Are you the customer or just a route to market?

Are you the customer or just a route to market?

Some companies in our industry might encourage you to “hurry up” while you’re in the procurement phase but maybe it’s because there’s something they don’t want you to stop and think about. For example, the question of business models.

In what we do, you have two options. The first is pretty simple: make your money from enterprises in proportion to the value you create for their business. That means putting in a solution that makes their supply chain more efficient and accompanying it with the processes and technology that makes suppliers want to use it too.

The second is a bit more old-fashioned, a bit less elegant, indeed, somewhat parasitic. This way involves using the enterprises you’re supposed to be helping as a direct sales route to their suppliers, where you’ll make most of the money. Basically turning your customer into your sales channel and pushing the majority of the financial burden down the supply chain to the guys it’s going to hurt most.

Purchasing Insight logoYou get your foot in the door with these big enterprises by claiming you have hundreds of experts on your team to bring their suppliers on board — but really what you mean is you have hundreds of sales guys just waiting to leverage the fact that these suppliers will now have no choice but to pay to use this system.

Except, for all those suppliers, there’s also another increasingly attractive alternative. And it’s not particularly good news for anyone. They just opt-out.

They don’t use your solution, they don’t respond to the hard sell of the “on-boarding” team and they don’t start taking advantage of supply chain finance, dynamic discounting or even the basic advantages of e-invoicing for themselves. So you don’t get anywhere near the supplier participation or ROI you were promised.

It’s a shame but too many businesses in this space have laid their foundations in the second option and it’s simply too late to change. They know it, we know it but they’re counting on the fact that you might not know it.

It’s fine to claim you have a massive network of suppliers already using your tool — but if those users hate it, resent having to pay for it and have to be forced to sign up and pay for the privilege by a team of sales guys, is there really any future in it?

Puts a whole new meaning to the phrase “standing on the shoulders of giants”, doesn’t it?

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