Nutraceutical Marketplace vs Traditional Sourcing – which is better for the buyer?

A procurement team can require a specific ingredient, a specific grade, a certain quantity and reliable documentation. The tough part is then finding the supplier who can provide all of these features for a price and within a specific timeframe.

To date, buyers have relied on distributors, supplier recommendations, trade shows, industry contacts and long-term relationships to manage this process. The same techniques are still valid – and many firms continue to rely on them.

However, there is another alternative which is becoming more and more popular – using nutraceutical marketplace.

Using online marketplace one will be able to find suppliers, analyze sourcing opportunities, and make procurement. But is it better than conventional sourcing?

The truthful answer is: it is dependent on the buyer's requirements.

For others, old-fashioned supplier relationships are still the optimal choice. To others, a marketplace offers access to suppliers as well as sourcing opportunities that would be more difficult to find in a traditional way.

Let's compare both of the approaches and see where both of them fit.

What is a nutraceutical marketplace?

A nutraceutical marketplace is a B2B online marketplace that connects buyers with suppliers of ingredients and related products for nutraceuticals.

Buyers can look for suppliers one after another or visit a specific marketplace where they can find all the opportunities to source at once.

The buyers can do the following:

• Discover potential suppliers
• Search for specific ingredients
• Submit sourcing requirements
• Request quotations
• Compare supplier options
• Link with manufacturers and distrib utors

The most obvious benefit for procurement is convenience.

Buyers can initiate their sourcing process from a single source instead of wasting hours across various websites and having to reach out to suppliers one-by-one.

But don't assume that buyers are relieved of the need to conduct due diligence when purchasing on a marketplace. Even with supplier credentials, product specification, quality documentation and other relevant documents still need to be checked prior to purchasing.

What is traditional sourcing?

Typical sourcing is typically reliant upon existing connections and direct interaction.

The buyer might already have a list of approved suppliers, or they might be able to find new suppliers by using:

• Industry referrals
• Trade shows
• Distributor networks
• Business directories
• Sales representatives
• Professional contacts

The buyer will then use email, telephone or meeting to discuss the product needs, pricing, quantity and delivery with the supplier that they have identified.

The upside to this is that relationships are a key component.

A customer who has dealt with a supplier for several years might already have an understanding of the supplier's quality, communication, pricing and delivery.

The downside would be that it can take some time to find new suppliers.

In the event that the buyer's supplier is unable to provide the product, their current supplier may have limited capacity, or they may raise prices, and the buyer will have to begin searching all over again.

That is where a marketplace can provide an alternate solution.

Difference between Nutraceutical Marketplace and Traditional Sourcing

The primary distinction is in the way buyers locate and assess suppliers.

The traditional method involves making use of prior relationships, and through individual research, supplier discovery is undertaken.

Buyers may have the chance to check out a number of suppliers from a single platform with a nutraceutical marketplace.

Let's do an easy one:

Both approaches do not always work best in all scenarios.

It is dependent upon product, supplier requirements, order quantity, market and procurement strategy.

1. Supplier Discovery: Where Marketplaces Have an Advantage?

The fact is that the first challenge in procurement is finding the right supplier.

Imagine a company wants to obtain a certain botanical extract or functional ingredient. However, the procedure will most probably be easy if the procurement team already has an approved supplier.

• And what if that supplier cannot deliver the required quantity?
• Or when the company desires to discover a better price?
• Or when it desires to have lesser reliance on one source?

It is here where a nutraceutical marketplace can come in handy.

A dedicated platform can assist buyers to find more suppliers and explore alternative sourcing options.

It's worth considering this for companies that are:

• Entering new markets
• Gaining exposure to more products and services
• Looking for alternative suppliers
• Facing supply disruptions
• Trying to improve sourcing efficiency

These goals can also be accomplished by traditional sourcing, but it might be more time-consuming and labor-intensive.

2. Price Comparison – Is a Marketplace More Affordable?

The belief is that the online marketplaces always offer lower prices.

That isn't necessarily true.

The truth is it is typically the visibility of the real price that offers the benefit.

If buyers are given the chance to look at several suppliers, they might have greater chances to get different quotations and to know the market pricing.

This can aid in effective procurement negotiations.

But price is not the only aspect to consider.

A supplier offering the lowest price may not necessarily provide the best overall value.

Here are some other factors to take into account when purchasing a property:

• Minimum order quantities
• Shipping costs
• Lead times
• Quality testing
• Documentation
• Product consistency
• Supply reliability

For instance, one supplier might have a bit higher price tag, but they could have better documentation and deliver faster. In the long run, this supplier may be a more economical choice.

The objective is to find out what is the most value for money in the overall procurement process, and not just the lowest price.

3. Quality and Supplier Verification Remain Important

There's no quick shortcut in this regard.

Supplier qualification is crucial, regardless of whether you're purchasing from a marketplace or a conventional supplier.

As the buyer, look for information pertinent to the product and intended use before making a purchase on nutraceutical ingredients.

