SciQuest.com's B2B E-Marketplace Finance Case Studies
In the mid 1990s, scientific products industry experts began realizing that the traditional supply chain had not been addressing the needs of scientists, purchasing professionals and suppliers. Scientists had to continuously develop new applications and test new theories. This required forecasting of the quantities of chemicals and other supplies and the kind of equipment they would need. They sometimes had an immediate need for critical items that were highly technical, which they had never purchased before.Most of the time, they had to purchase them from new and different suppliers. This involved going through several catalogs of the size of huge telephone directories. Purchasing professionals were also frustrated with the traditional paper-based product ordering process that required manual preparation of purchase orders and order tracking. Scientists sent their requisitions to purchasing professionals, who placed their orders with several suppliers by phone, fax and e-mail. This multi-step manual process was highly susceptible to errors. According to a survey, each requisition cost $107 for orders processed manually, while processing an order through an online procurement system cost only $30 in 1999. Suppliers used two sales channels – traditional distributors and direct sales.While traditional distributors gave suppliers access to a wider market, they kept the suppliers away from the ultimate customer. Most distributors also lacked the ability to provide the technical assistance associated with specialty scientific products and instruments. Direct sales gave suppliers' greater control and the direct customer contacts that were essential for specialty products. However, this sales channel was often expensive and inefficient. Many suppliers had web sites that were online versions of their catalogs, but these sites didn't remove the primary cause of inefficiency for buyers – the inability to find products and consolidate orders from different suppliers quickly and easily through a single service. Moreover, small companies could not afford to upgrade the site constantly.