B2B Marketplaces

Procurement Is Searching for Another Gear. If You’re Not Fast, You’re Last

In a world where more than 40% of online consumer purchases are made on marketplaces, the inflexible and often byzantine processes that dominate corporate purchasing look increasingly outdated compared with the proven convenience of consumer platforms.

Jayson Humphrey, General Manager for B2B Marketplaces at Tradeshift, digs deep into the process bottlenecks and outmoded technologies that are slowing B2B procurement down and leaving employees to look for answers elsewhere. 

Get your copy of ‘High-Velocity Procurement,’ our new research study, co-produced with Procurement Leaders and featuring first-hand perspectives from the world’s top CPOs.  

Time is money – this is something we can all agree on. What about timing? Is that also money? At Tradeshift, we prefer to think of timing in the context of first-mover advantage. We think timing creates a competitive advantage and in many ways, this advantage may be worth more, in the long term, than money.

The research presented in this report points to supplier onboarding and contracting as the two procurement activities which most often cause delays. Let us ask you this: have they always caused delays, and have we just tolerated them?

We believe the last three years exposed the true cost of the bureaucracy of procurement and that right now, organizations are looking around, trying to figure out what to do. The theme of velocity is perfectly timed as an aspirational procurement zeitgeist, but the reality is that most procurement functions will continue in their dogmatic defense of the status quo as if traditional procurement were some sacred cow. You will not be surprised to guess that we have a different view.

Traditional procurement would have you believe that a properly sourced supplier rigorously put through a competitive RFx/bidding process followed by intense contracting and then onboarding – have we lost you yet – some would have you believe this to be the holy grail. Every person reading this will have experienced both professionally and personally that contracted prices often put you underwater against the market.

Category managers would say that securing the source is worth the higher price, and for some commodities, in some industries, that is likely true. But for every category manager who can defend paying over-market prices, there are ten who cannot, and businesses just chalk it up to how things work.

Let’s contrast traditional B2B procurement with B2C procurement. What would traditional B2C procurement be? Going to the mall and talking with a salesperson, then possibly going to the competitor and talking to a different salesperson? Sure, we still do this, but B2C for Millennials and Gen Z is predominantly online.

The speed (velocity) of online product research and the ease of purchase is just too easy. By 2025, 75% of working-age people globally will be either Millennials or Gen Z, and we know they bring a behavioral challenge to our ways of working. And if it’s not their attitudes, it will be their technology. The world is their marketplace; it’s true for B2B, we just haven’t gotten the memo.

There is a revolution afoot in procurement, and it’s set to change almost everything about how businesses buy, transact with partners, and understand their operations. It won’t be easy, but procurement teams will need to let go of the idea that every supplier relationship requires negotiation, contracting, and onboarding. It is a no-brainer that B2B Marketplaces full of vetted and contracted suppliers inject velocity and agility into a business process that is currently holding growth back.

What does the future look like for procurement? It might be as simple as ‘if you’re not fast, you’re last.” If you want to learn more about how the next generation of networked marketplaces can help you transform the procurement function from a cost center to a profit and growth center, then request a customized demo today.

Learn more about Tradeshift’s B2b E Procurement Marketplace