Forget the 80/20 Rule
Although it seems intuitive to get your biggest customers and suppliers on board with B2B first, you must devote some of your efforts to automating tier-two and tier-three customers and suppliers. While the third tier may generate just 20 per cent of your revenue, those companies are often the most costly to deal with per transaction, making their conversion to cheaper e-commerce all the more urgent. As for tier-two suppliers, over time they'll become tier ones, says Rowland Archer, CTO of Holcomb, Archer, Heber & Tyler Commerce, a provider of software that facilitates B2B trading. "It's worth looking at them and finding out who's doing the volume that would merit tight integration," Archer says.
But trying to get these smaller partners doing business electronically can seem like an insurmountable task. Unless you're Intel or Wal-Mart and can force your partners to comply with your standards, you'll have to use the subtle strategies of companies such as BorgWarner, Celanese Chemicals, KeyNext, Panasonic Industrial and Sigma-Aldrich. While they're making inroads, these companies have miles to go before they reach the land of B2B gold. Here are the strategies they've devised and used in their recruitment efforts.
Strategy 1: Take your customers' B2B temperatures.
Before you begin warming your business partners to the idea of using the Web instead of phone or fax, you must first determine their readiness for B2B e-commerce. Sigma-Aldrich, a $US1.2 billion manufacturer and distributor of chemicals, has more than doubled the amount of business it does electronically each year since 1999. To enable those gains, the company trains its field sales force to ask customers questions to gauge their interest and alacrity in e-business. When visiting customers, the sales staff asks them what they know about e-business and if they've tried ordering over the Web or through an exchange. The salespeople also ask if customers are considering rebuilding their purchasing systems, and if so, how they're going about it and whether Sigma-Aldrich can participate.
"From those discussions, we identify the organisations that are in the midst of grappling with this topic, and we partner with them to determine the problems and pitfalls associated with deploying enterprise-scale procurement systems," says Brad Johnson, Sigma-Aldrich's director of e-business.
Strategy 2: Appoint an e-business implementation manager.
Although your sales staff can identify prospects for B2B recruitment, you'll want to designate an individual or team that will sell one or several of your business partners on the benefits of e-business and serve them in their deployment efforts. This relationship manager should discuss with the partner technology issues such as infrastructure and data transfer, processes for payment, procurement, invoicing and order fulfilment. The manager must work to develop an understanding of what the partner wants to get out of participating in your company's B2B network.
KeyNext, the e-business arm of financial services company KeyCorp, has a sales team composed of relationship managers that, on an ongoing basis, works with both suppliers and buyers who participate in KeyProcure, the company's e-marketplace. "Very often this is a change management issue for them," says Amy Anderson, KeyNext's director of technology and operations. That's because the role of purchasing managers generally changes after B2B implementation. Instead of handling the purchasing process centrally, they redistribute process management to other buyers in the company, establish a new approval process and manage indirect purchasing more strategically, says Linda Grandstaff, KeyNext's president and CEO.
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