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B2B procurement embraces the marketplace model

Amid a period of drastic logistical complexity and accelerated digitalisation, a network-based B2B marketplace model holds the key to more robust, transparent and flexible supply chains

A new generation of business professionals have long been questioning why they can order and receive any item seamlessly in their home life, but it can take weeks to get even the most basic items at work. Traditional B2B procurement is inefficient and time-consuming.

Companies have seen two mega-trends collide. Digitalisation was transforming B2B buying experiences even before Covid-19, but the pandemic intensified the shift as the physical economy became a digital one overnight. Meanwhile, lockdown disruptions amplified the risk of relying on a single source of supply, with just-in-time supply chains particularly exposed.

A network-based marketplace model addresses these issues by facilitating a dynamically connected ecosystem of buyers and sellers and digitising key processes to remove the low-value-added tasks in the supply chain. Cloud-based B2B marketplaces accelerate the sourcing of unplanned tactical supplies and empower employees while managing risks.

Analysts expect the future of global trade to be driven through marketplaces, helping organisations build resilience through easier access and greater visibility across the supply chain. The need will grow further given cross-border B2B ecommerce transactions will reach $1.8tn by 2023, some 17% of all B2B sales in the US, according to Forrester Research.

“Companies want to move from a pure linear supply chain to a network supply chain with a large baseline of suppliers,” says Julien Lévêque-Claudet, head of marketplace strategy and go-to-market at Tradeshift. “You cannot just do that by yourself. You need to tap into a B2B marketplace, delegating the role of finding and vetting suppliers to a third party which applies the right control and curation. The more connections, the faster you react to the speed of business.”

Procurement teams are under pressure to show more strategic value, moving from gatekeepers on spend to revenue generators. B2B marketplaces help them do that through accelerated sourcing and greater efficiencies. As end-users can buy directly from a curated supplier base, procurement staff are able to shift their focus to more value-added activities.

When physical and financial supply chains are interlinked, they’re more resilient, efficient and flexible…helping to unlock the $2tn global SME funding need

A dynamic marketplace model also eases the pressure on supply chains during periods of volatility by intelligently matching areas of high demand with pockets of capacity. It’s easy and cost-effective to build a diverse, pre-vetted supplier base in a controlled environment where smaller suppliers are put on a more level playing field with large vendors.

The benefits are clear but not all marketplaces are created equal, with many thinly veiled B2C marketplaces masquerading as B2B but lacking the backend infrastructure to support such transactions at scale with the right level of control and compliance required by small, medium and large enterprises in a B2B environment.

One marketplace solution that’s as robust on the backend as it is intuitive on the frontend is Tradeshift. Its network-based B2B marketplace environment allows better transparency and competitive offers for buyers while opening up a broader prospecting base to suppliers at a limited customer acquisition cost.

Tradeshift allows easy integration of multiple solutions on a single platform. Buyers are free to tap into different marketplaces according to their specific needs with centrally managed controls that enable them to set their own rules.

“It’s a marketplace of marketplaces,” says Lévêque-Claudet. “If a buyer is in the automotive sector, for example, they will benefit from group buying on a dedicated marketplace for direct materials and they can also access other marketplaces for indirect spend such as office supplies. Crucially, this can all take place on a single platform.”

The end-to-end digital process for managing trade also makes B2B marketplaces a springboard for sellers to access financial products. A rich seam of data underpinning each transaction means that banks and other third-party funders can start to offer financing options, such as early invoice settlement, directly through the marketplace.

“When physical and financial supply chains are interlinked, they’re more resilient, efficient and flexible,” Lévêque-Claudet adds. “Suppliers will sell their products but could also activate a financial product from a financial institution, in one place, ultimately helping to unlock the $2tn global SME funding need.”

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