Impact of E-hubs in B2B Marketplace: Shift in Procurement Trends
Covid -19 pandemic has changed how procurement has operated globally. Disruptions in the supply chain have led to businesses thinking about new ways to procure materials in all situations.
In India, third-party logistics is expected to grow 8% CAGR in 2021-25. Resilience and sustainability in supply chains are essential for authorities today. A Singapore-based business leader said that tech-led procurement services must be implemented in India for its procurement needs.
He emphasized that businesses must choose suppliers that can sustain disruption in the future. Many global and regional firms favor centralized procurement functions as they offer better monitoring and save costs.
Procurement hubs have built long-term relationships with suppliers that bring “just in time inventory” while keeping costs low and standards high.
One of how this can be achieved is with e-hubs. A large number of buyers and sellers are brought together by automating transactions. E-Hubs have vast choices for buyers to choose from, lets sellers access new buyers, and save transaction costs. They enable several businesses to gain purchasing power over commodities quickly and set them onto the venture path.
What can Businesses buy on E-Hubs?
Businesses buy a wide range of products depending on their needs and the nature of business. The purchases can be classified into two types:
Manufacturing Inputs are raw materials like?steel, chemicals, plastics, etc., that are used for production and processes. These are specific and can be different from one company to the other. All manufacturing inputs are purchased from vertical industry-specific suppliers and distributors. They use?specialized logistics and fulfillment mechanisms.
Operating Inputs are also often called maintenance, repair, and operating (MRO) goods. They can include office supplies, plane tickets, spare parts, and even cleaning services purchased from horizontal suppliers. They are not industry-specific and do not require specialized logistics.
How do Businesses Buy on E-Hubs?
Businesses can choose to buy their supplies based on their needs and abilities. Companies can adopt Systemic Sourcing, which involves negotiated contracts with vertical and qualified suppliers. These contracts usually tend to be long-term and affect a close buyer-seller relationship.
Spot Sourcing is usually adopted by companies looking to fill an immediate need at the lowest costs possible. Commodity trading like oil, steel, plastic, and energy usually takes this type of procurement without a long-term buyer-seller relationship.
Horizontal Vs. Vertical Procurement Solutions
Earlier, horizontal procurement services were most successful as they focussed on a wide range of supplies for diverse industries. But, their market slowly deteriorated as buyers demanded more customized solutions for their businesses, especially with software supplies.?
While customization could be possible for large enterprises, SMBs cannot afford it. It requires additional onboarding, complexity, and higher customization costs.
Vertical Procurement solutions are concrete and are designed with a targeted persona. This eliminates the need for customization, making it affordable even for SMBs. E-hubs are highly verticalized procurement solutions that build tailored workflow software to meet buyers’ needs. Due to this nature, there is a shift in trends from horizontal procurement platforms to vertical procurement platforms.
E-Hubs and Vast Opportunities
E-hubs have enormous potential for streamlining workflows and procurement processes and automating them. It also helps lower transaction costs and eliminates the need for repetitive work. It enables strategic planning, innovation and helps source better and newer materials.
E-hubs pose vast opportunities to navigate through uncertainties. It helps companies to source and procure supplies sustainably even through disruptions. It enables companies to be prepared for “just in time” and “just in case” situations.
Vertical Procurement platforms like E-hubs are here to stay for their by default-custom solutions built without additional costs. Large enterprises and SMBs, all the same, must relook their supply chain operations and restructure to remain resilient and disruption-proof in the future with E-hubs.
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