With the growth of the Internet, a new way of managing procurement has appeared in the form of market sites. These services promise to link buyer and supplier in an end-to-end chain of electronic trading. Businesses are being urged to hand control of procurement over to third parties combining the role of IT supplier and catalogue aggregator.
For some, the idea of outsourcing procurement may be attractive. Others may balk at delegating responsibility for strategic supplier relationships to a software provider.
Instead of increasing choice and shortening the supply chain, the market-site model has the opposite effect. The e-procurement supplier controls the software you need to use to buy from its site. This software won't work on other market sites or on individual suppliers' sites. On the Internet, you need to choose which electronic catalogue supplier to use and stick with it.
Suppliers have to meet criteria set by the market-site operator to set up shop. If your preferred suppliers don't meet those criteria, you may not be able to deal with them electronically.
Wouldn't it be better if the buyer could use a single interface to connect to numerous suppliers' sites? If the supplier doesn't want to operate such a site and chooses to go with an electronic catalogue aggregator, fine, then you connect to them too.
The technology exists to rebuild the e-procurement model in a form that suits supplier and buyer. The only people it won't suit are the market-site suppliers. Until this transformation has taken place, businesses will continue to rely on traditional methods of procurement and will continue to waste money.
Mary Kingman is business development director at e-procurement specialist Tranmit