Trading Hubs
Trading Hubs, also known as Online Exchanges are websites where buyers and suppliers buy and sell goods and services online. Trading Hubs can be likened to an online shopping centre. They vary in size depending on the number of buyers and suppliers using them, and the products traded. In a similar way to popular online auction sites, Trading Hubs allow buyers and suppliers to trade with a wide range of potential customers and sellers. Many companies world wide use Trading Hubs to successfully buy and sell in many industries, especially energy, textiles, logistics and manufacturing.
For suppliers, Trading Hubs are a cost effective way of reducing the amount of products in stock, which reduces storage requirements. For buyers, joining up with other prospective customers can bring about volume discounts, or the ability to fulfil a large contract.
A Request for Quotation is an invitation from a buyer, or group of buyers to a supplier to provide a quote for a product or service. Suppliers will respond with their best prices, delivery times and support and maintenance contracts. The buyer(s) will then choose the most suitable quote. The main benefits to buyers of using a Trading Hub are that buyers can utilise suppliers from all over the world, and are not limited to local, or the cheapest suppliers. Better prices, shorter delivery times and guaranteed product availability are also obtainable.
A Request for Bid is an invitation from a supplier to buyers to bid for a product or service. Suppliers can use this method to sell a large amount of surplus stock, or to help shift flagging products. Seasonal or other time restricted products can also be sold this way to a wider audience to ensure maximum profit, with no excess stock left.
A Commodity Exchange is an ongoing process where the price of a standard product, usually a raw material or agricultural product is set. Contracts are negotiated on the future values of these products. Prices will normally be variable as supply and demand changes. Setting the price in advance allows suppliers such as farmers or metal producers to receive a guaranteed income for their products, and for buyers, such as food producers or car manufacturers to ensure that their ingredients or raw materials will be supplied at a guaranteed price. Trading like this ensures that there is no price rise for the buyer and no drop in price for the seller.
Before a company enters into a Trading Hub as a buyer, there are several considerations that need to be taken into account. All major suppliers will need to be involved and fully committed to making the trading hub a success. Each supplier will need a comprehensive catalogue or list so that products and services can be accurately compared, to ensure the required products can be purchased quickly and easily. Sufficient administration and ordering processes need to be in place for both buyers and suppliers so that trading online will be beneficial, and reduce costs, and time. Suppliers that don’t like to publish prices, stock levels or other information will have to make this data available so that buyers can compare different suppliers. If they don’t then buyers will choose another supplier who does.
There are significant advantages of using a Trading Hub for both buyers and suppliers alike. Using electronic trading no longer limits buyers and sellers to their locale. Electronic trade means that buyers and sellers in different continents and time zones can trade effectively at any time thanks to the internet. Ensuring the best prices, best products and best delivery times can be made much easier thanks to electronic trading and eProcurement. Find out how ProcServe can help you get started with using Trading Hubs.
Find out more about:
Read about Our Global Customers
Scroll down for more customers