This dialogue occurred on Thursday, April 3, at 3:00 p.m. EDT.
Increasingly, procurement is evolving as a strategic function within most manufacturing organizations. Business networks are evolving to connect the supply chain and give procurement the edge it needs. We've invited Rachel Spasser, senior vice president and chief marketing officer at Ariba, and Andrew Bartolini, chief research officer of research firm Ardent Partners, to discuss the key elements of a strong business community.
@All -- In closing, I'd just note that not all networks are created equal. While many offer compelling benefits, the focus, features, and models of different networks can and do vary greatly making the selection of a network significantly more complex, but also, significantly more important. Do your diligence and if you haven't been tracking the market, tit's time to start.
@Hailey, great poll. The one thing we didn't talk about was the need for companies to remain agile enough to actually act on the information they can now access. The worst scenario is knowing you need to do something but cannot change course because you aren't flexible enough to do so
@Kim, I believe that the world we live in today creates the risk of too much data. The challenge for us as business professionals is to be disciplined in how we use data. And for technology companies in the "big data" space it is to enable people to turn data into insights. Otherwise, it is information overload.
@Kim Davis - The existence of more data is a good thing - most procurement departments struggle to understand and view some very basic things like historical spend. But to avoid info overload, CPOs have to be smart and identify what information has the most value, how to capture it and how to use it.
For some companies, the goals are ensuring they aren't too reliant on a supplier. So, they can use the network to help discover additional sources of supply to use as secondary suppliers or back-ups. For others, goals could include forming deeper relationships with a smaller number of strategic suppliers. In those cases, they want to have complete visibility into their operations so that they can collaborate more closely. And still others want to gain efficiencies so they can redeploy resources to higher order tasks (vs. manual, data entry). Networks play a role in all of these scenarios.
@tech4people - There is no doubt the buyers have a much more challenging job tracking specific supply markets and understanding trends. The last thing they need to do is spend time worring about POs and invoice approvals - they need more time to focusing on the strategic aspects of their job. Technology, including networks, is one clear way to drive this.
@rspasser, i'm glad to hear it about collaboration. I was speakign to several people yesterday at EE Live who said that they thought procurement remained all about price and lead time...but i'm hoping that the best organizations at least are making it more strategic as a function.
@tech4people, we all have access to much more information than ever before. The trick is to have a way to turn information into insights. Technology helps with that for sure. But also knowing the questions you want answered is critical. Otherwise, we get into analysis paralysis
Companies can get up and running quickly. I'd say one of the most important factors is truly understanding and defining your goals. Business networks like any platform only work if you understand what you are trying to achieve and have defined processes to do so.
@Hailey-I have a feeling that Buyers today have a lot more Information in their hands.Question is do they benefit? Also was wondering if Time to make Decisions has actually gotten worse now thanks to all this Information Overload?
@rspasser, when an OEM starts to look at this sort of initiative, who should be involved in the conversation? are there questions they should ask themselves? It sounds like a company coudl get up and running pretty quickly..
When a company is connected electronically to its trading partners and has visibility into its transactional relationships and supplier performance, it can better determine if it in fact is working with the highest value partners - risk is an element, cost is an element, quality, etc. It starts with understanding who your partners are today.
Network users have total control over any data that can be attributed to them. They have incentive to allow use of their data in aggregate because it comes back to them packaged as insights and intelligence such as general trends in the market, etc.
@ Hailey - One of the stumbling blocks of technology investments in teh supply management or P2P (procure to pay) world has been the inability to enable suppliers onto their transaction platforms. An invesment in a business network can extend the value of a P2P investment by enabling a high number of suppliers very quickly. The more suppliers and supplier content that a company is connected to, the greater benefit - Savings is a big part, next step is better communication and visibility into supply chain, then it gets interesting with network enabling better collaboration and more innovation .
Bringing Jim's question to the top: I'm curious about the risk analysis angle. Does that draw input from just public sources? Or does it tap into something like the behavior of the supplier with you the customer?
Initially top goals are always around savings. That is usually where people start. However, they quickly realize that networks are very powerful. They impact risk mitigation, they facilitate collaboration which leads to innovation and top line revenue growth
RE: Savings - With cloud solutions, the "time-to-value" has been greatly collapsed - our research has shown that with a reasonable level of adoption in year 1, companies can get a return on their investment in networks based simply on transactional efficiencies alone.
@Kim, I wouldn't say the less personal. I would say the more tools can help enhance the relationships. You can't meet in person per se but business networks provide vehicles for greater electronic collaboration
So wait, this is like social media for buyers and sellers? I was thinking it was more like an IT network. Are these more like portals that have expanded into the offline world, or more like updated versions of old-school buyers' clubs?
Agree with Andrew's point. Technology can actually enhance the personal relationships between buyers and suppliers. MSC Industrial Supply, a big supplier who uses the Ariba Network, spoke about this topic at Ariba LIVE. His point was "you can't fix what you can't see" and so visibility provides the ability to see what you can jointly do better.
Sahhring IP requires care and caution but most companies have standard contracts in place that can protect IP, but companies have to understand that if they fail to share and communicate key information to strategic suppliers, they may lose out on innovation and savings that the supplier can identify.
@JimC - Technology does not displace the need for personal relationships and connections but as supply chains continue to expand, driving competition and innovation. Industry leadership changes much faster so it's not likely that all of your suppliers are local. Networks can facilitate finding and initiating discussions with new and current suppliers.
@Hailey - Industry awareness is at an all-time high and our market research suggests that a majority of enterorises have waded into the network waters. What we expect now is for the companies to begin using networks more agrressively.
@Tech4People you are correct. Visibility and insights must be managed appropriately to protect data privacy and security. But used appropriately, they can help you run your business much more effectively
There are many different types of networks that can focus a a specific business process like payments or a specific industry or region. Then there are business networks that focus on larger trading partner relationships, supporting transactions, communication, and collaboration between them.
Visibility into where in the process orders are...for example, P.O.s, advance ship notices, invoices, okay to pay notification, etc. Companies can greatly reduce safety stock and the opportunity cost of safety stock if they have that visibility
How much of the connection and subsequent relationship between buyer and supplier is done electronically vs how much still has to be done the old fashioned way (people meeting in person or doing personal networking)?
@rspasser, what visibility, data and insights do you see as being particuarly strategic and how should electronics organizations leverage them to improve supply chain performance, logistics and procurement?
I agree with Andrew. We have moved beyond transactional relationships between buyers and sellers, especially in the electronics space where the need for speed necessitates a closer relationship. Networks facilitate those relationships by providing a shared platform.
Electronics suppliy chain is a fast-moving and highly-competitive global marketplace that finds its participants increasingly interconnected and under greater pressure to exploit any and all opportunities that arise. Today agility and collaboration are what will determine who wins and who loses. Companies must rely on their trading partners to win and business networks can facilitate the collaboration.
there is a difference. a business network is a many to many model where buyers and suppliers connect once and have access to an entire community. Networks also provide a level of visibility, data and insights that 1:1 connections do not provide
Andrew Bartolini is chief research officer of research firm Ardent Partners, a research and advisory firm focused on defining, advancing, and promoting the supply management strategies, processes, and technologies
Business networks are evolving to connect the supply chain and give procurement the edge it needs. In addition to increasing the speed of business, these networks contain transactional data that can be leveraged to make better decisions and predict future trends proactively, which in turn reduces risk.
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