Tradeshift: Procure-to-Pay Reimagined
Tradeshift was conceived in response to the need for a global open business platform. Business Chief Europe hears from co-founder Gert Sylvest and Chief Procurement Officer (CPO) Roy Anderson on how the Danish company’s revolutionary one-to-many approach creates a dynamic and integrated marketplace filled with services.
Tradeshift was built on a vision: to connect every business across the globe. With its roots in Denmark, Gert Sylvest – and his co-founders Christian Lanng and Mikkel Hippe Brun – dreamt of creating an open business platform for the whole world, not just Europe. By marrying social technology concepts with hard transactions to bridge major digital divides, Sylvest believes Tradeshift has developed a platform that transforms the way businesses can work together; capable of taking them “from broken to efficient, from complicated to simple, from archaic to modern,” as the company describes itself.
Today’s technology devours supply chain bandwidth making it tough for firms to put new tools in place. Tradeshift’s marketplace concept frees them up to embrace value-added innovation and collaborate on solutions beyond the regular limits of procure-to-pay. Inspired by peer-to-peer networks, Skype and file sharing, Sylvest and his co-founders chose to build on open servers and open source software. This allowed them to provide the market with useful tools for both business to commerce and business to business.
Following the rapid adoption of EasyTrade, Tradeshift’s forerunner which welcomed 60,000 companies in just 10 months, Sylvest noticed something interesting was happening: “We saw an ecosystem spring up, with people offering software and integration on top.” The company rolled out similar infrastructures across the Nordic region before connecting over 30 member-states across Europe. “It showed that you could connect whole supply chains or even countries and regions, at scale, and move them from paper-based to digital trades,” says Sylvest.
This proved to be the genesis of Tradeshift in 2010. “Instead of making money on the transactions, we thought about connecting companies and networks to create transparency in those transactions, which became the inherent value,” he recalls, maintaining everything revolved around access to finance. “Why was it so hard for SMEs to get access to financing at a reasonable price?” he pondered back then. “With no transparency in how they are running their businesses and their access to markets, it’s difficult for them to show the quality of their relationships and what they produce.”
Tradeshift moved away from selling to governments, switching focus to the Fortune 5000 sector. “We started by selling accounts payable automation, moving on to include the whole source-to-pay cycle, product information management, procurement and financing on top of these transactions,” he adds, noting SMEs in the supply chain can get the same software and the ability to on-board their buyers and suppliers. Allied to this was the opportunity to receive early payment and get finance in if they were willing to share their transactions with the banks.
Tradeshift now boasts more than 500 of the Fortune 5000 enterprises on the platform along with 1.5mn companies across the network including early customers such as Keuhne Nagel, Citibank and Capgemini. “They’re moving roughly $500bn annualised in transaction volumes,” reveals Sylvest, whose Chief Procurement Officer Roy Anderson applauds this huge achievement. “At MetLife, we had 18,000 suppliers. And getting the top 200 digitally connected was a big success. Moving paper-based suppliers into a digital environment and being able to build value-added services like, supply chain financing, improved pricing structures and logistics information, with AI on top, is a transformational event,” adds Anderson.
Tradeshift is now being utilised by the big banks, including HSBC, who create financing apps on the platform in free competition. With the expansion into procurement, it supports companies who want to reject the Amazon approach and manage their own marketplace, buying into the full platform edition, connecting everything from source-to-pay. “As well as a platform where banks can deploy their own existing applications inside of their supply chain, they can utilise one of our 300 apps to link with everything from direct materials and forecasting to forming a collaboration with a vendor,” adds Sylvest.
Tradeshift will soon be rolling out marketplaces: “The old marketplaces were basically a list of content at a price point, but the Tradeshift marketplace content is about one-to-many relationships. The connections are digital, easy to manage and maintain, but the relationship stays between a buyer and a supplier,” explains Anderson. There may be many content related marketplaces out there, but the intermediary separates the manufacturer from the buyer and becomes the connection. Anderson believes these are not as valuable in the B2B sphere. “Connecting the supplier and the buyer enhances quality, service, delivery and innovation. It’s all part of the value proposition they create,” he asserts.
Dynamic, and personalised to a buyer’s needs, Anderson envisages ground-breaking marketplaces for healthcare, retail environments, facilities, recycling and precious metals, or marketplaces by location and category type. “It’s possible to build an ecosystem of suppliers and services within a marketplace, then a company can plug into it and build their influence and scope of management,” he notes.
Sylvest believes the root of Tradeshift’s wider business strategy begins with procurement. Highlighting the efficiency gains achieved with automation and source-to-pay digitisation, he’s proud of the steps made towards achieving true visibility throughout the cycle from purchase order to goods received. “We’re showing you can do things differently to Amazon by offering companies the capabilities to build their own marketplaces and inherit the rich history of their suppliers instead of a singular view on driving cost as low as possible,” he remarks.
Anderson adds that to make procurement operations more efficient, Tradeshift is bringing applications into the marketplace that are integrated, connected and include internal and external communication. “You can get better decisions made faster and use applications that are specifically tied to the services required,” he says. With suppliers looking to create synergies Anderson, ever the evangelist, sees Tradeshift well placed to deliver: “Now, our goal is not only to offer more connections with new buyers, but allow you to tie your internal buyers to that supply chain to feed a connection that’s going to add more value to your delivery and your customers.” Believing it’s now possible to re-engineer an entire supply chain he warns that any CPO not trying to digitally connect their supply chain, is going to be left in the dust: “It will change the whole structure of what is efficient and what is the best, highest quality supplier at the lowest possible cost structure.”
Where does Sylvest see the company five years from now? “If 80% of the revenue being generated on this platform, and what is being delivered to customers, is created by people other than Tradeshift it would be a great measure of success and show how we could actually create value for an ecosystem.”
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