TowardS 100% digital business networks
A 100 percent digital business-to-business network: utopia? Not at all! OpusCapita experts in their fields explain how current developments in the market are driving the change, and how organizations can already embark on the journey toward entirely digital selling, buying, and paying.
Up to 80 percent of all the information that organizations need to run their supply chains efficiently is outside their own walls, in their business partners’ systems.
“This is why we need ecosystem thinking! To maximize the value of the trading relationships for all parties, we need to enable effortless access to all of this data and make it available for fast, streamlined processes,” says Heikki Pulli, Head of B2B Integration at OpusCapita.
So far, the electronic exchange of business data and trade documents has mostly been developed in bilateral connections, and the network effect of easy connectivity has been missed. Now the traditional linear business models are increasingly challenged by standardized digital business networks, where seamless collaboration between all parties is possible.
“New networks arise, and organizations need to find the ones that truly benefit their business. In order to stay connected, they need to keep a close eye on market changes,” Pulli says.
PEPPOL opens up Europe for everybody
In Europe, one of the most rapidly evolving open ecosystems is the PEPPOL network (Pan-European Public Procurement Online). In 2016, over 35 million electronic transactions were delivered in the network, and the growth anticipated for the present year is over 30 percent.
“What is important is that it is not just an e-invoicing network, but a many-to-many infrastructure for exchanging all business documents related to e-procurement, for example RFPs, catalogs, and orders,” describes Ahti Allikas, Solution Owner at OpusCapita. Allikas is also an active member of the OpenPEPPOL Association responsible for developing the PEPPOL infrastructure further.
PEPPOL originated to facilitate electronic cross-border trade between European suppliers and public-sector buyers, and continues to be spurred on by the public sector. To date, over 75 000 buyers across Europe have joined the network, which is accessible through nearly 150 Access Points provided by service providers such as OpusCapita.
“In a nutshell, PEPPOL means a wider network and more business opportunities for those who are compliant with the requirements. The aim is to spread the network in B2B communication, too,” adds Allikas.
Healthcare leads the way
PEPPOL is currently gaining traction in the healthcare sector. In 2016, the National Health Service in the United Kingdom joined the PEPPOL network, and this year, the healthcare sector in Norway has decided to start using PEPPOL in its purchasing processes.
“Healthcare organizations are among the biggest buyers in the public sector. Thus, the demand for PEPPOL-compliant catalogs, orders and invoices covers a vast supplier base, from international industry-specific manufacturers and retailers to local food or facility management service providers. It is a major push toward a new environment,” says Sami Seikkula, Head of Sales at OpusCapita Norway.
Seikkula points out that previous efforts to streamline the process along supply chains, for instance with EDI connections, have mostly involved suppliers with the largest volumes. Now the effects extend further.
“Enabling efficiency with e-procurement brings even bigger process benefits and cost savings than supplier invoice automation. Leveraging the potential of the PEPPOL network will be interesting for many public buyer authorities in the near future,” Seikkula notes.
Buying and selling made easy
One of the biggest challenges for the developing e-procurement landscape today lies in e-catalogs, or namely the lack of them.
“Selling organizations today handle a vast amount of product data, which, if done manually, is a huge effort. There is an increasing need for agile and automated ways of defining customer-specific assortments of the data and exchanging it efficiently. At this point, PEPPOL provides an additional, standardized sales channel to collaborate with public buying authorities,” describes Björn Frotscher, Product Manager at OpusCapita.
With a modern product information management (PIM) solution, suppliers can collect, enrich, and manage product and pricing data for different customers, and share it easily as e-catalogs as well as in their own web shop or other marketplaces. OpusCapita’s PIM and e-catalog solutions are PEPPOL-ready.
“If we look at the healthcare sector, the legal requirements are strict and add to the challenges of maintaining correct product information. Automating the information management and exchange helps to deliver the right data in the right format to the right buying customer’s system,” says Frotscher.
Digital milestones into the new era
In reality, paper is still common in B2B commerce, even if the annual growth in e-invoicing, for instance, is measured in double digits.
“In the end, organizations need to be able to be part of and operate in multiple local, industry-vertical and international networks with different standards. What becomes pivotal for their success is their ability to find a partner who can handle the complexity and ensure wide access through one optimized process,” Heikki Pulli explains.
A multichannel invoice exchange service is a good example of a necessary stepping stone on the way to the new digital world. In addition, digitization services with high-class data extraction continue to play an important role. That way, the efficiency of an automated procurement and AP process, for example, can be maintained regardless of the format of the received invoice.
As buying decisions move to digital channels, electronic messaging provides many benefits for invoice senders as well. Digitalized orders and order responses, dispatch advices, and e-invoicing make it possible to automate payment reconciliation in AR and streamline the whole order-to-cash process, cutting days out of the cash flow cycle. At the same time, improved transparency of the orders, deliveries, and invoices is reflected in customer service.
In digital networks, Pulli emphasizes the role of small and medium-sized suppliers. OpusCapita has created services for its customer companies in which their smaller suppliers can key in their invoices, for instance.
“None of the developing networks will flourish in the long run, if the integration of the long tail of SME suppliers only takes place in half measure. If there are no services available that enable small suppliers to join the digital networks, in the end it will be a burden on the efficiency of all,” Pulli concludes.
›› Published in OpusCapita Journal Spring 2017. Read the whole magazine here.