B2B Moves from Procurement to Collaboration

B2B buyers look at private trading networks (PTNs) as a chance to build relationships, not just complete transactions, perhaps that’s why more than 25 percent of B2B executives surveyed by Jupiter Media Metrix said they will add collaborative features to their PTNs within the next year.

The addition of collaborative applications, including inventory level monitoring and product design, to PTNs will outpace those of transaction-focused enhancements, as only 20 percent of B2B executives indicated that they will focus on procurement features. According to Jupiter analysts, the shift from transaction models to collaborative PTNs will offer companies the best short-term ROI by allowing buyers and sellers to improve the quality and efficiency of their products and manufacturing before meeting longer-term goals for cost effective B2B transactions.

“Private trading networks represent a new tool to link the interests of buyers, suppliers and distribution partners. Initially they promise cost savings, but their ultimate value will come through effective cooperation that benefits all three parties,” said Tim Clark, Jupiter senior analyst. “Most B2B buyers view PTNs as an opportunity to gain closer relationships with suppliers, not to facilitate transactions. Closer relationships with suppliers will result in faster ramp-up to manufacturing for buyers and more efficient and predictable inventory levels for sellers.”

A Jupiter B-to-B Executive Survey found that 17 percent of B2B leaders plan to use PTNs to monitor suppliers’ inventory levels within the next 12 months. Other information-sharing uses included collaborative planning, forecasting and replenishment (15 percent) and product design (11 percent). Commodities buying (13 percent) and procurement management (13 percent) were the only transactional applications identified in the survey. According to Jupiter analysts, visibility of inventory is a key component to the success of original equipment manufacturers (OEMs) and contract manufacturers because it enables them to plan “just-in-time” manufacturing.

According to the Executive Survey, 61 percent of B2B executives cited closer supplier relationships as a key function of PTNs. Forty-six percent indicated that faster times to market and closer links to channel partners were top value propositions of PTNs.

The use of PTNs is not without its barriers. Jupiter’s survey found that 36 percent of respondents indicated that concerns over sharing sensitive data with business partners was the main barrier to using PTNs, while 24 percent consider integrating existing technology investments a barrier. According to Jupiter analysts, industry-sponsored marketplaces, major customers of PTN software, should take leading roles in setting industry-specific standards that protect companies during the exchange of proprietary information.

“PTNs offer many great benefits to the buyers and sellers who use them, but they will not reach their long-term potential if they are used as standalone applications,” Clark said. “The most strategic connection exists between supply-side PTNs that monitor inventory levels and demand-side PTNs that connect manufacturers to sellers or end users. When combined, they can create visibility along the entire chain between buyers and producers and also have the potential to allow for sellers to anticipate demand.”

More than 80 percent of B2B buyers will be strongly influenced to trade online with suppliers who offer more comprehensive services, including collaborative product design and supply-chain inventory visibility. More than half (54 percent) of B2B buyers would treat suppliers as “preferred vendors” if they provided such value-added services.

Related reading

nurcin-erdogan-loeffler_wikipedia-definition-the-future_featured-image
pwc_experience-centre_hong-kong_featured-image
12919894_10154847711668475_3893080213398294388_n
kenneth_ning_emarsys_featured-image
<