Portals open doors to suppliers

Corporate buyers haven't had much luck convincing suppliers to use their new supply chain management systems. Adrian Mello says that supplier portals may turn the tide.

When it comes to adopting new technology, suppliers can be a ticklish bunch.

It's not easy for corporations to convince suppliers to use their new electronic supply chain management systems. Suppliers are reluctant to invest in expensive software--especially when it may only work for a small subset of their buyers. Suppliers are also suspicious of new buyer-sponsored technology, which they often regard as just a way to pressure them into lowering their margins.

Portal technology may be the answer. "Supplier portals are becoming a standard requirement for organizations that are re-aligning supply chain functions," says Bill Brandel of the Aberdeen Group.

So far, enterprises have primarily used portals to share information--such as health benefits, retirement programs, and corporate directories--with their own employees. In fact, only 8 percent of all corporations use their portals to communicate with suppliers, according to Forrester Research. However, corporations' early successes with employee portals have encouraged many of them to consider portals for interacting with suppliers.

Portals offer a number of compelling benefits to suppliers. Any supplier with a personal computer and an Internet connection can use a corporate portal without investing in expensive enterprise software systems.

A well-constructed portal also gives suppliers easy access to useful information such as product and process requirements and key staff contacts. "It's more effective for suppliers to deal with you because the portal allows you to create a tailored customer view," says Tim Thatcher, portal marketing director at IBM.

Corporate buyers also benefit--which is important considering that they are the ones that pay for the bulk of the cost of setting up and maintaining the portal. The good news is that portals are a bargain compared with other complex, multi-million dollar supply chain projects. A typical portal deployment costs only about $650,000, according to Forrester research.

Unlike most other supply chain projects, portals can be deployed quickly. Forrester found that 39 percent of enterprise deployments take less than six months and 70 percent take less than a year.

Supplier portals help save time and money by automating transactions, such as purchase orders, advance shipment notices, invoices, and advance receipt settlements. For example, a buyer can post all new purchase orders on the portal, and using event management tools, automatically notify suppliers about the new P.O.s via e-mail. Suppliers click on a link within the e-mail message to access the related purchase order on the portal.

Normally, companies handle many of these transactions by fax and regular mail, but these methods take longer, require more handling, and don't lend themselves to storing information centrally. Large companies can get around these problems by setting up EDI connections and VANs for their largest suppliers but these technologies are too expensive to set up and maintain for smaller and medium-size suppliers.

Although portals offer many benefits, buyers may have limited success in attracting suppliers unless they implement their portals carefully. When implementing the portal it's important to keep the supplier's point of view in mind to make sure it offers them a compelling reason to use it. Buyers can improve the odds of success by paying attention to a few issues.

  • Ask suppliers what they want. Interview suppliers when designing the portal to evaluate their requirements. You may not be able to satisfy every supplier or meet their every need but role-based views can go a long way to making the portal more useful for different groups of suppliers.
  • Anticipate suppliers' integration requirements. Make it easy for suppliers to integrate the portal with their own IT systems. "The smart supplier portal sponsor realizes that their suppliers have their own systems to integrate with and ask 'what can we do to make it easier for our suppliers to get set up?'," says Forrester Research Director Laurie Orlov.
  • Help suppliers get started. Allocate resources to educate suppliers about the benefits of using a portal. Many enterprises are using service providers that specialize in supplier outreach and training. This is especially useful for ramping up the portal quickly when an enterprise buyer, for example, may want to get several hundred suppliers on board in several weeks.

With the right technology and the right approach, there is a huge opportunity to bring the majority of all suppliers into the twenty-first century. Less than 20 percent of U.S. suppliers have the ability to conduct business online, according to the Hurwitz Group. Portals may be the break-through technology that finally gets suppliers on board.

Do you think supplier portals can strengthen the weak links in a supply chain system? Tell Adrian what you think, or TalkBack below.