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Virtual Market Place - The Next Level in Purchasing Automation


As in the real time marketplace, virtual market places are typically designed to exhibit the actual market dynamics of the given product/service. They combine the use of internet technology with the procurement best practices to simplify the whole procurement process.

There was a time when having a superior e-Auction capability was a matter of pride for a CPO and was the sole solution to stimulate competition among suppliers to achieve sustainable savings and to gain knowledge of the supply market.  However, it is not so anymore!

But what is driving this shift? My experience, working with several customers, indicates that there are three principle aspects driving this shift -demand on purchasers to constantly deliver typical savings of 5% to 8% YoY, further aiming for reduction in transactional TAT & transaction costs; and enhancing business satisfaction.

Also over a period of time, the processes have gone heavier, markets have changed and therefore  organizations are now constantly reevaluating  and looking at newer ways of ensuring that the  most efficient  and possible ways of buying are explored.

Lately, organizations have started considering implementing what is known as "virtual marketplace". Imagine a marketplace, where there are buyers and sellers and market dynamics, they look at mutual interest areas, negotiate and arrive at a cost, decide on logistics and delivery aspects etc.  Now imagine a virtual web spun out of buyers and sellers sitting globally and replicating a similar model through technology. Is it possible?

Yes, as in the real time marketplace, virtual market places are typically designed to exhibit the actual market dynamics of the given product/service. They combine the use of internet technology with the procurement best practices to simplify the whole procurement process.  With the virtual marketplace, Users are just required to log in, post the request, review the supplier's catalogs/bids online and award the PO/Contract accordingly. 

The marketplaces are designed typically to show functionalities in such a way that for each buy, user would be provided an option to choose either an electronic catalog of suppliers or conduct eRFX.  Electronic catalogs would guide the user to the available supplier catalogs in the system while eRFX would provide for the non-catalogue items.

The pivotal aspect of such a market place is the dynamic experience that it offers. In the case of a real time marketplace, the price of each seller is explicitly advertised in order to win customers.  Likewise, the virtual marketplaces are by and large designed in such a way that the bids of each supplier are visible to others to fuel competition among suppliers. This scenario would be applicable even to the listed catalogs where the rates of each supplier's catalogs are visible to the other suppliers and thus offering a dynamic catalog environment that will lead to transparent competition among suppliers and also build credibility for the organizations as fair and ethical buyers while demonstrating compliance to various trading laws and regulations.

Wait, there's more! These marketplaces are also additionally designed to accommodate a requisition tool blended with electronic workflow management systems so that after a user searches for the required items, he/she can compare, evaluate and eventually add items to a shopping cart! Thus, marketplace would play a dual role - of being a virtual depot of supplier catalogs and also a robust P2P system with end to end capabilities. 

Therefore, virtual marketplaces promise an end to end, user-friendly shopping experience by allowing them to shop online, submit shopping carts and award POs. The resultant benefits? Multiple!  Substantial spend savings, improved knowledge of the supply market, reduced negotiation cycle time and real time market dynamics.

The stage is set for the next level of e-Auction and various service providers are now providing this expertise. Infosys, in its continuous endeavor to help global enterprises take procurement to the next level, offers such virtual market places to provide transformational business benefits to its clients.

Look forward to your comments on this shift and the challenges you visualize in implementing marketplace solutions across various industry segments.


Good blog Arun. Nice reading.

Thank you, DP

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