Is an eMarketplace Innovative?

Whether you want to buy office supplies, IT hardware, travel, Social Care, Consultancy services or even retail or manufacturing goods for resale, an electronic marketplace has been created and implemented in one guise or another in most developed countries for nearly 20 years.  And yet, the throughput of spend on these marketplaces still only accounts for less than 27%. Why is this?

The business benefits are clear enough; total control over contracted spend, automation of the entire requisition to pay process, reductions in the cost of procurement by a minimum of 10%ᵻᵻ and total visibility of all spend in real time at the push of a button!  Add to this that corporate requisitioners are more used to buying online at home than ever before (record online sales in 2013 of 10.35%ᵻᵻᵻ– see image below) so it then occurs to me that there has to be something fundamental at work here in the UK.

In some countries, where compliance is a social given, the thought of not following a ‘rule’ would be inconceivable, whereas in others adherence to a procurement process would simply be mandated and anyone not falling in line would be dismissed; but here in the UK, ‘rules are there to be broken’, ‘who are you to tell me I cannot buy from the supplier I’ve always used?’, ‘who says it’s better for the company, I don’t care about that!’ ‘Rules! I’ll find a way round them’…… it’s almost a challenge which needs to be overcome!

One place this may be different is in the Manufacturing space, where process and efficiency reigns supreme. ‘If there’s a better way of doing something; more efficient, slicker than before, then it’s my job to make sure I find it, follow it and do the best I can.’ But even then this usually only happens on the production line or factory floor in the ‘goods for resale’ side of procurement.

eMarketplaces have not really changed over the last decade, so we can no longer call them innovative.  Apart from the addition of electronic payments which means they are available to a much wider number of organisations, with less integration required than ever before, they are fundamentally the same.

It may be that the process automation benefits of implementing an eMarketplace brings with it the inevitable removal of effort involved in that process and the potential for redundancies in the Procurement and Accounts Payable teams.  Invariably these teams are involved in the adoption process and obviously tend to be resistant; no wonder the only people who are remotely interested in the value of an eMarketplace are CPOs or CFOs.

However, the business transformation tends to be too hard for a CPO to want to consider and definitely not as sexy as ‘doing the next great deal’. But the benefits from that deal will never be realised in an indirect category unless the implementation of the deal is addressed.

Therefore if the UK wishes to take advantage of the benefits offered by an eMarketplace, the transformational change required to adopt it into the business-as-usual psyche of the British workforce must be taken seriously and implemented in conjunction with a mandate, whether hard or soft, to avoid being sorely disappointed when the potential benefits of those valuable procurement contracts are not realised.

ᵻ – Aberdean Group, Supplier Networks v2.0, April 2012
ᵻᵻ – BDO LLP analysis of Procserve eMarketplace value 2013
ᵻᵻᵻ – Office of National Statistics data

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