Supplier Enablement

Supplier Enablement - fair play

In an earlier blog I spoke about how buying organisations are meeting the cost of their B2B eCommerce initiatives as they implicate their suppliers.

I also mentioned that some buying organisations take the view that the supplier must pay - period.

Is there a half-way house?

What if the buyer were to meet the costs initially because this overcomes the resistance and objections that suppliers put up about 'cost' and then agrees over time for a transferance of cost as the value/benefit materialises for the supplier?

To anticipate the next objection: what if I don't want to meet the cost at some future agreed date?

I think the answer is, OK, that is your option. However, bear in mind that we go on with the use of B2B eCommerce and that would put you on the 'outside' of our preferred way to manage transactions with our suppliers. You might want to consider what that might mean to you?

OK, so what are these benefits that materialise over time?

Let's say that we review the position after one year during that time we will implement the bi-directional exchange of electronic documents; we will send electronic XML orders to you and you will send electronic XML invoices to us. We can guide you on how you can use the electronic XML order to automate your processing of the order. We expect that the availability of an electronic XML invoice should improve our capability to process invoices providing more control over payments and increasing our options to take early payment discounts.

You should look at what improvements show up in your business and we suggest that one year is ample time to take stock of that.

So let's say that it all works out, what will be my costs when they are transferred to me?

Now we are in a big discussion with multiple choices:

1. Buyer transfers all the cost to the supplier on the basis that they have paid for the buyer to get up to speed with B2B eCommerce and there is benefit to the supplier. The supplier has the option to walk anyway.

2. Buyer transfers half the cost in recognition that their own benefits are derived from the supplier's participation in B2B eCommerce.

3. Buyer transfers none of the costs but makes it mandatory that a supplier trade with them using their preferred B2B eCommerce methods.

4. Buyer agrees a tariff with the supplier. That might be; we send you 400 orders a year and you send us 400 invoices a year, your tariff based on 400 invoices is 400 x ? where ? is the cost of the supplier to send an invoice (50p?) or the incremental cost to a buyer to process a paper invoice versus and electronic invoice (£1.50). The numbers before are made up yet broadly representative of likely costs.

All very interesting and up for debate which is the purpose of this blog to allow other people to contribute ideas.

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posted by FrankB @ Wednesday, August 16, 2006