Selling Through Trading Partners

By Jim Christensen

In order to remain competitive, some businesses are faced with a decision to switch from existing paper-based processes to an electronic system for conducting commerce. One of the main factors driving this shift is the adoption of electronic procurement systems by large buying organizations. In order to realize the benefit of purchasing electronically, buyers need to have suppliers online as well. As a result, these buyers, or trading partners, have begun requiring their suppliers to trade with them electronically. As more customers realize the advantages offered by electronic procurement, the competitive advantage can definitely shift to those suppliers able to interact electronically. Sometimes, buying organizations will set a deadline beyond which all ongoing suppliers must have upgraded their processes in this way.

In other scenarios, suppliers have realized that by switching to electronic processes, they can actually sell more effectively to their existing customers and at the same time expand their customer base, perhaps by acquiring customers from a competitor who is not as technologically advanced. In some cases, suppliers can also significantly lower their cost of doing business, which in turn allows them to provide more competitive prices.

Some opposing factors have prohibited mass adoption of electronic trading by suppliers. Some suppliers are concerned that if human interaction is removed or minimized by moving to a completely automated process, their products can become commoditized. They are concerned that purchasing decisions will be made based solely on the lowest price. To combat these concerns, suppliers need a system that not only reduces their costs, but also enables them to continue to expose their brand and value proposition. Such a system would keep price as just one of several factors that buyers need to consider. Microsoft has adopted the generic name "remote shopping" for this functionality, and it is also known by names such as Punchout, Tap Out, and RoundTrip/Open Catalog Interface (OCI) within the industry.

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