Global Logistics & Supply Chain Strategies had an article in its March 2008 issue titled If Supplier Portals Were So Great, Then What Went Wrong? This article provided a time-phased history of supplier portals from the late 1990’s to the present, but also points out how the hodgepodge of approaches have finally begun to sort themselves out in terms of a value proposition.
Michael Lamoureux’s blog Sourcing Innovation scooped me on initial comments in its post It’s not the Portal or the network…it’s the Facilitation, which provides some interesting sourcing and procurement perspectives, most of which I agree with.
As an industry analyst at both AMR Research and IDC, I also had the opportunity to observe among various industries, as well as speak to customers regarding what value, if any they garnered from the process, as well as the supporting technology within portals and trading exchanges.
The article indicates that in the earliest days, portals were cheap and easy to setup. I disagree. The earliest technology was still a work-in-progress, and most of the early portals were focused on indirect sourcing, procurement transactions, and buying processes. When you added the almost mandatory costs of a systems integrator complete with process and change management, the cost ballooned to the point that many firms could not justify the ROI to move forward into more complex procurement processes. More importantly, the suppliers who were curried to participate found themselves in a situation of added costs to participate, as the article correctly points out. When trading exchanges were spawned, various niche technology providers were quick to pitch the value proposition of an exchange that made revenue, as well as bring suppliers together in a seamless network. A lack of consistent industry standards did not help.
What was missing, in my view, was the broader supply chain value proposition, beyond just transactional or electronic content exchange, and narrow functional focus. Buyer-supplier portals have finally begun to yield benefits because they moved beyond the functional limits of the procurement process, into areas of product design collaboration, supply and demand calibration, order fulfillment and transportation tracking. Today’s electronic supplier networks can effectively overcome the limitations of geography and time sensitivity, and yes, can provide a broader value proposition. This may be one area where the ERP providers have finally got it right- enable broader value-chain processes.