SupplyNet fails to shed light on customers

Public sector marketplace SupplyNet set out last week to demonstrate its readiness to start trading but continues to be vague about suppliers and customers.

Electronic marketplace SupplyNet set out last week to demonstrate its readiness to start trading but continues to be vague about suppliers and customers.

The head of the e-procurement hub, Carlos Martinez, would not reveal which or how many government agencies are using the system, which went live on August 10.

“They’re piloting how it works within their organisations, whether users accept it, the issues around full deployment, suppliers’ reactions, how it relates to their financial systems. Most are conducting pilots over two to three months because they want to run it over a few month-endings.” On the supplier side he says there are between 30 and 50 participants.

Potential customers contacted by Computerworld were coy about any involvement with SupplyNet, which is half-owned by GSB Supplycorp, 30% by Qixel Capital Group and 20% by Advantage Group. The State Services Commission’s e-government unit head, Brendan Boyle, says the government has an e-procurement project underway and is looking for a competitive marketplace but has no comment to make on SupplyNet.

Trade NZ e-commerce project head Arama Kukutai says it is too early to comment on SupplyNet, though he says Trade NZ is aware of it.

Ray Newport, who is heading a project to set up a procurement portal for New Zealand’s 2400 schools, says it is not looking at connecting to SupplyNet. “Portals can connect into exchange environments but it is not a great priority for us, although it is not unreasonable to assume that at some point we may do so.”

Despite the lack of public detail, it is acknowledged that SupplyNet is one of the most costly electronic marketplaces in New Zealand. Martinez says setting up the e-procurement hub hasn’t left much change out of $15 million. And that’s just infrastructure - staff, premises and setting up the business side of the new electronic marketplace will come on top of that. Martinez believes such investment shows SupplyNet’s financial strength, one of the factors would-be buyers should take into account when deciding which marketplace to join.

“This is something which costs millions of dollars, it is not an overnight play,” he says in response to analysts’ predictions that despite the boom in electronic marketplaces around the world, the majority will fail over the next five years.

For companies considering e-procurement as a way to shave dollars and increase control over purchasing, they should also consider whether the e-marketplace they are looking at has a low barrier to entry, says Martinez.

“Otherwise it won’t get critical mass and those [marketplaces] that win will be those that attract the most buyers and suppliers.”

To keep entry costs low, especially for small and medium-sized companies, SupplyNet offers a hosted service as well as a fully integrated option. There are several pricing plans from enterprise - based around the number of employees or desktops - to entry level, which is similar to a cellphone plan where customers pay a set amount and a fee every time they generate a purchase order.

Other criteria to consider are whether the system is suitable for all sizes and types of organisation and what alliances the marketplace has. Through CommerceOne, which supplies its e-procurement software, SupplyNet is connected to trading hubs in 23 other countries. Martinez envisages that through such global connections New Zealand buyers will ultimately be able to buy directly from international suppliers. He stresses that SupplyNet is not only aimed at the public sector but at all business.

While SupplyNet’s cataloguing and auction services are now live, work is still being done with an unnamed financial institution on payment services, and with freight and courier companies on logistics.

Suppliers can be hosted or integrated. “Hosted suppliers don’t have to pay money up front. They just need a browser and an Internet connection. Integrated suppliers will be high volume and time sensitive. Those who are high volume but haven’t got their back office integrated can start off by being hosted.”

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