Don’t Gamble with Your Supply Chain. Why Sourcing with Marketplace Platforms is the Smart Bet.
Supply chains can face many disruptions — catastrophic weather, labor disputes, material shortages are just a few in a long list of factors. Economic losses from the 2011 Japanese earthquake and tsunami were estimated at more than $300 billion.
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But the biggest risk to supply chains is suppliers. According to Ariba’s David Landsman, 68 percent of supply chain disruptions are due to supplier insolvency. And the eco-system of supply chains is vast, with a company’s suppliers having dependencies on their own individual networks of suppliers.
How can companies limit exposure to supplier vulnerability? Marketplace platforms should play a key role in the strategic sourcing plan.
As a global souring expert, David Landsman will lead a series of sessions on strategic sourcing at Ariba LIVE which takes place March 17 to 19 in Las Vegas and April 8 to 10 in Rome. David leads the team for Ariba Discovery, a marketplace platform where companies can search for suppliers and suppliers can discover new sales opportunities.
Last month, David and I discussed the advantages that marketplace platforms offer buyers and suppliers. For this interview, we talked about the misperceptions that companies have when it comes to the value of marketplace platforms.
Q. What’s the top question you hear when you discuss sourcing suppliers at Ariba Discovery?
Companies often ask, “Can I use it for my category?”
And the answer is absolutely. Ariba Discovery covers more than 20,000 categories and has over 1.2 million companies from the Ariba Network participating. Companies have sourced everything from secret shoppers for retail chains to logging instruments for water wells.
Q. What keeps companies from trying marketplace platforms?
Often times, internal processes inhibit sourcing and procurement teams from trying new solutions like marketplace platforms. There can be a number of steps with onboarding new suppliers. Because of this, teams may opt for sourcing from the company’s existing pool of vendors.
What they miss out on is gaining real-time insight into pricing for goods and services. Marketplaces like Ariba Discovery serve as a barometer for what the true market cost of commodities are at this moment in time. Marketplaces also work as a great tool for supporting supplier rationalization goals. Companies can find suppliers who can fulfill a greater range of their needs … sometimes those suppliers are already part of their existing vendor pool.
Q. Anything new that Ariba LIVE attendees will hear at your sessions this year?
Ariba Discovery has always been a great resource for spot buying and indirect spend. We’re now seeing a growing number of companies turning to Ariba Discovery for direct materials spend. Margins for direct materials spend have traditionally always been higher than highly-commoditized categories frequented for indirect spend. With more suppliers for direct materials onboarding at the Ariba Network, companies are finding competitive pricing with these vendors. I’m leading a session specifically on this topic titled, “Enhancing Your Direct Spend Initiative with Ariba Discovery” where Ariba customer ITW will share insights on its direct spend sourcing strategy.