The ongoing disruptions caused by the pandemic and continuing geopolitical tensions has been a major test of the world’s supply chains. These disruptions have forced many industry players to reconsider their business strategies, as well as their relationship with buyers, to cope more effectively with unexpected disruptions.
Suppliers, a significant portion of which are small and midsize businesses and enterprises (SMBs and SMEs), are particularly vulnerable and suffer the most from disruptions. According to the World Bank, SMEs represent about 90% of businesses worldwide and are important contributors to global economic development, comprising more than 50% of job creation.
To survive, small and medium-sized suppliers are embracing digital innovation to help them adapt more quickly to unexpected changes in their market environment. Joining a business network is one of the most effective ways in which suppliers can reap the benefits of digitalisation. It enables them to expand their network of buyers while improving productivity and streamlining supply chain operations.
Here are some of the key benefits of joining a business network:
- Getting discovered and making it easier for buyers to purchase your products. Being part of a business network allows suppliers to be seen by a wider range of potential buyers across geographies, industries, and types of organisations. This is a huge opportunity as it unlocks new revenue streams by enabling suppliers to enter new markets and get discovered by potential partners that would not otherwise be available to them. Additionally, suppliers can put their product catalogue on the network. This gives new and existing buyers an easily searchable way to shop their products and place new orders.
- Improving efficiency and collaboration. Joining a business network enables suppliers to collaborate with business partners to share information including production forecasts, orders, quality, and inventory information. This helps them determine whether they can fulfil specific order requests, often in real time, which facilitates better forecasting and inventory planning as well as improved order processes. Additionally, business networks enable suppliers to extend their internal processes and systems to an ecosystem of logistics partners, such as shippers, carriers, and other third-party logistics providers.
- Enhancing relationships: Automating key pain points of the supplier/buyer relationship, like onboarding and logistics management, can significantly improve the customer experience and lay the foundation for stronger, more lasting, and more profitable customer relationships.
- Collecting and sharing business data. Business networks are a central collection point for business data. Suppliers can leverage that data via network-provided KPIs that create a snapshot of their business health including information about top-selling products, payment status, and overall sales performance. Additionally, buyers on a business network can see updates on their orders, and suppliers can share shipping information, stock availability, and other useful data that allows them to anticipate customer questions proactively.
- Maximising cash flow and improving transaction capabilities. Another advantage of being part of a business network is that suppliers have access to a fully digital transaction process and more flexible payment options, providing them with alternative methods to access liquidity. This is particularly important for smaller suppliers who may not have the capital of larger players, and therefore can’t survive for prolonged periods without ongoing cash flow. Additionally, business networks give suppliers increased transparency into the status of their invoices via self-service portals. Similar digital service capabilities enable buyers to place orders automatically, expediting the buying process.
- Highlighting suppliers’ environmental, social, and governance (ESG) credentials. When buyers evaluate suppliers, they need timely information about who the supplier is and how they operate. At the same time, suppliers need an avenue to broadcast their ESG credentials to potential buyers. Business networks make this process highly efficient. Instead of spending hours and days filling in extensive questionnaires from a variety of potential buyers, suppliers can upload their diversity, governance, sustainability, and other qualifications to a partner directory for any buyer to access. This is especially important in helping to understand who your trading partners are doing business with throughout their value chain, which helps to eliminate risks such as human slavery and environmental offenders.
Ongoing disruptions in recent years have forced suppliers toward new strategies to gain a competitive advantage and mitigate risk. Fortunately, there are a wide number of technological options that can help them. By embracing business networks, suppliers can address the risk of disruptions, preserve cash, and have greater visibility over supply and demand trends that can impact their ability to respond to unexpected changes in their market environment.
