E-Commerce Expected To Redefine Manufacturing And Distribution

  • October 31, 2017 at 1:25 PM EDT
  • By Andrew Atkinson, GrandCanals
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0aaAndrew Atkinson Grand CanalsThe Internet has disrupted everything from education to government to personal communications. E-Commerce turned brick-and-mortar retail, transportation and logistics upside down. Now, in the business-to-business (B2B) space, a convergence of maturing technologies is set to disrupt supply chains, distribution networks and inventory management. Lora Cecere, a noted supply chain expert, points out that less than 28% of orders and shipments are currently processed hands-free. As the complexity of global supply chains intensifies and the pace of business accelerates, manual processes will not be able to keep up.

B2B is ripe for digital transformation, but integrating and scaling e-Commerce systems across distribution networks presents many challenges. Globally, Frost & Sullivan puts the 2020 B2B eCommerce market size at $6.7 trillion in sales, representing 27% of worldwide manufacturing trade. Forrester Research predicts that by 2020, B2B e-commerce sales in the U.S. will pass $1.1 trillion, comprising 12% of total B2B sales. According to experts, in the U.S. manufacturers and wholesalers are the primary drivers investing in e-Commerce platform solutions. Gartner estimates the digital commerce platform market will grow at 15% CAGR through 2020.

There are three main ways in which manufacturing companies can expect e-Commerce to affect the way they do business: first, by taking friction out of the ordering process; second, by increasing the importance of the direct-to-customer sales channel; and third, by changes in customer expectations about the speed, simplicity and reliability of doing business.

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These three points are all linked. Whatever else our role in the economy, we are all consumers and we take our business-to-consumer (B2C) experiences into the office with us. Amazon has set a high bar for expectations: streamlined access to products, clearly presented information about delivery options at the time of order, reliable fulfillment, a straightforward return process, and the ability to see — and contribute — feedback on both product and process.

So, why shouldn’t every purchasing interaction be this easy? We all know there are lots of reasons why not, especially for complex products. However, consumer B2C sites like Amazon are the de facto baseline experience that drives our customers’ expectations for all transactions. The farther you are from meeting these new standards, the more tenuous your grip on your customers’ business.

Using the technologies and techniques of e-Commerce, you can make it easier for your customers to do business with you. In many cases, taking out friction from the ordering process can increase the volume of business going through your direct-to-customer distribution channel. But now, in order to meet those Amazon-driven expectations, you need to substantially transform your distribution/fulfillment game. Easier said than done — Amazon has spent billions creating the technology infrastructure underpinning their cutting-edge capabilities. What can you do? And how can you do it in a way that preserves or enhances your margins?

What Are The Building Blocks Of Success?

Good, timely data is the foundation of mastering the e-Commerce challenge. It’s a truism that you can’t manage what you don’t measure. In practice, this means that you must gather data from across your distribution/fulfillment chain — from your own internal order management and inventory control systems, as well as from external partners such as carriers and 3PLs.

However, just getting the data isn’t enough.

In order for it to be actually useful for enhancing the customer experience, the data from all of these disparate systems must be normalized, that is, translated into a common standard. With that normalized data, you can form a single, comprehensive, end-to-end picture of the customer transaction, and do the analysis needed to make recommendations across different potential fulfillment or distribution options possible — and to make those options visible to the customer at the time of the order to duplicate Amazon’s “known cost, known delivery date” experience.

Feeding that data into advanced predictive and prescriptive analytics designed to optimize the cost/service tradeoff will enable you to provide customers with the best possible combination of cost and customer service. Backward-looking descriptive analytics may show you where you have been (and help to diagnose past problems), but won’t give you the timely guidance you and your customers need to move forward. Finally, the ability to normalize data enables a dialogue between analytics and the execution systems they inform, allowing you to feed intelligence back and create a closed-loop, end-to-end distribution or fulfillment process.

What Does All That Buy You?

The ability to gather, normalize and analyze data from across your distribution or fulfillment process provides you with four critical benefits.

  • First, you get a clear picture of where you actually are. What is the actual cost of the product, as delivered, based on real information and not just on historical cost averages?

  • Second, with timely, accurate, normalized data, you have the ability to identify opportunities for significant cost savings — getting your distribution or fulfillment process lean.

  • Third, by providing timely, accurate, normalized data to advanced analytics, you can identify the best tradeoffs of cost and service or the best way of actually getting your products to your customers.

  • Finally, you can stay lean by leveraging the intelligence you have created to continuously improve your distribution and fulfillment functions and to keep abreast of changes in your customer base, your market, or your competitive environment.

Where Does That Leave Us?

At GrandCanals, we understand that e-Commerce is fundamentally changing the B2B world, just as it is on the consumer side. E-Commerce transactions still represent a minority of the volume of B2B business, but across all channels, this is where growth is happening and where customer expectations are being shaped.

Turn disruption to your advantage by getting in front of change and taking lessons from leading-edge B2C e-Commerce companies. Strategic application of comprehensive data and advanced analytics will enable you to clearly understand what is going on right now, how to improve your customers’ experience and to create the means for continuous improvement so you can keep pace with a constantly changing world.

Your customers are enamored with the Amazon shopping experience. Many can’t imagine how they ever managed their lives without reliable reviews, one-click purchasing and free two-day shipping. Imagine the possibilities for growth and transformation if your customers felt the same way about your e-Commerce services.


 

Andrew Atkinson is the Director of Product Marketing at GrandCanals. Previously, he was the Director of Product Marketing at Cloud Cruiser. Atkinson has proven ability to achieve and act upon a deep understanding of customers, markets and competitors. Formerly at E2open, Atkinson has more than two decades of startup, international and IPO experience with various high technology companies.  He started his career in Boston, MA after he completed his bachelor’s degree at Harvard University and then went on to complete his Masters in Applied Economics and Finance at the University of California, Santa Cruz.

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