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Open Supplier Network

Essay by   •  February 8, 2011  •  Research Paper  •  1,443 Words (6 Pages)  •  772 Views

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Introduction

Founded in 1999, Perfect Commerce provides buyers and suppliers the opportunity to make transactions electronically by applying On-Demand spend management solutions. With over 500 clients, 200,000 users, and 11,500 suppliers, the company ranks as the leading On-Demand SRM solutions provider (Anonymous 2007C). Clients come from an extremely wide range of industries: chemicals, retail, energy, financial services, food products, healthcare, hospitality, manufacturing, technology, and transportation (Anonymous 2007D).

Perfect Commerce relies heavily on acquisitions and business partnerships to accelerate growth. Most recently, the company purchased Commerce One, one of the pioneering companies in e-commerce (Anonymous 2007B). The acquisition helped Perfect Commerce to reach out to more customers and granted the company access to an established customer base in Europe, increasing the company's presence in the global marketplace (Anonymous 2006F). In addition, in order to provide the best experience for the customer, Perfect Commerce partners with companies such as SAP, Oracle, IBM Global Services, and Metavante (Anonymous 2007C). By doing so, a wide array of clients can all find value in the company's products.

The Open Supplier Network (The OSN) is at the heart of all SRM solutions offered by Perfect Commerce.

(Source: Anonymous 2007E)

"A single connection linking purchasing and eProcurement systems to The Open Supplier Network enables companies to access thousands of suppliers. Buyers and suppliers have the ability to send and receive POs, invoices, and other documents by using a Web browser or the latest XML-based or EDI integration technologies" (Anonymous 2007E). The single link eliminates the need for clients to manage multiple supplier connections, and because of Perfect Commerce's partnerships, The OSN integrates with many of the leading ERP systems, allowing clients to maximize return on their current technology investments. Also, with over 11,500 suppliers in the system, desktop buyers can easily comparison shop and make transactions with both large and small trading partners. According to Perfect Commerce, this saves clients an average of 15% in purchasing costs (Anonymous 2007A).

Analysis of Perfect Commerce & The OSN

Strengths

As a company, one of Perfect Commerce's greatest strengths is its ability to make strategic partnerships. Companies such as Oracle and SAP, who can be seen as competitors of Perfect Commerce, actually work with the company in order to create a value-added environment for all involved parties. These partnerships with industry leaders are evidence that Perfect Commerce is well trusted in the realm of supply chain. "Perfect has also done well financially.....making [it] a relatively safe choice" (Bartels 2005). It does not appear that users will need to worry about this company losing its position in the industry due to financial reasons.

Like the company that created it, one of The OSN's greatest strengths is its ability to work well with its partners' ERP systems, such as SAP and Oracle's PeopleSoft (Anonymous 2007E). The sheer size of The OSN's network is also a strength. As the largest independent supplier network in the world, The OSN has over 21 million SKUs of catalogue content (Anonymous 2007E). As a result, nearly anything that clients need to purchase will be available over the network. Finally, Perfect Commerce estimates that initial fees for its On-Demand solutions are 50-90% lower than those for traditional software, while the ongoing operating costs are half as much (Anonymous 2007C). This, along with "operational implementation within weeks," should result in quicker return on investment for clients (Anonymous 2007C).

Weaknesses

A potential weakness of the company is its apparent inability to create growth without acquisition. At some point, Perfect must improve performance internally, and there is little evidence that the company will be able to do this. Also, it is possible that these acquisitions will cover up poor company performance. While the business may appear to be growing, because of other companies being purchased, overall performance of the company may be falling, but it may not be evident from the financial statements.

Because The OSN is an ON-Demand computing model, there is always a risk that the system could be down. Should this occur, clients and suppliers alike would be unable to gain access to the network. Also, it is very difficult to find information regarding post-2005 developments in The OSN (with the exception of Commerce One being acquired in early 2006). As a result, it is possible that the software reached its peak in 2005. Should this be true, it is unlikely that Perfect Commerce is adding new suppliers to the network, and therefore, clients are not getting the entire array of options when looking for products. However, as stated earlier, this idea stems only from the fact that information is not readily available for developments after 2005.

Opportunities

With just over 500 clients, the company has plenty of room to increase its customer base. With its long list of highly esteemed partners, it would appear that the company has considerable growth potential. While there may not be extensive evidence that Perfect Commerce has taken advantage of this potential, the opportunity still exists. Also, if The OSN can continue to build its catalogue of SKUs, which seems feasible as new suppliers are emerging each year, more and more companies will gain value by using the program. Finally, Perfect Commerce may be able to find a way to begin bundling its products, instead of relying so heavily

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