Part 2: Seven Success Strategies to Optimize Your Network ROI
1. Move beyond a tactical perspective to a strategic one. Best-in-class sellers view networks as a transformational resource as opposed to just an enablement tool. These sellers take full advantage of the diverse capabilities networks offer, using them to create highly effective, repeatable processes that increase their market share across multiple geographies and trading partners. By adopting a similar approach, you can realize economies of scale and establish new ways of doing business that help you develop innovative products and services while boosting customer revenues, loyalty, and satisfaction.
2. Start where you are and expand capabilities gradually. Your participation in a specific network can evolve over time as your relationships and priorities develop. For example, while you might begin by providing one customer-required capability like e-ordering or e-invoicing, you can then leverage that experience with other customers while adding new capabilities. On the Ariba® Network, a natural progression might be to first create a strong seller profile, then begin connecting through e-ordering and e-invoicing, and next integrate with customers to capture the full value the network offers.
3. View supplier networks as a tool to create competitive advantage. Many sellers use supplier networks to better differentiate their product and services, tighten relationships with their customers, and create unique, value-added products and services exclusive to their business—all of which help them gain competitive advantage in their market space. And as more buying organizations seek to automate via networks, sellers who are already enabled and experienced will be far better positioned to capture market share than those who continue to rely on traditional methods.
4. Think globally while acting locally. While supplier networks can give you global reach, be sure to solidify international connections with strong local service. This makes it far more likely that you’ll become a strategic seller, making your business harder to displace. For example, after connecting with a large Brazilian mining company via Ariba’s Quadrem Network, one MRO seller took service to a whole new level by moving its industrial parts store directly to the customer’s plant. End users can still order through the network, but now have the added convenience of being able to pick up orders in house. Not only has this spiked sales, it has created deep traction in the relationship—an unusual accomplishment for a seller of indirect goods.
5. Gain familiarity with regional preferences. Keep in mind that the prevalence of different network types varies by region—e.g., European companies are three times more likely than their North American peers to use payment gateways, which make it easier to manage multiple currencies and payment methods—so it’s important to understand local patterns in the areas you’re targeting when deciding which networks to join.
6. Use network participation to differentiate your company. While participation in supplier networks frequently serves as a door-opener, you can manage that opportunity to rapidly differentiate your business. For example, a customer may invite 10 different sellers to participate in a sourcing event, but you can make your business stand out by going above and beyond what’s being requested—by offering faster response times, better payment terms, more available inventory, or similar capabilities that other sellers don’t provide.
7. Capitalize on network data to explore potential new markets and serve customers better. The detailed purchasing data supplier networks provide offers an information goldmine that you can plumb to determine next steps for your business. By analyzing customer buying patterns and preferences, you can gain valuable insights into what customers want, accurately assess the viability of new products you’d like to develop, and create well-informed strategies that move your business forward. You can also share your insights with customers, helping them better understand what they buy while collaborating on win-win approaches that benefit you both.
Systemax: Using the Ariba Network as a Competitive Differentiator
During the past two years, Systemax, Inc., a Fortune 1000 company that sells personal computers, computer components and supplies, consumer electronics, and industrial products in North America and Europe, has utilized supplier networks—particularly the Ariba Network—to transition itself into a strong B2B player. The decision was based on Systemax customers’clear preference for e-commerce as a primary procurement channel and was also a natural extension of the company’s B2B strategy, which is designed to complement its core local account management.
According to Tracy Lamb, director of global accounts for Systemax Europe, Ltd., use of the Ariba Network is a big part of the company’s strategy to use e-commerce as a competitive differentiator. As a result of the new approach, Systemax has seen dramatic sales growth through Ariba in both North America and EMEA, with close to $1 million in European sales for the 12 months ending March 2012 and a 50 percent revenue increase expected by the end of 2012.
Watch/Listen: Go to http://www.youtube.com/watch?v=ZbimS3lx1P8 to learn more about the strategies Systemax Europe is putting in place to drive network success.