Breathe a Sigh of Relief; Suppliers are Here to Stay

Breathe a Sigh of Relief; Suppliers are Here to Stay
There’s a lot of talk these days about what the onset of e-commerce is going to mean for suppliers. Unfortunately, most of what’s being said seems to warn of the dangers that lurk for unsuspecting suppliers who fail to join the online momentum at precisely the right moment. I’ve written about the daunting side of the Internet more than once in this column; and it’s true — your customers have high hopes for what your online services will offer for them, and the moves you make toward meeting their expectations will be critical to the future of your company.

But there’s more to the story than that. Perhaps more than anything else, the advent of e-commerce is a great big chance for suppliers to reinvent their relationships with their customers, making themselves more important than ever. How? By listening to what it is your customers really want from e-commerce — and that’s a lot more than just low prices.

Making Life Easier
In a recent Forrester Research study called “Online Supply Chain Realities,” purchasing professionals from a variety of industries expressed their hopes for the e-commerce revolution. Above all, they want online purchasing to make their lives easier by helping to eliminate the inefficiencies that are inherent in a traditional purchase order-based procurement system, and by helping them streamline operations and reduce inventory.

“The Net will dramatically speed up and improve the quality of interactions with our suppliers,” says one health care company purchasing exec. “Less waiting means less inventory taking up valuable space.”

What’s more, buyers expect suppliers and manufacturers to get their online stories straight, and right away. They want standardization online that will enable them to compare products and prices and manage supply chains in new ways. One way they expect to see this happen is through the use of a system that’s causing a lot of trepidation among some suppliers: online marketplaces.

Despite fears that these marketplaces will eventually crowd out traditional suppliers, customers don’t seem to see it that way. Most seem to feel that the online marketplaces will not replace traditional suppliers; rather, marketplaces will be used to coordinate customers’ interactions with suppliers and to conduct transactions.

Loyalty For a Price
“We’re not going to alienate our current suppliers by going through a Net auction for 2 cents worth of savings,” says a purchaser with an industrial equipment company. “But we are using e-marketplaces to share production requirements and engineering changes.”

In other words, customers envision new alliances between traditional suppliers and online marketplaces that will work to everyone’s — especially the customer’s — benefit.

According to the report’s author, W. Daniel Garretson, the main key to success in the e-marketplace will be suppliers’ ability to maintain a sense of what their customers really want and, more important, the commitment to providing it. “Rather than blindly waiting for their customers to define industry-wide collaboration,” he writes, “suppliers will often need to develop their own plans.” So what does that mean, exactly? The fact that the answer isn’t clear is just the point: There are no rules yet; the time has come for you to get out there and make some. According to your customers, they’ll thank you for it.