E-Sourcing Forum » The e-Marketplace Frenzy

The e-Marketplace Frenzy

September 18th, 2006 at 08:11am David Bush - Iasta

As a follow up to last Thursday’s post on MRO Spend Management, I’d like to point out a recent Supply & Demand Chain Executive article that points out MFG.com’s acquisition of SourcingParts.com that effectively Creates the Largest Online Marketplace for the Manufacturing Industry. The deal creates a single global marketplace through which over $5B worth of manufacturing services was sourced in the last 12 months.

According to MFG.com’s statement, “The combined companies bring together buyers and suppliers from around the world in an online environment that leverages the collective intelligence of the community to bring products to market faster, less expensively and more intelligently.” Although it is true that volume and economies of scale will provide benefits to you, the user, I’d like to point out that marketplace buys generally do not qualify as strategic sourcing and that the results you can expect are probably no better than what you’d get through a properly run reverse auction.

Significant, sustained, sourcing results depend on a proper process and proper eSourcing technology to manage that process. That being said, a marketplace that includes an automated supplier discovery engine that matches the attributes of a buyer’s RFQ to “ideal” suppliers using a community rating system that rewards those who are good citizens and exposes those who are not has a lot of value, and the use of such a site in conjunction with an eSourcing project and eSourcing suite that would let you manage the RFX and bidding process internally, so that you could apply decision optimization and total value management to the award decision, could be very beneficial.

I’ll be interested to see how the acquisition and new solution plays out for them over the coming year, especially since many marketplace efforts started during the dot com boom have met with limited success. Mfg.com seems to part of a new breed that is trying and succeeding on this model.

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Entry Filed under: General, Supply Management Best Practices, Technology / SaaS, e-RFx, e-Sourcing Marketplace

1 Comment Add your own

1. Jeremy Brofford | September 21st, 2006 at 3:49 pm

I do not want to use this forum to self-promote, but I believe a little clarification is necessary. For the record, SourcingParts is an e-marketplace that does offer traditional SRM and E-Sourcing tools to manage custom RFX events/Reverse Auctions as well many other SRM functions. Existing SourcingParts customers have been benefiting (and will continue to benefit) from this hybrid model for the last 6 years. Our model allows buyers to conduct strategic sourcing events with only the suppliers they wish to include, but they may also choose to use suppliers found in our “automated supplier discovery engine” to find additional suppliers to include in the sourcing process in order to scan the entire global market. Sourcing events may be private, public, or hybrid between the two - this is a business decision made by of the buyer based on their own experience, level of market knowledge, and risk assessment. Let it be known to any existing SourcingParts customer reading this blog that you will be able to use our solution the same as pre-merger for the foreseeable future. The major result of SourcingParts being acquired by MFG will be a larger, more global community that is mutually beneficial to both our buy-side and sell-side clients.

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