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Part 1: What Networks Can Do For You

 

When it comes to describing today’s supplier networks, nothing says it better than the old ad slogan: they’ve come a long way, baby. So if you’ve been thinking of supplier networks mainly as a way to receive orders, it’s time to take a closer look.

 

 

What’s new with networks?
Rather than being limited to transaction-focused, “catalog-to-pay” processes, many supplier networks are evolving to become truly strategic resources that drive buyer-seller collaboration across the entire spectrum of business commerce. What’s more, your customers and prospects are using them in greater numbers than ever before. For example, recent Aberdeen research shows that:

 

  • Over three-quarters of today’s buying organizations use supplier networks to discover and begin doing business with new sellers(1)
  • Interest in supplier networks is strong and growing, with 66 percent of buying organizations in North America and 43 percent of those in Europe ranking supplier networkactivity as either a critical or very important priority(2).
·       
The flexibility of cloud-based technology and the need to connect with trading partners globally has spurred companies to use networks in new ways, giving sellers and their customers a powerful, cohesive platform that helps them:

 

  • More easily meet the challenge of cutting costs by automating the cycle from purchasing to payments
  • Share transaction and non-transaction information and collaborate on documents
  • Accelerate and gain visibility into business processes
  • Improve real-time access to data and better manage communication and transactions via the social and mobile aspects of the cloud
  • Establish stronger, longer relationships, partly because of the better seller performance that networks make possible
  • Gain global access to trading partners and business that would otherwise be unavailable
  • Free up staff to work more strategically as the result of efficiency gains across a wide range of functions, including:
    • Marketing/promotion and trading partner discovery
    • Account management
    • Strategic sourcing, cash management, and contract management
    • Business document archival (3).

 

 

Understanding networks: The key to better benefits

The evolution of supplier networks has given rise to a diversity of network types that vary widely in scope and purpose. By clearly understanding the distinctions of each, you’ll be better equipped to maximize your network ROI.

 

Though your participation may often be driven by customer requests, networks that offer the most comprehensive capabilities—and make it easy to leverage those capabilities with multiple customers—generally deliver the most value. The chart below describes common network types, their current popularity among buyers, and how the Ariba® Network stacks up in relation to them.
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Network Type

Description

Percentage of Buying Organizations  Using Them

Capabilities Provided by Ariba?
Business social networkRelationship-based network to facilitate the exchange of compliance, risk, and performance information as well as to discover new buying and selling opportunities, but not focused on process9%Yes—Ariba Discovery and Ariba Sourcing allow you to give buyers direct access to this type of information about your company,  greatly expanding your chances of learningabout and being invited to bid on new business opportunities, while Ariba Exchange enables you to connect with a large community of trading partners and colleagues
Proprietary supplier portal Buyer-sponsored network leveraging third-party technology rebranded by the buyer; expressly for use with preferred suppliers, businesspartners, and vendors in an internal corporate community, with suppliers set up on a point-to-point basis31%Yes—The Ariba Network delivers the same or broader functionality, without the limits of
invitation-only participation and one-off implementation and use
Vertical-focused consortiumDominant in a specific industry (e.g., automotive, aerospace, chemicals) that encourages suppliers to participate 15%Yes—The Ariba Network encompasses all vertical industries in a multiplicity of regions worldwide, and with the acquisition of Quadrem in 2011 has extended this reach and diversity even more—adding, for example, a deep vertical focus in the mining and metals industries
Category-focused networkNetwork with special functionality and extensive
membership of dominant suppliers in key categories (e.g., commodities, complex spend, industrial MRO
18%Yes—The Ariba Network includes buyers and sellers across more than 20,000 categories
Global commerce networkVendor-named network offering wide range of document types and order-to-pay processing; includes solutions used in other upstream and/or downstream processes16%

Yes—As the world’s largest business commerce network with participants in 186 countries, the Ariba Network enables you to automate and/or integrate documents, activities, and solutions across the entire order-to-cash cycle as well as upstream and downstream processes, giving you a common collaborative platform and global community in which to conduct and grow your business

Order-to-pay networkVendor-named network focused exclusively on automating exchange of purchase orders,invoices, payments, discounts, and AP automation21%Yes—By enabling you to automate and/or integrate business commerce documents and processes across the order-to-cash cycle, the Ariba Network helps you and your customers to sell, buy, and manage cash faster and more effectively than ever
Payment gatewayGateway built on existing payment solutions to provide a complete one-stop shop for all payments to suppliers, whether from AP or other sources11%Yes—E-invoicing and e-payment capabilities provided through the Ariba Network enable you and
your customers to automate and expedite the billing, approval, and payment processes all through a single platform
EDI VANElectronic data interchange value-added network, referred to often as a regional post office; essentially connects supplier systems to back-office applications16%Yes—The Ariba Network accommodates trading partners who still use EDI VANs by translating cXML documents into EDI documents and transmitting them directly to sellers
Sources: Aberdeen Group and Ariba, an SAP Company

Note that while proprietary supplier portals—which are considered “closed” networks, since sellers must typically be invited to join by a buyer—are currently the most widely used, other more “open” network types are rapidly gaining prevalence. These include global commerce networks like the Ariba Network as well as category-focused, order-to-pay, and vertical-focused networks, all of which you can proactively join on your own.

 

Harnessing the power of networks for your business
Now that you know more about what today’s networks can do to drive value for your business, the next step is learning how. You’ll find plenty of guidance to get you started in Part 2: Seven Success Strategies to Optimize Your Network ROI.

 


[1]Supplier Networks: Moving Beyond the Traditions of E-Procurement, Aberdeen Group, June 2011
[2]Mind the Gap: A Comparison of Supplier Networks across the Pond, Aberdeen Group, May 2012
[3] Supplier Networks v2.0: A Look at Commerce in the Cloud, Aberdeen Group, April 2012

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