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Supplier marketplaces come of age

April 25, 2013
Engineers looking for capable suppliers have unlimited amounts of data instantly available through powerful online search engines. But access to more data has not necessarily made supply-chain management more efficient or effective. A search may return 100,000 results; the engineer may only look at 5 or 10 of them. Are they the best suppliers, or just the best at search-engine optimization? And, particularly with custom manufacturers, it is not always easy to determine their qualifications for a project.
Frank Russo, Chief Executive Officer, Fabricating.com, Hoboken, N. J.

Engineers looking for capable suppliers have unlimited amounts of data instantly available through powerful online search engines. But access to more data has not necessarily made supply-chain management more efficient or effective. A search may return 100,000 results; the engineer may only look at 5 or 10 of them. Are they the best suppliers, or just the best at search-engine optimization? And, particularly with custom manufacturers, it is not always easy to determine their qualifications for a project.

Nonetheless, the Internet’s potential is substantial. The basic idea: Start with a robust RFQ and sourcing platform that leverages company/capabilities data to generate targeted results (yes, like Google). The combination would create a vibrant, efficient means to find custom manufacturing services. Submit an RFQ and receive quotes from a number of qualified suppliers.

Granted, early attempts at Web-based sourcing fell short. Online auction sites provided a way for engineers and purchasers to submit RFQs, and for contract manufacturers to bid on jobs, but RFQs were open to everyone and buyers did not necessarily get bids from qualified suppliers. Plus, the technology did not support the communication required to exchange information and conclude and track bids.

Today, the landscape has changed. The technology used to vet suppliers makes use of advances we see in other software products — data mining and filtering, immediate communications, and communities — along with sophisticated e-commerce capabilities. Now called marketplaces, these dynamic sourcing environments let engineers and buyers post RFQs, receive bids from prequalified suppliers, and select a highly qualified manufacturer. Marketplaces can speed product introductions, and they let users proactively diversity their supply chain and explore different, possibly more-effective methods for manufacturing a product.

The acceptance of marketplaces by industrial buyers and sellers has risen substantially. But choosing the right one is also key to a project’s success. Here are a number of features to consider before submitting an RFQ:

Wide acceptance. Are suppliers for the processes you need in the marketplace? Look for good representation of the custom manufacturers your projects require and other buyers submitting RFQs. Also, check to see where the suppliers are located. Are they concentrated in a local market or dispersed geographically? This helps when reshoring manufacturing operations, facing Made-in-the-USA mandates, or needing suppliers in your own state.

Comprehensive sourcing platform. Flexible RFQ submission is a must. A robust sourcing platform should let you include all the information necessary for suppliers to bid accurately, including drawings, attachments, and links to reference material. It should also let you control who receives your RFQ. Do you want to submit it to a select group of suppliers or the entire marketplace? Mandatory is the ability to update RFQs with new information. For example, if one supplier asks for clarification that all potential manufacturers should know, the ability to broadcast those updates ensures everyone is quoting on the most-current version.

Integrated, flexible communications. Communications should be integrated into the bidding process. Can you broadcast updates to all suppliers who received your RFQ? Send messages to specific manufacturers? And communicate via e-mail, text, or voice mail?

Supplier information. The marketplace should provide comprehensive information about the suppliers qualified to bid on your RFQ — such as ratings and customer feedback — so you can make an informed decision.

Security and storage. First and foremost, your information and communications should be secure and only accessible by you. Storing your RFQs, quotes, and all communications lets you keep an audit trail of a job and ensure there is no ambiguity about the job specifications. Access to historical information on previous projects makes it easy to submit RFQs to the same supplier without recreating the requirements.

Lastly, take a step back and look for what is critical to a dynamic marketplace. Is the sourcing community growing? Is the underlying technology on the forefront of custom-manufacturing sourcing? Pick up the phone and talk to the managers of the marketplace you are considering. Innovators are always in contact with their customers to understand the market and provide a valuable product that meets the changing needs of their client base.

Bottom line: Pro-active supplier discovery is a good thing, and it keeps your ideas and products flowing toward the customer without delays. But when a critical supplier disappears without notice, having your fingertips on a reliable sourcing platform with a qualified supplier base is more than a good thing … it’s priceless.

Edited by Kenneth J. Korane

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