The Future of B2B and Government Procurement

Written by Arcadier, 16 Jan 2017

The rise of the platform economy in the last decade has catalysed transactions and made supply chains more efficient. Through companies such as Amazon, Alibaba, Uber, and other online structures, a wide range of economic activities have been made not only possible, but also fast and convenient. While the global economy is reorganising, businesses and government bodies must also transform to improve its operations to keep up with the changing landscape.

In devising a supply chain management strategy that delivers results and can be sustained with minimal cost and effort over the long haul, many leading companies have begun to engage in collaborative strategic sourcing. Taking the best of sharing economy marketplace platforms, they apply it to their global supply chain to strengthen networks, improve data accuracy and efficiency, and save costs.

The possibilities in the use marketplace platforms are endless, and the same can be said for its application in global supply chains. From assisting the public in finding and purchasing trusted care products and services to reducing the complexity of B2B procurement, Arcadier explores a marketplace’s benefits for business and government agencies:

Address the challenge of rising business costs

Precisely because procurement processes are often costly and paper-based, there is plenty of room for improvement. When United Overseas Bank (UOB) announced that it’s developing a B2B virtual marketplace for its small- and medium-sized enterprise (SME) customers, it cited cutting purchasing costs as one of the main reasons.

Online marketplaces in the B2C and peer-to-peer (P2P) environment are looked upon as an extremely cost effective new channel to market. Through a marketplace, businesses and government agencies can negotiate bulk purchase deals, at the same time providing a trustworthy platform for buyers and sellers to come together. Buyers are also able to check for best prices for particular goods or services and alternative products that may be cheaper or of better quality.

Other opportunities for cost saving come from improved purchasing data, the simplification of sales and support processes, a more reliable and efficient supply chain, and increased customer as well as supplier satisfaction.

More efficient processes

Although price is important, the quality of the goods or services supplied and their on-time delivery is critical to the experience and output offered by a business or government agency. The factors above are largely affected by how efficient the procurement process is.

Compared to B2C transactions, B2B purchasing is more complex in nature, requiring more paperwork, research and documentation. Business and government agency employees are often tasked with repetitive and mundane tasks such as having to request for numerous separate price quotations for products and sometimes even shipping.

A network which connects all parties on one single platform with one point of contact for the entire procurement process can greatly reduce the costs, time and effort that is typically required. With such an infrastructure in place, the business or government agency can then divert focus from handling queries to sourcing strategically. Another benefit of using marketplaces for procurement is that the suppliers have to maintain their own microsites, update their product description, prices, and shipping options.

As a marketplace platform is modeled after successful consumer shopping websites with which we are familiar, it’s relatively simple for employees and suppliers to use.  The simplicity of B2C online shopping experience can be matched, even down to payment processing if payment gateway capabilities are provided.

Data accuracy

In B2B procurement, data is of paramount importance. Decision makers rely on the quality and accuracy of the data entered into the system, which means that discrepancies, queries and disputes due to inaccuracies in a paper-based system can be detrimental and costly.

Sans the paper-driven bureaucratic processes, buyers and sellers can easily and securely exchange online documents. The accumulated procurement transaction data can then be used to inform strategic sourcing decisions and contract negotiations.

The availability of data also makes supplier practices more visible, which allows the formulation and implementation of key corporate and government initiatives such as social responsibility, ethical sourcing, and compliance with anti-corruption legislations in different countries.

For example, through integrated marketplace features, suppliers can conveniently upload reports that evaluate their green initiatives for environmentally conscious buyers to review. A cloud-based government procurement system can also play a pivotal role in supporting local sourcing initiatives.

Stronger relationships, a more powerful network

A marketplace’s services can span from the beginning (search/research) to the end of a transaction (payment and after-sales), driving compliance and cementing buyer and supplier collaboration.  As is the case with B2C marketplaces, trust is indispensable.

As the marketplace is positioned to offer more transparency, it also helps buyers and sellers to increase market visibility, enabling personal relationships. Feedback and reviews from buyers to suppliers and vice versa also help to strengthen partnerships and increase responsiveness to the changing needs of the market.

It’s important to highlight that most successful marketplaces don’t just build their user base; they cultivate and grow their community. The development of a procurement network through marketplaces will surely mean better relationships with end-users, buyers, and suppliers.

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