When people think of crowdsourcing, inevitably thoughts of start-ups raising capital from small investors or online retailers having customers design t-shirts pop into most minds. All examples of companies leveraging communities of individuals.
However, the potential from crowdsourcing is just as relevant to B2B commerce. The emergence and growth of cloud-based business networks has created global communities of companies just as diverse and accessible as communities of individuals. The integration of such networks into enterprise software has made leveraging these communities to crowdsource a relatively seamless and simple process. And concepts such as driving innovation from one’s supply base are not new. Just look at the automotive or aerospace industry for examples.
What is new?
- The ability to leverage not just a few strategic suppliers, but the broader global community, including many companies you never heard of before. This includes expanding beyond direct material suppliers to all categories of spend.
- The ability to do so in an automated, scalable manner
Let’s look at an example within an indirect spend category – a retailer looking to source HVAC systems for its physical stores. Historically, the typical approach would have been something like this:
- Specify the precise requirements (items such as # BTUs required per unit)
- Invite current and some other known suppliers to bid on those precise specifications
- Squeeze the suppliers on price and other terms until 1 or more are selected
This approach limits cost savings to the lowest prices available among known suppliers for a specific solution. It also structures the supplier relationships as cost-focused ones, and limits the potential for discovering innovative approaches.
An innovative, networked enterprise would follow a different approach:
- Identify the business requirements (climate range required for offices, specifications and locations of the office spaces)
- Post the requirements over the a business network with discovery capabilities integrated with their Sourcing application.
- Receive bids for a range of possible solutions suggested by the potential supply base (ex. traditional air conditioners / heaters along with energy efficient and environmentally water cooled systems)
- Evaluate the many options and select a supplier(s)
The networked enterprise crowdsources the problem, leveraging the knowledge in the global community of HVAC providers to identify more possible solutions. Some of those may offer not just lower costs but also other benefits (i.e. a reduced carbon footprint). It also sets the stage for a collaborative relationship with the selected supplier(s).
This is just one example – the universe of possibilities is far greater. In the networked economy we now live in, those companies that leverage business networks in such ways will drive an increasing competitive advantage relative to their peers.
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