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Smarter strategy

Smarter strategy

05/03/2012 | Channel: Technology, E-Business / IT, Business

Ronald Teijken discusses e-commerce and the supply chain – the shift of order-taking to order making

B2B eCommerce, where the transactions are purely between businesses, such as a manufacturer and a wholesaler, has evolved dramatically over the last few years. The web has become the foundation for all customer interactions and manufacturers are leveraging this platform for marketing, community building, sales and data gathering to name but a few processes.

The voice of the customer
In line with this change, traditional B2B manufacturers are now adopting new techniques more commonly associated with B2C businesses, such as marketing and using social media. Whereas more traditional methods of selling, marketing and order-taking would occur across a slower and less interactive chain of sales and communications, such as phone or catalogue, manufacturers are now shifting order-taking to ‘order-making’ – meaning that they are using the Web to communicate, interact and react to customer demand and customer data, to provide a product that ultimately reflects customer need and demand. Today’s customer demands are seen as outside in and no longer inside out; organisations are driven by markets and customer processes, focused on optimising the entire supply chain and have dynamic business processes extending across companies.

Manufacturers are increasingly using social networks to promote their products and brands; buyers are sharing feedback with the community on products and services, and manufacturers are reacting directly to this feedback. One example of this is Jaguar, the UK-based manufacturer of luxury sports cars and sports saloons. Jaguar has a Facebook page with the latest news and photos of its products, where followers can comment and discuss the latest developments, enabling the manufacturer to act directly on this feedback. Even beyond this, the Mini brand of cars is using social media to create new models of interaction with its fanbase. Mini is not just about motoring anymore, but really has become a lifestyle. A Mini is not cheaper or arguably any better than another car in the same category, but through clever marketing it has become one of the most desirable ones.

Social media and the supply chain
Of course, once you link in the supply chain to this type of activity, it is not that simple. In today’s world of the ‘connected customer’, customers are forcing manufacturers to rethink how they conduct commerce across their entire supply chain, from supply chain planning all the way through to after sales for their customers. The car maker of ‘Mini’, while technically a manufacturer, has really become more of a strong B2C brand and a lifestyle, shaped by customer demand, as it has the ability to respond to consumer feedback and adapt products accordingly. If other manufacturers are to be as successful, they also need to start looking at how they can head this way and in order to do so, they must develop a new approach in a world of smarter customers and business change.

The adoption of ‘Smarter Commerce’
Smarter Commerce is a result of the increased powers that customers now have through the power of the Web, mobile and a range of social technologies. These platforms have shifted power from the sellers (businesses) to the buyers (consumers) - collectively, consumers can now make or break a brand at the click of a mouse.
However, the same capabilities that empower consumers - such as Facebook, Twitter and eCommerce, also create powerful tools for manufacturers, so to take full advantage of these tools, they need to have the correct systems and processes in place to utilise them effectively.

How does Smarter Commerce affect the supply chain?

ERP and legacy applications were not designed for the new ‘outside-in’ customer experience, or for the required adaptive supply chain responses. To overcome this issue, manufacturers need to adopt a ‘smarter commerce’ profile, where they are creating a customer driven buying experience and at the same time creating an adaptive supply chain network which can respond to customer demand.
They need reliable processes and systems to collect and monitor all this online data / buzz being created about their products, integrate this information into their supply
chains and marketing strategies and respond to this as quickly as possible.

Crocs, a world leader in manufacturing and selling innovative casual footwear for men, women and children, has implemented IBM software to create a smarter supply network and capitalise on these new customer buying patterns. It was previously using a system which required manual processes to manage orders, resulting in lengthy response times, and causing a growing dissatisfaction within the wholesale channel due to poor order accuracy. It is now looking holistically at its supply chain operations by firstly fully understanding the businesses issues and processes, and by now having a common pool of inventory for all regions and channels, to gain both customer and operational benefits. By doing so, its global inventory visibility across its direct and wholesale operations has enhanced, and the fill rate on Internet orders is nearly 100 per cent. This means it is meeting the commitments to its wholesale customers, including major retailers and consumers, in a timely and accurately manner.

Manufacturers like Crocs can adapt their supply chain capabilities to cope with volatile demand and heightened customer expectations, through:

Optimising supply chain and inventory planning to identify the best options for sourcing and production – this will reduce total supply chain costs and will better match supply to demand. This is vital as customer demand is constantly changing and so manufacturers need to react quickly and have easy access to inventory to see where the products can be sourced from. Orders might also need to be changed quickly depending on the demand, and so a stable process needs to be in place to cope with this.

Streamlining inbound and outbound logistics – by using networked warehouses for optimal visibility and cloud-based transportation management, this will reduce transportation costs, lower warehouse management costs and increase on-time performance. This means that orders will not be delayed so customer loyalty is retained.

Ensuring reliable, scalable and visible B2B commerce with all trading partners – this will reduce order admin costs and14ensure customers are getting what they ordered in time and without mistakes being made. Visibility needs to be clear as customer demands are always changing, and expectations are always high.

In today’s ever changing e-commerce market and in the new age of the ‘empowered customer’, manufacturers must be aware that customer demands are always fast-paced and changing, and to take advantage of this, they should be carefully monitoring their customer’s views, particularly on the Web. However, for this to be effective, a smarter commerce strategy needs to be in place, which oversees the whole supply chain process, in order to fulfil these new demands and ensure customer loyalty.

Ronald Teijken

Ronald Teijken is commerce solutions regional leader, IBM. Ronald began his career by working within manufacturing and planning at Fokker Aircraft in the Netherlands. He also worked for Global ERP provider, Baan, and subsequently at Infor for eight years. Whilst at Infor, Ronald managed pre-sales, management of an EMEA Solution Centre, global product management and product marketing positions for the Supply Chain products. Prior to joining Sterling Commerce, which is now owned by IBM, Ronald held the position as supply chain manager for an international manufacturer of hydraulic systems.

IBM is a globally integrated enterprise operating in over 170 countries. Today IBM UK has around 20,000 employees, bringing innovative solutions to a diverse client base to help solve some of their toughest business challenges. In addition to being the world’s largest IT and consulting services company, IBM is a global business and technology leader, innovating in research and development to shape the future of society at large. Sterling Commerce was acquired by IBM in August 2010, expanding IBM’s ability to help clients accelerate their interactions with customers, partners and suppliers through dynamic business networks using either on-premise or cloud delivery models.

For further information, visit: www.ibm.com