At last, suppliers get what they need from e-hubs

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Once an afterthought in the world of e-procurement and e-marketplaces, suppliers are finally getting the respect they deserve.

Although large buyers and e-marketplaces drove the early days of b-to-b e-commerce, both groups have learned you can only ignore—or worse, abuse—your suppliers for so long.

Indeed, the hottest e-commerce trend of early 2001 is to give supplier companies, and their b-to-b marketers, better environments to advance their products and brands.

"The reality is, it’s still very hard for suppliers to get involved in b-to-b," said Cindy Elkins, Ariba Inc.’s VP-supplier and content solutions. "But we’re committing to helping suppliers as fast as we can. Suppliers have moved on from questioning whether they need to make an investment to getting dirt under their nails and figuring out how to integrate their infrastructure into b-to-b."

Earlier this month, Ariba announced the latest in a line of supplier-enablement initiatives, dubbed the Ariba Supplier Hub Program. A supplier hub is one that brings together many suppliers in one location.

Through its new program, Ariba works to bring all a hub’s suppliers onto an e-procurement or e-marketplace platform at one time. Ariba is initially working with a mix of technology providers and e-marketplaces. Among its initial partners are Impresse Corp. (a print industry hub), Viacore Inc. (an electronics hub) and bCentral (Microsoft’s small-business hub).

Competition abounds

Ariba is not alone. In recent weeks, rival i2 Technologies Inc. unveiled a suite of new services targeted at helping suppliers link into e-marketplace and supply chain environments, and upstart Fourthchannel Inc. launched a hosted tool to help manufacturers and distributors sell via online exchanges.

In the past, such programs and technologies have been more sizzle than steak, but industry watchers say helping suppliers sell more effectively online has become a big priority.

"Essentially, the first phase of b-to-b was driven by e-procurement vendors, who also fueled most of the e-marketplaces as well," said Bob Harrington, VP-marketing for sell-side vendor OrderFusion Inc. "They had a catalog orientation—the catalog had a short product description, a unit of measure and a unit price. Suppliers couldn’t do quantity discounts, show pictures or text or allow customers to configure products."

Because of that, there was an enormous reluctance to use these environments, which marketers perceived as an attack on their brand image, Harrington said. "Suppliers wanted to participate but not at the cost of losing differentiation," he said.

OrderFusion recently helped three suppliers become "Ariba Ready," a program that aids suppliers by getting their catalogs and business processes in place to be instantly integrated into Ariba’s commerce network.

Technical KO

OrderFusion’s Harrington credits Ariba’s so-called "punch-out" technology, which lets buyers link out to a seller’s Web site for more information, with helping suppliers take better control of the b-to-b selling process. Commerce One Inc. has a similar technology called "Round Trip," as do many other e-procurement and technology vendors.

"What we have now is a much more robust selling experience," Harrington said, noting that suppliers need to be looped into the buying process to do what they’ve always done—respond quickly to quotes and close a deal with a personal touch. "The closer that e-commerce is to [real-world] commerce, the better for suppliers," he said.

MwSupplier Inc., a hub that helps minority- and women-run suppliers get into b-to-b, became Ariba-ready with OrderFusion’s help.

"Small suppliers don’t have IT departments or a technical person; we can do the work for them and get them trading online with their buyers," said mwSupplier CEO Pete Varma.

It’s not just small suppliers that need hand-holding and special attention. Medical supplies e-marketplace Inc. last week detailed the progress of its supplier alliance program, which involves large suppliers such as PerkinElmer Inc., Amersham Pharmacia Biotech Inc. and Endogen Inc.

The independent exchange won the commitments of these crucial suppliers by tweaking its pricing and service strategies, said Peyton Anderson, SciQuest’s VP-business development.

"We have relationships with over 850 suppliers, and every supplier is different in their own way," Anderson said. "But we’ve put a lot of emphasis on allowing suppliers to differentiate their suppliers and getting their costs per order down to the very lowest number possible."

In addition, SciQuest has worked with suppliers to customize pricing structures based on a company’s specific needs. For instance, if they want extra data and catalog management, the price goes up; if they are fully integrated electronically and require less hand-holding, prices may go down.

Supply and demand

All of this has led to something of a turnabout in how suppliers view e-marketplaces. As many e-marketplaces struggle to survive, at least some suppliers have realized the e-markets need them. But suppliers are also recognizing that they, as suppliers, need the efficiencies of e-markets.

"Suppliers are recognizing that a very simple marketplace model wasn’t necessarily the most accurate way to charge for services," Anderson said.

"All of them said, 'We know you guys need to get profitable, and as a supplier partner, we want to help you get to profitability.' "

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