Transforming procurement with B2B marketplaces

Today, B2B marketplaces are rapidly expanding into procurement organizations. According to Forrester research, without a trading platform as a core element of a BPO offering, client value will disappear in the next few years. Additionally, it’s estimated that by 2022, 50% of all legacy spend analysis software will be retired and replaced by AI powered tools. What does this mean for procurement professionals? I recently sat down with Gonzague De Thieulloy, Global Offering Leader, Source to Pay, at IBM,to talk about the challenges of traditional source-to-pay processes and the benefits of adopting a marketplace approach. Here are some highlights from our conversation:

B2B purchasing isn’t quite at the level of B2C yet, but it’s getting better every day

Marketplace solutions need to integrate companies’ internal processes “end to end” to deliver value and meet the growth trends in the B2C environment. Unfortunately, there is still a gap between B2B and B2C capabilities which comes down to three critical functionalities. The ability to:

• control which suppliers to include in a marketplace and which items can be sold to an organization
• set up relationships, pricing and terms privately with suppliers
• set purchase options for certain buyers and give them more or fewer options
• provide a competitive environment at the moment of purchase

Why the marketplace approach is so much better than traditional purchasing

Marketplace solutions are disrupting traditional purchasing processes by incorporating big data, AI and new technologies like IoT (Internet of Things)  into their capabilities. “Marketplace solutions will add three major steps to the e procurement process,” Thieulloy explains. “First, shifting to a marketplace approach will give end-users the ability to buy directly from a curated supplier base. Second, they will enable procurement staff to shift their focus to more value-added activities. Third, they will empower small and medium-sized suppliers to better digitize their products and services to compete with large, global vendors.”

The Netflix model of B2B purchasing

All the time, we hear from customers that they want more of a ‘Netflix’ experience from their platform. What they mean by this is that they want a complete platform they can transact on and a variety of content that’s easy to choose from. According to Thieulloy, there are three critical aspects of this that need to be considered when choosing a solution. Customers need to preserve a one-on-one relationship with their preferred suppliers but also give their suppliers the ability to tap into the power of a larger network. Furthermore, a digital RFQ can improve collaboration between the stakeholder and supplier and empower both parties to interact seamlessly. And lastly, improved buyer and seller analytics make both parties smarter and stronger. The opportunity to create real value with marketplaces is here

If you take each of these elements in turn, you can see why our customers are so excited about the potential of marketplaces. Not only can they help them improve the way stakeholders consume procurement, they can ultimately enable them to create more value in their organization. Marketplace solutions are poised to dramatically improve the buying experience, increase efficiency, and revolutionize how suppliers and buyers engage with one another.

At Tradeshift, this matters because it is at the core of our mission to connect every company in the world and create economic opportunity for all.

Do you want to hear more about how you can make purchasing from work as easy as shopping at home? Find the full discussion here.