Global Logistics and Supply Chain Strategies - March 2008 - (Page 50)

If Supplier Portals Were So Great, Then What Went Wrong? BY ROBERT J. BOWMAN The first Web-based portals dedicated to enhancing buyer-supplier relationships got an underwhelming reception from the trade community. But the survivors have evolved into networks with real value. here’s no better place to conduct buyer-supplier relationships than on the internet. The technology would seem a natural fit for companies looking to get closer to their suppliers and streamline supply chains in the process. So why has the road to supplier portals been marked by so many obstacles? In the late 1990s, at the height of the dotcom mania, hundreds of entrepreneurs stepped forward with Web-based “solutions” for enabling buyer-supplier transactions. Some were industry-specific; others took a broader approach. Some involved an intermediary; others didn’t. In addition, there was a split between portals meant to serve the needs of a single large retailer or manufacturer, and those that invited multiple participants. It has taken time for this hodgepodge of approaches to sort itself out. And questions T remain about the best model for particular companies or industries. But one thing is clear: most of the surviving channels for buyer-supplier collaboration look radically different from those of a decade ago. Supplier portals were cheap and easy to set up in the early days, says Jane Barrett, research director in the Value Chain Strategies team of AMR Research in Boston, Mass. But designers didn’t think strategically. “Companies weren’t taking a holistic view of supplier performance management and collaboration,” she says. Many portals, especially those that featured auction capability, seemed bent on getting buyers the best deals. An initial focus on indirect procurement, such as office supplies, as well as on spot-buying and excess inventory, only served to heighten the sites’ obsession with price. “The leaders were hopeful that they could set up a toll booth along the informa- tion highway and collect,” says David Hope-Ross, senior director of procurement and supply chain management with Oracle Corp. “As a result, you saw companies come out with ill-founded business models. The only barrier was a business card.” Suppliers, not surprisingly, pushed back. Many saw portals as just another means of boosting discounts for buyers. (“Auctions,” says Hope-Ross, “were like the Super Bowl of procurement.”) Highly touted efforts such as Covisint in the automotive industry fell short when many suppliers refused to sign on. A transactional mindset doomed other efforts. Early portals—also known as trading exchanges—looked to automate basic, day-to-day processes without seeing the bigger picture. Since that time, says Barrett, successful ventures have taken on valueadded services such as the exchange of data for forecasting, product design, ship- 50 MARCH 2008

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Global Logistics and Supply Chain Strategies - March 2008 Editorial GL & SCS Exclusive FastForward Up Front The Green in Green Think Inside the Box Have a Second Look Can't Happen Here Opinion: Stay in the Black as Your Workforce Fades to Gray Opinion: Four Critical Steps to Managing Change in the Supply Chain Industry Voices

Global Logistics and Supply Chain Strategies - March 2008

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