BRITISH BUSINESSES ACKNOWLEDGE E-MARKETPLACES DELIVER SIGNIFICANT BENEFITS

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Online marketplaces reduce operating costs and improve internal efficiencies reveals new research. The study was carried out for the Chartered Institute of Purchasing & Supply (CIPS) by the University of the West of England (UWE), and supported by BT and Oracle. These results support the view that online marketplaces do provide tangible value to e-procurement business models which may surprise some industry critics. The research indicates that e-marketplaces are now reaching commercial maturity, in the way they treat both buyers and suppliers.

Key findings from the survey are that users have been able to reduce the time spent on order discrepancy by 69 per cent and on complex catalogue creation by 65 per cent both activities take up a substantial proportion of time used by companies on e-procurement. In addition, the survey shows that the use of these solutions is helping to increase the quality of service to internal customers by around 28 per cent, and improve the overall supplier relationship by over a fifth (22 per cent).

Roy Ayliffe, director of Professional Practice at CIPS, said: "The survey highlights some key issues for the B2B e-commerce market to consider regarding the use of e-marketplaces. It shows that users are prepared to acknowledge, perhaps for the first time, that online marketplaces can deliver significant savings and can have a key role to play in terms of driving efficiencies and allowing companies to concentrate on more strategic issues that hit the bottom line, such as strong customer and supplier management. For the future, companies need to look closely at the emerging business models for e-marketplaces and engage in them where real tangible value can be added."

The results also show the respondents' perceptions of the key benefits and drawbacks for users of online marketplaces. Top of the list of benefits for buying organisations is the ability to be more strategic in their relationships with suppliers. Other advantages include the ability to confirm an order has actually been placed, provide a single point of reference for all parties involved in any transaction, provide fast access to commodity searches and the ability to run tenders through the use of e-auctions. The biggest perceived drawback is the feeling that e-marketplaces are unsuitable for certain goods. Others included the lack of being able to use a personalised approach and concerns over marketplace longevity.

Perhaps unsurprisingly users are found to be more positive towards B2B e-commerce than non-users. However, the overall scores from both parties against the drawbacks cited were lower than those given for the perceived benefits. This suggests that even for non-users, the perceived benefits of e-procurement are now seen to outweigh the drawbacks.

Also investigated in the survey are perceptions of supplier organisations for e-marketplaces. From the results, the main reason for joining an online trading hub is to be seen actively supporting their customers buying organisations, followed by increased customer retention. The biggest concern for suppliers was the need to join multiple marketplaces and cope with different catalogue formats. Suppliers also highlighted concerns around the issue of marketplace longevity.

Steve Russell, manager of e-procurement, at BT Global Services, said: "The findings of this research clearly highlight that online marketplaces have an important strategic role to play in today's highly connected digital networked economy. However, the fact that both buyers and suppliers have highlighted some concerns, such as the existence of multiple marketplaces and the lack of a single trading format for users, should not be ignored by the industry. What is very positive is that many of these drawbacks are areas that the provision of managed e-marketplaces can overcome."

Andrew Douglas, senior procurement specialist at Oracle UK said: "This research backs up our own experiences in this field, namely that new adopters of e-procurement are looking much more seriously at exchange marketplaces, viewing them as key to successful implementations. In addition, we have seen early adopters re-assessing their initial approach to catalogue content and supplier adoption. This is leading to a move away from a largely internally resourced approach to greater use of e-marketplaces. The research provides evidence that marketplaces are now coming of age."

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