Supplier Networks Beyond the Transaction: A Radical Revolution (Part 1)

Spend Matters welcomes a guest post from Jay Merenda. Jay has over a decade of experience with sourcing, supplier management and P2P technology working at both providers and within the industry, giving him unique insight. He's dedicated his career to becoming an expert and thought leader in the space.

What is the true value of technology enabled business-to-business networks? Sure, e-invoicing, ePO, etc., are key elements for automating tactical P2P collaboration. In my opinion, this capability is now a commodity. I see a new business model emerging that will far exceed the value of transactional networks with a focus on strengthening business relationships.

Using the iPhone as an example (although I prefer Android!), you expect tools like email, a contact list, and a calendar. The manufacturer (Apple, Samsung, etc.) does not charge you extra to use these tools. These are the basics you expect with any phone you buy these days. But your phone has become a platform for what you really want, what you find value you in, what you enjoy, and essentially, what you are willing to pay for. You now have access to a world of apps that go far beyond the core capabilities of your phone.

You pay for premium content and apps from the Apple Store, Google Play, and Amazon Prime because they can improve your life and how you interact with the world around you. There are infinite possibilities in this realm, and the next "big thing" is always right around the corner. Most important, these apps improve relationships with your friends, family, colleagues, and service providers, plus you can even have a little fun along the way. Strengthening relationships and developing new ones is the real value proposition when you apply the model to business networks. Now, moving on from the iPhone...

The possibilities for a business network are infinite, if it is a truly open platform with no walls to any third parties wanting to build apps that leverage the platform's established B2B connectivity - one that allows them to innovate quickly and continue to expand the value proposition of the platform.

Let's look at what's available today and the possibilities for the future (the "apps," so to speak). Businesses will come to rely on and expect these things to strengthen their relationships. It will not be one-sided. Both sides of the coin will be at play, CRM and SRM:

  • Access to supply chain financing providers, ability to track compliance to payment terms, and the ability for suppliers to request early payment in exchange for providing a discount to their customer (dynamic discounting). As a buyer, you can hold onto cash or save money; you choose. As a supplier, you have flexibility to get paid faster should you need the cash or get paid in full if you can wait.
  • Ability to manage and share a world of business information in a one-to-many environment. Post once, share with many. How did you share a picture of your kids in their Halloween costumes this year? Did you print it out and mail it to your friends and family or did you post it once to Facebook, and instantly share it with all?

    The same goes for all the information you exchange in your business relationships. This alone will save you an enormous amount of time and resources in making the relationship more efficient while giving real time visibility to critical business information. Some examples:

    • Ability to share risk assessments, audit results, certificates, certifications, and so on. This will speed up pre-qualification and speed to contract. Imagine a world where as a supplier, you are pre-qualified...instantly. Imagine as a buyer you can quickly ensure supplier compliance and know the potential risks of working with that supplier in real time.
    • Company information, product listings, standard RFI information, points of contacts, etc. Want to get discovered by a new prospect? Need to source more through small, disadvantaged businesses? Looking for new supplier capabilities/innovation? Suppliers can increase their customer base. Buyers can access innovation and ensure compliance.
    • Transactional data (Payment Address, EFT/ACH information, eCatalogs). The basics.
    • Over time, more and more B2B "communities" will connect to the network to share industry specific content.

Stay tuned as we continue this analysis in the next post in this series.

- Jay Merenda

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Voices (3)

  1. Jay Merenda:

    Yes, it’s a typo…not yet another acronym to learn 🙂

  2. Brian Roufa:

    What is a B2V community? Did you mean B2B?

  3. Anonymous:

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