The process for purchasing electronic components is largely the same as it was 10 years ago. Buyers go through the list of parts they’ve been commissioned to acquire and they work with the same partners they still have through email, phone calls, and maybe a unified communications service. These ad hoc negotiations are tracked in spreadsheets, and buyers record quotes and make purchasing decisions sometimes days after a quote has been requested.
This process is obsolete. It’s slow and analog, but it’s the traditional model, so it’s been kept in place even as other options that would be improvements have come along. It’s the epitome of putting your hands up in the air and saying, “Well, that’s the way we’ve always done it”, and with this bad reasoning, it’s hurting the electronics industry in his outfit. This stagnation in the procurement process limits the progression of other functions and prevents companies from evolving.
The alternative model, however, is finally gaining momentum and showing promise for moving beyond the status quo. The market approach unites suppliers and buyers to match supply and demand at scale rather than relying on old relationships and slow processes to gather information. Combined with specific features to meet purchasing demands for electronic components, this change opens the door to more efficient technology producers and a more efficient market overall.
For an active example of how a system like this works, look down to the B2C equivalents that laid the foundation for success and can serve as an example to the world of B2B purchasing.
Bringing B2C to B2B
An online travel market, for example, acts as a one-stop resource for finding the best tickets, hotel reservations, car rentals, and vacation packages. Essentially, these factors make up the nomenclature of travelers, and the marketplace gathers up-to-the-minute quotes for each of them, from almost every possible supplier, in one place, simplifying the booking and purchasing process.
The needs of the component buyer are more complex and varied, but B2B e-commerce marketplaces work the same way. A buyer’s request includes parts, quantities needed and delivery time and they identify all corresponding products based on those specifications.
In addition to offering a better image of the market as a whole, this allows buyers to act quickly in securing their parts without ever leaving the site or sets a starting point for new negotiations. The element of negotiation is a perfect example where the meshing of the new technology-driven process with the traditional human-driven process provides the answer. While the demand for a negotiated price is digital, the best marketplaces also offer a team of sourcing and purchasing veterans who will continue to negotiate with the supplier, leveraging their expertise and scale to ensure the conditions required by the buyer.
Don’t change the habits of buyers; Use them to your advantage
Of course, the “site” itself can also be a barrier for buyers of electronic components. They are used to working in their organization’s enterprise resource planning (ERP) systems. Asking them to go to an external resource, like an online marketplace, is a big change, whether it’s a process issue within their organization or simply that they need to change their minds. behviour. Here too, a marketplace shows the way to deliver on the promise of B2B.
Beyond its B2C roots, today’s marketplace sites are widely used by the business community. However, people who book flights for business trips do not want to have to deal with travel receipts, airline expenses, hotel expenses, and other major purchases needed to get their trip started. That’s why integrations with business travel platforms are essential to integrate all market functionality directly into the systems companies already use to track and manage business travel.
Electronic component markets need to adopt a similar customer service philosophy. With API connections, marketplaces have the ability to literally anchor themselves into the ERP systems that buyers use in the procurement process. Rather than having to go to a site, make a purchase, and go back to their organization’s system to record all of the information, it all happens right in the ERP. Rather than adding more steps to the buyer’s workflow, a marketplace can improve their existing process, making it more efficient and faster.
Buying in times of shortage and the marketplace solution
Securing demanded parts quickly and efficiently has never been more critical in a context of widespread shortages of semiconductors and other components. These crises are not uncommon and occur fairly regularly, but the current scale is unprecedented. Apparently, everything has rushed in following the coronavirus disease (COVID-19) closures and reopenings, droughts and spikes in demand. As industries struggled to understand how the COVID-19 economy would affect customer demand, they had to adjust their manufacturing cycles continuously on the fly.
The resulting shortages have led to price increases and in many cases buyers feel they have to either accept this new pricing or miss their allocation which can result in decreased production or even complete plant closures. Buyers need to get the components necessary to keep production moving and performing high, this is where B2B markets and alternatives come in.
B2B marketplaces help alleviate shortage crises by creating a more informed buyer with a broader view of the market as a whole and a simpler path to extend the supply chain. Rather than looking at parts in the context of suppliers, buyers can take a broader view that instead focuses only on parts.
To deal with extreme shortages, combine the traditional model with e-commerce marketplaces. There is value again and again in expert negotiators, dealing with buyers and sellers, and those who live and know the market. By combining this model with e-commerce-based marketplaces, buyers have a better view of shortages and can limit their impact.
E-commerce is second nature to consumers, but online market trends have not translated into the B2B space, especially in a technology-driven industry like electronic components. The reason is that buyers are reluctant to break away from the traditional or high negotiation practice because they think this is the only way to get the best price.
The time it takes, about a week to quote a typical nomenclature, is overlooked, by which time the market has likely already changed and prices and availability have already changed. But the marketplaces themselves have to take some responsibility as well, as many B2B marketplaces do not offer the level of experience to match B2C sites, let alone offer additional tools that meet the needs of the marketplace. purchase components on a large scale or integrate with their existing processes to ease the transition.
B2B e-commerce offers an opportunity for organizations to take ownership of their buying and sourcing process, but marketplaces must evolve to adapt to the needs of buyers. This means providing a great user experience and tools specially designed for buyers of electronic components. Electronic commerce has proven itself. If buyers and market operators can find a balance in the way they work together, the entire tech industry will benefit.