Recourse in e-Marketplaces

Preparation for the unexpected is always underscored in negotiations, more specifically to Asia’s dynamic environment. It has been a widely accepted phenomenon that Asia’s historical richness stems from the fact that wave after wave, conditions change via some form of political and economic cycles, calamities included. Much has been learned after typhoon ‘Milenyo’ swooped down on the metropolis and neighboring regions, and some are still quantifying costs tied to its wrath. Consolidated measures from industry players have also been taken in addressing oil spills despite the realization that there are no quick fixes for these incidents.

While much has been tackled on the importance of price reference and volume aggregation via e-Marketplaces, among others, events continue to unfold in the business arena, including the removal of trade restrictions resulting from measures that might be levied by members of the World Trade Organization (WTO). Headlines have also been busy with increasing concerns about environmental protection, while others have floated the possibility of adopting a unified currency in Asia. Lest we forget, wobbles might also take place within the geopolitical terrain, depending on the situation in the Middle East, and how North Korea would digest unanimous sanctions by the United Nations in the coming months.

Depending on how commercial-related contracts define "force majeure," decision-makers have become cognizant in further simplifying its scale, especially with respect to available recourses that may be taken to minimize, if not, avoid disruptions in business processes. Prospects of higher prices or inflation have become an accepted twin variable when discussions point to economic expansions, and measures are still being made to minimize its impact on end-users’ pockets. Aware of this concern, leaders are equally challenged that awarding criteria in commercial contract negotiations need not necessarily boil down to obtaining the "lowest" possible prices, but considerations are also made on "intangible" aspects that should be covered when so-called "risk premiums" arise.

As a neutral-centric e-Marketplace, SourcePilipinas has assisted trading partners in identifying and sub-classifying "risk premiums" through identified features within its exchange. Terms and conditions are appropriately relayed to pre-accredited players, and information dissemination is simplified, especially for issues that may be raised by any player to avoid misinterpretation of requirements. Parameter identification is best highlighted depending on auction-type selection (e.g., open/blind/sealed) from a buyer and/or seller’s perspective, to minimize unwanted disputes or arguments over the long haul.

Take the case of construction-related requirements where pricing elements can be segmented to secure necessary permits and licenses, among others, and liabilities that need to be considered in case faulty construction has been proven within an identified and acceptable timeframe. Since reports can be extracted at the end of an online procurement exercise, enterprises are more able to pinpoint risk-reward points without necessarily abandoning their regard in optimizing results based on specified budgets. If buyer A assesses its construction auction, he/she would need to check differentials in price quotes based on materials that would be utilized to cover ceiling components, against those that would be utilized to complete walls and flooring structures, for example. If supplier A comes out cheap, other construction-tied components may be compensated as a result. Similarly, if suppliers B and C came out more expensive relative to supplier A, structure integrity considerations may have to be taken to support infrastructure stability and/or materials warranty. The same can be applied to foreign exchange-related risks as e-Marketplaces can accept bids based on agreed reference exchange rates. This mostly applies to indent orders, especially if the participants are to bid from their offices overseas. Buyers, in turn, can view bids based on a uniform currency to avoid recalculations and enable their finance officers to quantify forex-related risks. E-Marketplaces provide windows for data extraction, especially in coming up with clauses where renegotiations can take place.

All said, recourses could be mapped and identified within the e-commerce arena. Aside from having to avoid hassles that might be encountered within a volatile macro environment, actions can be facilitated swifter when planned approaches are in place.

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Grace Crisostomo-Cerdenia is the general manager of SourcePilipinas.com and COO of 2TradeAsia.com. For queries, e-mail her at [email protected].