There Ain’t No Such Thing as a Free (E-commerce) Lunch

This article considers the pros and cons of reliance on suppliers purchasing portals.

It’s a common practice for mid-sized corporates to take the path of least resistance in their use of e-commerce systems. Faced with the need to minimise inventory, optimise time to market, reduce departmental headcount, and the backlog of work in IT, a supplier offering to provide an ordering portal seems to make a great deal of sense.

Stick with this policy and fast forward a few years and it turns out that many departments may have become reliant on suppliers in a way that they never expected. And one that threatens critical processes. If one of these suppliers hits the wall or is seen to be hiking prices beyond fair play then how soon can their portal be replaced, and at what cost and risk to the rest of the finely tuned process flow? If a vital ingredient for a food manufacturer can’t be purchased because of a systems failure then does the rest of the production line stop? How does this affect other inventory orders, deliveries, cash-flow, retailers, etc?

And if this supplier’s system is the store for corporate assets, as in the case of a DAM or other document repository, then how to retrieve them even if you know where they physically live?

The remedy is a tough one because, just as there is no free lunch, there is also no magic wand. First assess the situation. Look for the signs of failing suppliers and act on the weakest cases first. Find an independent solutions vendor you are comfortable with and implement their portal making your suppliers part of the trading platform. Now if a supplier goes down it’s a relatively easy job to introduce another in its place. And because it’s your process that they have to adopt there are some other benefits such as a shorter time to productivity, better options for supplier management and retention of order data and intelligence into the future.

Working as I do in a company that supplies such systems, you would be suspicious that I have my own agenda. I’ll happily admit to that. Will you admit that you may have put your organisations at risk by relying on e-commerce solutions provided by suppliers?

Keep safe.

James

James Evason is Business Development Director at marketingunity, a software company specialising in B2B ecommerce systems for marketing collateral development, production, procurement, fulfilment and supply chain management.
www.marketinguntiy.com
Posted by James Evason at 10:13 No comments: Links to this post
Monday, 11 January 2010