

From a historical perspective, the primary “capabilities”, organized into one or more modules, that such a platform would possess would include requisition, approval, and PO management; invoice and receipt management; m-way match; payment platform integration; tax tracking and reclamation support; discount management and cash flow tracking; and budget management. Such a platform may or may not includes special capabilities for T&E or contingent labour, which may be managed through separate, parallel workflows in parallel platforms.

From this viewpoint, some key capabilities that such a suite must possess include:

  • intelligent requisitions
    semantic technology and predictive algorithms must be brought together to help a user properly define what they want, preferably against standard goods, services, and work order “catalogs” so that the proper goods and services can be selected or, if a sourcing project is required, sourced; the platform should guide the buyer to the right type of good (FGPA and not off-the-shelf motherboard), service (database programmer and not administrator), or ATM installation (and not acquisition) based upon what the user free-form enters in the description field (when he bypasses the wizard-based workflow that was custom-designed to get him there)
  • auto-generated purchase orders
    that are generated against a contract, approved requisition, or recurring order to make sure all data is complete, and all part numbers match both supplier and buyer databases
  • automatic m-way match and invoice correction
    not only should the system automatically m-way match every invoice that comes in, but it should automatically kick-back any errors to the suppliers with a complete description (missing data, invalid prices, etc.) and a suggestion for an auto-corrected re-submission – the goal is that only when there is a dispute that needs to be manually resolved should a human be involved; this also goes for payment, if the invoice is against a contract, against a pre-approved requisition, or within a payment threshold, it should be automatically queued for payment – manual approval should only be required in exceptional circumstances
  • working capital optimization
    not only should the platform support early payment discounts and invoice factoring, but it should be capable of using this information to present cash-flow optimized payment schedules, subject to no late payment or max late payment rules by supplier, that schedule all approved payments to optimize the organization’s working capital without unduly burdening suppliers (and hiking their costs, which will just result in price hikes to the organization in the following year)
  • tax database integration
    the system should pull in tax rates in real time, verify all taxes paid are correct, track each tax paid by appropriate municipal, state, federal, or union body, determine which taxes the organization is eligible to get back in rebates, link to appropriate filing documents, and automatically fill out the necessary documents for rebates as appropriate
  • intelligent catalogs
    that seamlessly integrate supplier catalogs, be they EDI, XML, or custom format, open web-store catalogs (from un-contracted merchants or contract merchants for un-contracted products), and buyer developed catalogs that custom define products and services unique to the organization (and automatically suggested by the intelligent requisitions above) that not only allow any product or service that could be requisitioned to be easily found, but that guide the user to any contracted, preferred, or low-cost alternative
  • returns and defects and warranty tracking
    the system should also track all products rejected at the warehouse due to defects, all returns within the warranty window, and all related warranty service costs that can be billed back to the supplier and insure that defective items received are taken off of the invoice before it is paid and returned and warranty items are credited and taken off future payments

In other words, the requirements for a modern B2B 3.0 Procurement platform, even from this short list, are well beyond what has traditionally passed for an e-Procurement platform that, in the early days, was anything that could manage requisitions, approvals, purchase orders, and manually entered invoices. Do any of the platforms out there make the cut? We’ll get to that. But first we had to provide some food for thought.

Have We Reached B2B 3.0 Yet? Part 4: B2B 3.0 in Sourcing

In our last post we exemplified our definition of B2B 3.0, simply defined as the first generation of technology that actually puts business users on the same footing as consumers, as the first generation of B2B technology that adds real content, community, and open-connectivity to B2B platforms through cutting edge technology like:

  • web services
  • intelligent agents
  • meta-search
  • real-time collaboration
  • semantic technology
  • mashups
  • analytics and
  • workflow

But we didn’t explicitly map these technologies to the different Supply Management technologies or workflows that you as a Supply Management professional have to use on a daily basis. Today we are going to outline some key requirements that Sourcing Suites should possess if we are going to consider them B2B 3.0 platforms. This list is not all inclusive, and simply possessing all of these capabilities will not make a suite B2B 3.0, but if these requirements are missing, then the suite will not make the cut. In mathematical terms, these are necessary, but not sufficient, conditions.

In order to avoid confusion, for the purposes of this post, and this series, we are using Sourcing Innovation’s typical definition of a Sourcing platform from a technology perspective, which is defined as the platform that is used from the time a need is identified until a contract is signed. It is the platform that underlies the “planning” and “sourcing” phases of the strategic sourcing execution lifecycle (with Procurement, SRM, and similar technologies taking over during the “execution” phase).

From a historical perspective, the primary “modules” that such a platform would include RFX, e-Auction, optimization, analysis, and contract creation and management, but these would be integrated in one seamless process because, as SI has repeatedly said, it’s not a suite, it’s just sourcing.

From this viewpoint, some key capabilities that such a suite must possess include:

  • near real-time market intelligence
    integration with market (price) indexes, including commodity exchanges, public sector price databases (from public contracts), best price databases (that compare listed prices across multiple sets), energy rates, and labour rate databases (from government and published data)
  • automatic cost-model recalculation
    and alerts whenever there is a potential for costs to increase or decrease beyond a certain threshold
  • single-sign-on supplier portals
    where the supplier can manage all interaction with you as the buyer and submit invoices, query payment status, resolve conflicts, collaborate on NPD, discover upcoming opportunities,and provide new product and service information
  • automatic profile completion
    for current and new suppliers that uses IRS, credit and risk services, business directory, and other public sources to auto-fill missing data in a supplier’s profile, so all they have to do is confirm and correct data; also, automatic discovery of products and services they offer from online exchanges that they list on
  • visual supply chains for each supplier
    that allows a buyer to visualize the supply chain for each and all products sourced from the supplier based on all available data as well as the global supply chains the supplier interacts in based upon public trading data from government import/export databases and public sector contracts
  • auto-quote
    based upon current pricing, standard increases or decreases based upon market rates, and publicly available price data to simply initial supplier bids in an RFX or e-Auction
  • (near-)real-time decision optimization
    that is able to compute the lowest cost award taking all cost (model)s, (business) constraints, and goals into account
  • advanced spend analytics
    that can not only allow a power-user to slice, dice, enrich, re-categorize, and slice again the data any way they want to see it, but detect anomalies, project trends, and dig up insights that will allow new opportunities to be sourced in clever and valuable ways
  • contract obligation tracking and auto-verification
    most contracts require submission of insurance certificate, government (tax) forms, certifications, audits, and similar data upon award that needs to be tracked and validated by the buyer – this is a very time-consuming task; the platform should allow buyers to upload and use semantic technology, government, insurance agency, and other APIs to automatically validate uploaded documents upon receipt so that all a buyer has to worry about is chasing down delinquent suppliers or suppliers who don’t upload documents in the require formats (to allow for automatic verification and validity tracking)

In other words, the requirements for a modern B2B 3.0 Sourcing platform, even from these short lists, are well beyond what has traditionally passed for an e-Sourcing platform that, in the early days, was anything that could manage a few RFX forms, power a simple e-Auction on a few lots, and index a scanned version of a contract on a few meta-data fields. Do any platforms out there make the cut? We’ll get to that, but first, in our next post, we’ll define some of the key capabilities of a B2B 3.0 Procurement platform.