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Spend Matters Article Blog Recap: What About the Vendors?

Barriers Suppliers Face with E-Procurement Integrations & How to Alleviate Supplier Adoption Challenges.

Spend Matters Article Blog Recap: What About the Vendors?

Aug 24, 2017

Kari_Cress.jpgPunchOut2Go is in a unique position – sitting in the middle of B2B Buyers and Suppliers – which provides great insights into the challenges that companies are faced with when it comes to leveraging the benefits of eProcurement and integrating business applications. Recently, PunchOut2Go had the opportunity to share the challenges we see Suppliers facing with adopting and integrating to their buyers’ eProcurement systems in a featured article from Kari Cress, PunchOut2Go VP of Marketing and Strategic Alliances on Spend Matters.

Within the article, the following 5 barriers are highlighted:

  1. Lack of knowledge and skill. There is a wealth of information on the e-procurement market from a buy-side perspective but for the supplier-side, there is very little information available. Except for the large enterprise suppliers that have been selling through eProcurement for years, most suppliers are at the elementary stage of understanding this channel and typically take a reactive approach to e-procurement rather than viewing it as a strategic business initiative. There is no e-procurement 101 crash course for suppliers and typically the first time they hear about e-procurement is when responding to an RFP or contract bid. Internal IT departments are typically not skilled in B2B e-procurement integrations nor understand how to develop punchout catalogs and B2B order automation capabilities from within their existing e-commerce infrastructure — that is, if they are a large enough supplier to have an e-commerce application already in place. Suppliers are left to educate themselves and others within their business on the customer need, market, procurement process, benefits and potential risks.

  2. Technology Requirements. What is cXML or OCI? Is that the same as EDI? What is a punchout catalog? What are UNSPSC codes? Can our order management system accept electronic purchase orders and send out advanced ship notices and invoices? These are just a few questions that suppliers are trying to figure out along with how the technology works, how to provide technology to display the correct product offering and pricing to each buyer and IF their current infrastructure can support what is needed. In addition, suppliers must determine the best path forward in supporting the technology. Do they manage the technology in-house or partner with a third-party e-procurement integrations provider such as PunchOut2Go? In each case, a thorough assessment needs to be completed to determine the proper technology needed and the best ongoing support structure.

  3. Building the business case for ROI. Suppliers are pressured by their buyers to make an investment and business decision to offer the technology needed to do business through the e-procurement channel or risk losing the current business or miss the opportunity to win additional sales opportunities. From a supplier's perspective, it is challenging to develop a business case and return on investment justification for integrating with their buyers' procurement systems. There are no benchmarks studies today that provide information to suppliers such as an average increase in sales from other suppliers that have been successful within this channel. Suppliers are trying to determine if their sales will increase as a result of time and resources spent integrating an electronic catalog and if operating costs will decrease by automating purchase orders and invoices. In addition, it is also difficult for suppliers to determine if other customers are using e-procurement systems and if there is potential to integrate those customers. It is helpful if the supplier has multiple requests from multiple customers to integrate to justify the level of investment and identify the upside potential.

  4. Multiple e-procurement networks with unstandardized usages of standard protocols. Large enterprise suppliers have hundreds of customers utilizing an array of different procurement spend management systems such as SAP Ariba, Coupa, Oracle, Jaggaer (formerly SciQuest), Paramount Workplace, PeopleSoft, Zycus and Vroozi. Each e-procurement system has its own protocols for data interchange and specifications for e-catalog formats. Even buyers utilizing the same e-procurement provider, there are variations in the requirements and data interchange on each platform. Due to the lack of standards for electronic catalogs, suppliers will always be challenged with learning the various e-procurement systems, new protocols and finding the right e-business solution that is scalable.

  5. Implementation Costs and Supplier Fees. With the various e-procurement providers in the market today comes various business models that suppliers need to understand. For example, some providers charge the supplier a transaction fee based on the amount of business conducted over their network, which is a built-in barrier for supplier adoption. There are other e-procurement models that charge the buyer a licensing fee for each supplier integrated with their network. While these providers claim they have no supplier fees, the buying organization might pass along the licensing fees to their suppliers as an "enablement" fee of becoming a "preferred" supplier, adding incremental costs of doing business for the supplier. Many new e-procurement providers have come to market over the last several years that do not have supplier fees (because they know it inhibits adoption) causing others within the market to rethink and adjust their business model. Suppliers must determine if the cost of the implementation and associated "supplier fees" are worth the cost of doing business on a per customer basis.

In an effort to alleviate supplier adoption barriers, many buying organizations, suppliers and eProcurement providers are teaming up with third-party managed service providers, such as PunchOut2Go, whose core focus is B2B eProcurement integrations to help reduce the complexity of system integrations, provide solutions to fill the technology gap requirements and accelerate on-boarding time.

Read the complete article here.

Category: Trends