An Electronic Supplier Network is a Strategy – Not a Provider Product

supplier management

The term “supplier network” or “business network” can mean many things to many people. Ariba offers its supplier network as a cloud-based set of services — application, integration, supplier discovery, payment, etc. — and has been very successful at that. Think about car dealers. They don’t make all their money on the cars themselves but on all the downstream services. And if you have a bigger fleet of older, complex vehicles, you’ll make more money from your customers over the lifecycle. It’s good business and a good strategy — unless you’re the customer. As such, I’m writing to the customers about how to best approach supplier networks.

What is a Supplier Network Anyway?

I define a supplier network simply as a network of suppliers. Brilliant!  

The term “supplier base” is so old school. It’s all about supplier networks that are part of broader value networks these days. You need to get the lingo right.

OK, so what about electronic supplier networks? An electronic supplier network is therefore merely the extent by which you’ve automated your interactions and your digital engagement with your suppliers. (You need to work the words “digital” and “engagement” into your business vocabulary too — and don’t even get me started with “platforms.”) As your suppliers and their products and services become increasingly digital, the strategy by which you connect and collaborate with them to the benefit of your customers will become increasingly critical to your success.

So, this digitization strategy for your supplier network needs to be managed as robustly as any type of strategy. You wouldn’t engage suppliers in sourcing without having a sourcing strategy first, right? You don’t execute category management without category strategy, right? And if these things are truly strategic and our core competencies, you would never outsource your strategy itself to a third party, right? You want to keep your strategic options open and be able to tap supply markets for innovation to change tactics as needed. Those markets help inform your strategy, but they don’t dictate it.

It’s Your Strategy — So Develop it Wisely

So, you need a strategy for coherently connecting with suppliers in a way that is secure, confidential, cost effective, nimble, intuitive and meets the diverse demands of your many internal stakeholders and external customers. This strategy requires many things. Platform thinking and design can help you develop a strategy and architecture that gets you results in the short term and doesn’t box you in the long term. It uses a services-oriented approach to your procurement business services for your stakeholders and then works backwards to the platform-based services you need in your electronic supplier network: analytic services, master data services, integration services, personalization and so on. See the related articles below on these topics.

If you want to drill into some of these topics and how to approach your supplier network strategy before you engage various third-party service providers — even those using the supplier network moniker — then you should definitely attend the webcast we’re planning on Dec. 15. I hope to you see you there!

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