Supplier Enablement - the future is coming. Or is it?
How times have you tried to predict the future and spent some time trying to understand those things that would influence your prediction?
I picked up on an article published by gtnews.com on July 04 2005 that had a stab at the 'Future of Electronic Invoicing'. gtnews.com is read by those in finance and treasury.
The future was described like so:
The electronic invoicing industry is moving towards more inter-connected B2B solutions like federated networks.So,some 18 months has passed is there any indication that this future is coming?
The article correctly highlighted the obstacles to buyers and suppliers from 'lock-in'. To strike an analogy; if you had to choose your telephone provider (telco) based on who you could reach by telephone using that telco then that presents you a problem if one telco can not povide you a service to reach everyone that you need to or might want to speak with. Of course this is not an issue because the telco industry understands their customers want a service that provides any to any connectivity.
The article suggested that the service providers that deliver electronic invoicing will need to deliver the same any to any connectivity that your telco does. Is there progress towards any to any connectivity using federated networks?
Le me know your views and I will compile your replies in a future blog.
2007 - will it be you?
Reflecting on my blog of yesterday I started thinking: how many suppliers have lost customers because they had
NOT implemented electronic invoicing when asked by a customer?
I don't expect anyone to reply this question.
However, I have evidence that suppliers are losing customers and I wonder how many customers they have to lose before they choose to act?
Never mind with a new year in prospect we should look to the future.
Will it be you in 2007 that is asked to implement electronic invoicing?
What clues do you have to know if it will be you?
1. Do you know what your customers' procurement policy is?
Click here to see an example
2. When you win a new contract or renew a contract check to see if your customer has introduced a clause concerning eCommerce. Many buyers are introducing eCommerce clauses as a condition of business even though they may not implement that immediately.
3. Do you have any UK public sector customers? The likelihood is that sooner than later you are going to be required to submit electronic invoices.
4. Have your suppliers implemented electronic invoicing? That is, they want to send electronic invoices to you.
5. When your are replying to an Invitation to Tender (ITT) or Request for Quotation (RFQ) did the customer require you to send your reply on paper or reply using an online service. If it was the latter then that is a clue they are moving their procurement away from paper to electronic delivery.
6. Has your customer contacted you to have a conversation about your early payment discount terms?
7. If you have had an approach from a customer about your submitting electronic invoices how did you respond? a. I didn't respond my preferred response was no but obviously I couldn't say that. b. I said I would think about it. c. I said I would if I knew how. d. I said Yes - how do I do that?
If the clues are there and you need some help then
click here
Electronic Invoicing - progress for some, problems for others
It is fascinating when you read something and you think that is bang on if only I had the same clarity of expression. I read this statement:
We would like to do away with paper invoicing completely because of the man hours and cost involved in processing this paperwork.Done and dusted! That is the expression of
why now we need to figure out the what and how details.
What? We need to STOP our suppliers sending paper invoices and have them only send electronic invoices. Do you apply that to all suppliers or just your top suppliers? If you want 'to do away with paper invoices' it has to be the former. What notice is reasonable to introduce this change? Should you consider incentives or compel your suppliers to act?
How? Do you let suppliers figure out how or do you provide a solution? If you provide a solution will you pay or make your suppliers pay?
In a recent blog that I started I received a posting from a business in South Africa that had tried for more than one year to get some smaller suppliers to commit to electronic invoicing. Despite much effort spanning one year they have now decided to abandon those suppliers that have not complied and are looking for new suppliers. Sooner or later those suppliers are going to face the same request from other customers and they will soon figure out this is something you can not ignore - PROGRESS.
Click here for more information about the why, what and how of electronic invoicing.
Supplier Enablement - No Free Ride
There is no shortage of interest in B2B eCommerce but who is going to pay?
Will it be the buyer or the supplier?
The vendors of products and services that deliver the solutions for B2B look upon buyers and suppliers as their customers. What are they saying?
