Supplier Network Fees: Pay-to-Play or Pay for Value?

In Duncan Jones’ recent Procurement Leaders article “Are eCommerce Network Fees For Suppliers A Barrier Too Far?” he talks about the possible points of resistance a buying organization will face from suppliers in terms of levying what is commonly referred to as pay-to-play fees.

While Duncan stated his support for Ariba’s position that suppliers should pay for the value they receive by being part of a network, he also did not discount the fact that with the advent of free networks, CPOs should take the time to consider their strategy in terms of whether or not fees are a good idea.

From my standpoint, I do not believe that this is an either or proposition.  In fact I believe that the most progressive model is one that reflects an incremental fee schedule that is commensurate with tangible supplier benefits that can be both quickly and easily demonstrated.

What do I mean by an incremental fee schedule?

Quite simply, I believe that all suppliers should have access to a basic engagement platform that is free of charge.  Beyond that, the network should then be able to offer value-added premium supplier services at a nominal cost. 

The greatest benefit of a free to low-cost connectivity capability that includes added value services is that it paves the way to increased supplier participation.

Of course what makes this new, more productive model possible is the ability to move beyond the days in which suppliers had to engage in long and costly integration and on-boarding efforts in order to electronically communicate with a specific buyer network.  With cloud-based solutions like Nipendo’s, suppliers can not only get into the game both quickly and seamlessly, but with added value services such as digital signature and supply chain financing, they can now realize benefits beyond the traditional pay-to-play platforms.