B2B procurement embraces the marketplace model

A new gen­er­a­tion of busi­ness pro­fes­sion­als have long been ques­tion­ing why they can order and receive any item seam­less­ly in their home life, but it can take weeks to get even the most basic items at work. Tra­di­tion­al B2B pro­cure­ment is inef­fi­cient and time-con­sum­ing.

Com­pa­nies have seen two mega-trends col­lide. Dig­i­tal­i­sa­tion was trans­form­ing B2B buy­ing expe­ri­ences even before Covid-19, but the pan­dem­ic inten­si­fied the shift as the phys­i­cal econ­o­my became a dig­i­tal one overnight. Mean­while, lock­down dis­rup­tions ampli­fied the risk of rely­ing on a sin­gle source of sup­ply, with just-in-time sup­ply chains par­tic­u­lar­ly exposed.

A net­work-based mar­ket­place mod­el address­es these issues by facil­i­tat­ing a dynam­i­cal­ly con­nect­ed ecosys­tem of buy­ers and sell­ers and digi­tis­ing key process­es to remove the low-val­ue-added tasks in the sup­ply chain. Cloud-based B2B mar­ket­places accel­er­ate the sourc­ing of unplanned tac­ti­cal sup­plies and empow­er employ­ees while man­ag­ing risks.

Ana­lysts expect the future of glob­al trade to be dri­ven through mar­ket­places, help­ing organ­i­sa­tions build resilience through eas­i­er access and greater vis­i­bil­i­ty across the sup­ply chain. The need will grow fur­ther giv­en cross-bor­der B2B ecom­merce trans­ac­tions will reach $1.8tn by 2023, some 17% of all B2B sales in the US, accord­ing to For­rester Research.

“Com­pa­nies want to move from a pure lin­ear sup­ply chain to a net­work sup­ply chain with a large base­line of sup­pli­ers,” says Julien Lévêque-Claudet, head of mar­ket­place strat­e­gy and go-to-mar­ket at Tradeshift. “You can­not just do that by your­self. You need to tap into a B2B mar­ket­place, del­e­gat­ing the role of find­ing and vet­ting sup­pli­ers to a third par­ty which applies the right con­trol and cura­tion. The more con­nec­tions, the faster you react to the speed of busi­ness.”

Pro­cure­ment teams are under pres­sure to show more strate­gic val­ue, mov­ing from gate­keep­ers on spend to rev­enue gen­er­a­tors. B2B mar­ket­places help them do that through accel­er­at­ed sourc­ing and greater effi­cien­cies. As end-users can buy direct­ly from a curat­ed sup­pli­er base, pro­cure­ment staff are able to shift their focus to more val­ue-added activ­i­ties.

A dynam­ic mar­ket­place mod­el also eas­es the pres­sure on sup­ply chains dur­ing peri­ods of volatil­i­ty by intel­li­gent­ly match­ing areas of high demand with pock­ets of capac­i­ty. It’s easy and cost-effec­tive to build a diverse, pre-vet­ted sup­pli­er base in a con­trolled envi­ron­ment where small­er sup­pli­ers are put on a more lev­el play­ing field with large ven­dors.

The ben­e­fits are clear but not all mar­ket­places are cre­at­ed equal, with many thin­ly veiled B2C mar­ket­places mas­querad­ing as B2B but lack­ing the back­end infra­struc­ture to sup­port such trans­ac­tions at scale with the right lev­el of con­trol and com­pli­ance required by small, medi­um and large enter­pris­es in a B2B envi­ron­ment.

One mar­ket­place solu­tion that’s as robust on the back­end as it is intu­itive on the fron­tend is Tradeshift. Its net­work-based B2B mar­ket­place envi­ron­ment allows bet­ter trans­paren­cy and com­pet­i­tive offers for buy­ers while open­ing up a broad­er prospect­ing base to sup­pli­ers at a lim­it­ed cus­tomer acqui­si­tion cost.

Tradeshift allows easy inte­gra­tion of mul­ti­ple solu­tions on a sin­gle plat­form. Buy­ers are free to tap into dif­fer­ent mar­ket­places accord­ing to their spe­cif­ic needs with cen­tral­ly man­aged con­trols that enable them to set their own rules.

“It’s a mar­ket­place of mar­ket­places,” says Lévêque-Claudet. “If a buy­er is in the auto­mo­tive sec­tor, for exam­ple, they will ben­e­fit from group buy­ing on a ded­i­cat­ed mar­ket­place for direct mate­ri­als and they can also access oth­er mar­ket­places for indi­rect spend such as office sup­plies. Cru­cial­ly, this can all take place on a sin­gle plat­form.”

The end-to-end dig­i­tal process for man­ag­ing trade also makes B2B mar­ket­places a spring­board for sell­ers to access finan­cial prod­ucts. A rich seam of data under­pin­ning each trans­ac­tion means that banks and oth­er third-par­ty fun­ders can start to offer financ­ing options, such as ear­ly invoice set­tle­ment, direct­ly through the mar­ket­place.

“When phys­i­cal and finan­cial sup­ply chains are inter­linked, they’re more resilient, effi­cient and flex­i­ble,” Lévêque-Claudet adds. “Sup­pli­ers will sell their prod­ucts but could also acti­vate a finan­cial prod­uct from a finan­cial insti­tu­tion, in one place, ulti­mate­ly help­ing to unlock the $2tn glob­al SME fund­ing need.”

To find out more, please vis­it Tradeshift.com

Pro­mot­ed by Tradeshift