ManufacturingJanuary 6, 2021

A better way to buy

How online marketplaces won fans during the pandemic
Avatar Benoit Schildknecht

When industrial buyers ventured online in search of new suppliers to replace those shut down by the pandemic, they discovered benefits that exceeded that limited goal. Online marketplace expert Benoit Schildknecht explains how their experiences may change sourcing forever.

Online consumer marketplaces – the Amazons and Alibabas of the world – helped keep many households going through the early months of the pandemic. Even people who had never shopped online gave it a try, and most were pleasantly surprised by the ease of the experience.

But what of businesses? When companies’ default suppliers of widgets and ball bearings shut down, where did their purchasing agents turn? Like neophyte consumers, many went online., in search of replacement 3D printing services and CNC machining services. And what they found was far more valuable than temporary replacements for shutdown suppliers.

Consider the case of an online business marketplace geared to companies that design and manufacture products. Many studies have shown that 80% of the cost of a product is determined during the design stage. Typically, though, designers don’t know how much the parts they are designing will cost to make or buy. Unless they are incorporating parts they have used before, they must wait until Purchasing can collect quotes from suppliers to know if they have hit the target on cost.

“When the pandemic struck many buyers flocked to online marketplaces, searching for new suppliers to replace those forced to shut down. What they found, however, was a better way to buy.” 

If, as usually happens, the quotes submitted to Purchasing show that the product will cost more to make than the market will bear, it’s back to the drawing board to re-design the product and lower the cost. The minimum delay in such cases is at least two weeks – more if hitting the right price targets requires more than one re-design and re-bid. Suddenly, a new-product introduction schedule that once seemed reasonable becomes impossible, jeopardizing the product’s market potential.

Instead, what if a designer’s CAD software were connected to an online marketplace that could quote the cost of a part design in real time? Then the designer would know immediately if the design would exceed the target cost, and could begin exploring cost-saving measures. Whatever the answer to the design challenge, the designer could know before releasing the design that the cost was on-target.

Digital 3D designs, online connectivity, and AI-powered estimating algorithms not only make this scenario possible – they have made it real. In many cases, those manufacturers who are providing the estimates will even suggest design changes to bring down the cost – online, in real time, and free of charge.

(Image © Dassault Systèmes)

Purchasing still plays its role, of course, negotiating the best possible price for the final design from a number of suppliers or manufacturers. Buyers can even use the marketplace to streamline that process, posting the part models and requesting quotes from multiple suppliers with a few simple clicks.

In fact, many business buyers discovered during the pandemic that they could have been buying their parts pre-pandemic at substantially lower prices via an online marketplace. How is this possible? A marketplace puts hundreds of vendors at a buyer’s fingertips, many more than a typical buyer can search out on their own. When a buyer can receive dozens of quotes in less time that it takes to get three the old-fashioned way, price savings often result.

The best marketplaces also will conduct much of a buyer’s normal due-diligence, pre-certifying the capabilities of each vendor, along with their reliability, financial health and legal status. Once a buyer receives bids and identifies a short list of potential vendors, they can conduct further reviews and negotiations, securely and privately, via the marketplace.

Custom design isn’t the only way a marketplace can help manufacturers. Just like Amazon, a B2B marketplace can offer massive selections of standard parts – in virtual form, as 3D CAD models – from hundreds of suppliers. Searching via key specifications for the part make it quick and easy to find just the right design. A designer can even add the 3D model for a part directly into their design, at no cost. If the part becomes part of the final design, Purchasing contacts the design owner to request a quote, or posts it for competitive bids.

When the pandemic struck, many product designers and B2B buyers flocked to online marketplaces out of necessity, searching for new suppliers to replace those forced to shut down. What they found, however, was a better way to buy, with more choice, closer proximity, and improved visibility into and control over the 80% of cost baked into a product at the design stage.

Discover how custom-manufacturing specialist Xometry leveraged the 3DEXPERIENCE Marketplace during the COVID-19 pandemic to find new suppliers for crucial parts.

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