What exactly needs to be paid for?A buyer implementing eProcurement, eInvoicing or P2P automation, e- , will need to engage suppliers. That typically results in requirements put to a supplier to create and publish electronic content and generate an electronic invoice and that comes at a cost to the supplier.
Who pays?The general picture is:
In the private sector the buyer usually expects the supplier to meet any cost as a ‘cost of doing business’. There are exceptions.
In the public sector, at least in the UK, the buyer usually meets the cost and that is to ensure that no supplier is disadvantaged from competing for contracts. The Zanzibar Marketplace exemplifies this approach.
Among vendors there is no consensus with pricing options where the buyer pays, supplier pays and both pay.
Suppliers are waryThere are examples of buyers achieving e- compliance with all their suppliers but in the mainstream it is typical that a buyer will target their top suppliers with the 80/20 rule applying. Many of those top suppliers will be sitting on multiple requests to get involved in the e- of their customers each having their own unique requirements. The supplier is now burdened with the complexity of the business case and IT implications for each customer. This is not going to change soon and the number of requests is increasing.
Buyers wait in vainThe supplier’s dilemma is often not evident to the buyer who blissfully assumes they have a supplier’s attention and compliance which is why those that have implemented e- describe supplier enablement as challenging.
Suppliers bogged down with cost justification and IT complexityMany suppliers have customers in the public sector and the private sector and both are negotiating down the cost of purchased goods and services and so in the eyes of a supplier they already get a good deal. If the deal included e- as a condition of business then the supplier went in eyes open. However suppliers are receiving requests for e- from pre-existing business and worry about what to do; not knowing how that might affect their business. The cost to the supplier is important as it erodes margins but it is meeting the differing requirements of various customers that injects complexity in terms of process and IT requirements that suppliers want to avoid.
Buyers get itIf you look on the buyer side they typically implement a single interface between the business and the supplier base; one to many to keep down the cost and complexity. In the supplier base a piecemeal approach is more common as result of reacting to customers’ e- and that results in cost and complexity for the supplier.
Suppliers catching onAs suppliers get wiser they recognise the need for a solution that will accommodate all of their customers’ e- requirements. They are also looking at the opportunities from having XML orders available to them rather than paper documents to reduce the clerical costs of processing orders. As a result they are now implementing a single interface between the business and the customer base; a one to many solution, and the first vendor through the door is in a strong position. However, the reality is that the majority of UK businesses are untouched by e- but that is because wherever possible they have avoided engaging with e- customers in a wait and see approach and to forestall incurring additional costs.
e- is unstoppableThings are changing, for example, the UK public sector has an agenda for e- efficiencies and is meeting the cost for equipping suppliers for e-.
This has a big impact: i) it improves the competitiveness of suppliers particularly SMEs and, ii) it will also benefit the private sector as suppliers are given a ramp to e-. Buyers have visibility to their own costs for processing requisition to order or an invoice and know what savings they achieve in a post e- world. Now they are becoming curious about a supplier’s costs; to process an order and raise an invoice. Why the interest? Because where a buyer meets the cost of e- for a supplier then they expect the supplier will achieve savings and that provides scope for the supplier to offer concessions that help the buyer meet their objective to drive down the cost of purchased goods and services.
e- is here and the who pays options are:
the supplier pays and figures out how to cut costs or recover their additional costs perhaps through tweaking prices, or, the buyer pays and agrees that a supplier’s cost savings will be taken account of when negotiating prices. At the end of the day e- is about reducing costs and if your supplier is at the bottom of their barrel when it comes to price then buyers may have to give to get.
On a final noteIn a recent blog I challenged the view that the success of e- hinged on solving a customer’s pain and vendors co-operating. No it is not. e- depends upon the collaboration of parties that have opposing agendas; buyer to pay the smallest price negotiable, supplier to achieve the highest profit negotiable. It is about: who pays and how much.
This blog was also published by Line56.com on 18th December 2006.
