One reason why so many business-to-business (B2B) e-marketplaces failed in recent years is they were tackling it from the wrong end, according to the Bank of Montreal (BMO).
BMO Monday launched a B2B e-procurement system called
FlexPort. Rather than trying to achieve a critical mass of suppliers, it went to customers first and asked them which suppliers they’d like to see automated.
“”We’re not trying to create a mall that’s going to be open to everyone. This is really about known-to-known, large corporations that are buying from strategically-sourced suppliers,”” said Randy Ford, director for BMO e-purchasing solutions.
The purpose of FlexPort is to alleviate purchase order, invoicing and payment headaches from both customers and their suppliers, said Ford. The data is captured by FlexPort, moved into a data warehouse and then returned to both parties in a format they can both read and tie into their own accounting and back office systems.
“”We can take their suppliers’ files electronically directly from their inventory system without them having to do any work. We will bring it into this message hub and convert it into a format that our customers . . . can use for that data and eliminate the invoice,”” he explained.
The bank has about eight suppliers in the works and is in discussions with 20 more, said Ford. “”It’s as fast as I’d like to see it right now. Of course, it would be lovely to have 2,000 suppliers and do what everybody said they were going to do and have this enormous mall, but that’s just not going to happen. Even the large corporations are taking it slow. It’s really being done one supplier at a time for the most part.””
IDC analyst Albert Pang, based in Mountain View, Calif., agrees that a supplier-first mentality is what sunk many e-marketplaces. “”I think the biggest hurdle they have seen is they have not been able to get the support from the suppliers,”” he said. “”If you don’t have enough products to sell, then the buyers would have to juggle multiple e-procurement sites.””
The first supplier to use the system is Mississauga, Ont.-based Wainbee Ltd., which provides industrial manufacturing equipment to multiple industries. Wainbee was a referred to BMO by a client, said Ford. Wainbee is also a BMO customer, using its purchasing card and lock box offerings.
Wainbee is currently beta testing FlexPort, according to accounting manager Bill Henry, primarily for its credit card functionality. If it works as advertised, the company stands to save a lot of time in putting orders through. Before, it was processing card transactions by writing down numbers over the phone. “”Half the time we wouldn’t even get approvals on them because it’s not a convenient thing,”” said Henry. “”In the back, we have those old swipers where you slide it. That’s how antiquated the system is.””
Henry predicts that 10 per cent of its customer base will use the system, and the plan is to start using it in Wainbee’s other locations in Montreal and Vancouver.