Depending on the ingredient and market, this may include:

• Product specifications
• Certificate of Analysis (CoA)
• Quality certifications
• Manufacturing information
• Documentation relevant to GMP or CGMP
• Batch information
• Safety documentation

These requirements will vary depending on product, application, and destination market.

A marketplace can help the buyer discover the supplier more easily, but does not relieve the buyer of the responsibility to assess the supplier.

This is also true in the case of pharma raw materials sourcing.

When it comes to pharmaceutical procurement, there are multiple quality systems to consider, along with manufacturing standards, documentation and regulatory requirements.

The sourcing channel can vary, but the need for due diligence does not.

4. Time to Source – Can Marketplaces Save Time?

Sourcing traditionally might not be efficient in case the buyer needs to contact several suppliers individually.

The buyer can send an e-mail, get a response from the supplier, ask for some documentation, and repeat this procedure with yet another supplier.

A digital marketplace is helpful because it can make certain processes more efficient through the identification and sourcing of suppliers.

For procurement teams, this can mean:

To save time spent looking for things.To save time in looking for things.

• Faster supplier discovery
• Easier sourcing inquiries
• Improved organisation of supplier information
• More efficient comparison

This is particularly beneficial when procurement teams have a number of sourcing projects underway at any one time.

These savings may be in the marketplace itself not always being "faster. Rather, it's about the saving you'll realize by not having to do any manual work to locate and match suppliers.

5. If Traditional Sourcing Is Still Preferable

While the digital procurement function is expanding, there is no dearth of traditional sourcing.

At times, a supplier relationship may prove more advantageous than searching for a new supplier on the internet.

When, for example, the conventional method of procurement is desired, it could be:

• You currently have a trusted supplier.You already have a trusted supplier.
• The supplier is able to consistently deliver to quality requirements.
• You require highly customized products.You require products that are highly customized.
• Technical collaboration is important
• You depend on stock available locally.You use local stock.
• You have an ongoing strategic partnership

The stability of a long-term relationship can be found.

Your current supplier may know more about your needs and production schedule and could be able to respond better than a new supplier.

Therefore, the key to procurement is not just to determine whether to stick with traditional or digital procurement.

It could be a question concerning both.

6. A Nutraceutical Marketplace Makes More Sense

When the buyer requires to extend sourcing options, a marketplace becomes useful.

Suppose a business has been buying an ingredient from the same supplier every year for a number of years.

The supplier shortfalls in the quantity or suddenly raises prices.

The buyer is now in need of options.

A specialized marketplace for nutraceuticals can serve as a good starting point for finding the others, rather than beginning at square one.

It applies the same way when companies have to buy-in:

• New nutraceutical ingredients
• Alternative supplies of raw materials
• Specialty ingredients
• APIs
• Excipients
• pharma raw materials
• Chemicals and intermediates

In such cases, discovery of digital suppliers is an effective way to supplement the current procurement process.

What about pharma raw materials?

While the attention of this article is nutraceutical sourcing, it is the same challenge in the pharmaceutical industry.

When a company is sourcing its pharma raw material, it must find suppliers that can provide the technical, quality and supply requirements.

However, for these buyers, supplier discovery is just the beginning.

The supplier should also be considered in terms of intended application and applicable regulatory requirements.

A specialised B2B marketplace can help procurement teams know if there is a supplier that fits their requirements, however, the buyer should also qualify them before a commercial relationship is formed.

This is especially critical in the procurement of APIs, pharmaceutical intermediates, excipients, and other vital ingredients.

How ChemDmart can help buyers find sourcing opportunities?

One of the most difficult aspects of the pharmaceutical, chemical, and nutraceutical procurement team's job is locating the appropriate supplier.

ChemDmart is a specialized, B2B procurement and supplier discovery platform for pharmaceuticals, chemicals, biotech, nutraceuticals and related raw material industries.

The platform enables businesses to navigate sourcing possibilities and reach suppliers via a single digital space.

This can help consumers with activities including:

• Discovering potential suppliers
• Finding nutraceutical ingredients
• A tour of pharma raw materials
• Managing RFQs
• Improving supplier visibility
• Supporting global sourcing
• Accessing procurement intelligence

A specialist marketplace isn't that it overlooks the necessity for procurement expertise.

Rather than spending time searching for them, this makes it possible for the purchasing team to evaluate the suppliers who have the ability to meet their needs.

So, which is better for buyers?

There is no one right answer.

A nutraceutical marketplace is a very good option when buyers are looking to find new suppliers, compare the sourcing options, grow their network and enhance their procurement efficiency.

For customers with existing supplier relationships, who need to be very specialized and collaborative, or who rely on trusted local distribution networks, traditional sourcing can be useful.

Many businesses will find it best to use a combination of both.

As long as they are seen to be working, use traditional relationships where they work. At the same time, use digital markets to discover new suppliers, but have alternatives ready.

There have been complexities in the supply chains of pharmaceuticals and nutraceuticals. It requires the procurement team to be adaptable, open, and connected with suppliers.

So it's not going to be all or nothing, digital or traditional, for the future of sourcing.

It will be about the right source channel for the right procurement need – and the right level of visibility to make the right choice.