B2B industries: how to survive the digital transformation of the value chain

An erosion of margins, a change in the balance of power with your longtime partners, global giants who now refuse to negotiate with you and impose new standards: here are some of the symptoms of a  value chain in full transformation. How is it possible to get out of it?

B2B and the industrial world is experiencing its share of small revolutions: the growing importance of e-commerce, the growing use of marketplaces, the increase in software-as-a-service (SaaS) models, the Internet of Things (IoT), the rise of private brands ( private labels) , the complexity of logistics outsourcing… How to measure the threats and business opportunities present?  

Formerly in cooperation, the stakeholders of the value chain see their relations evolve towards an in-between of  coopetition , even towards an assumed competition. With the discreet but well underway growth of B2B e-commerce, propelled by new technological capacities, the value chain is in full transformation. The relationships and the role that each of the various stakeholders occupied and the relationships between them are being redefined. In this shuffling of the cards, some are more at risk of losing ground. The race is on between those who produce, those who distribute and those who sell to end users.

All are trying to adapt to new customer expectations, often modeled on the digital experiences experienced in B2C: speed, transparency, autonomy and access, to name but a few.

Born-digital players like Amazon often have one thing in common: their model is demand-driven. And the more their maturity and scope increases, the more pressure they put on those upstream in the value chain.

The big end of the stick seems to have passed from the hands of those who control the supply to those who control the demand. Demand that finds itself aggregated and scaled like never before (Amazon, Ariba, Google, to name a few). For example, a retailer who goes through Amazon and its shipping service (Fulfillment by Amazon) will necessarily see its margins and its bargaining power erode.

Companies at the production end of the value chain see their place and their offer at risk, gradually losing their voice at the negotiating table: they are subject to the new standards imposed by some and the prices dictated by others. . In this context, digitizing their business will likely be too little too late without inspired, courageous and open thinking about their business model to find new ways to deliver value. The risk of not doing it? Become a commodity that other players can enslave, or even short-circuit.

To stay relevant, some equip and transform. They also try to appropriate all or part of the famous request. For instance :

• A manufacturer that adds  IoT  to its products to directly collect data on end users via software marketed in SaaS mode;
• A distributor who sets up a structured online catalog, imposing competition between its suppliers on the freshness and format of product data;
• A software publisher (SAP) building a sprawling marketplace (Ariba).

 Would you like to know more? Come and attend Marie Nicollet's conference on the subject which will take place in Montreal on April 17, 2019! This conference is part of the Connexion exhibition on digital transformation organized by Les Affaires. Far from a fatalistic prophecy, discover 3 key strategic axes, supported by concrete examples, to re-invent your business model and ensure a lasting place in this new ecosystem.

Get 40% off Salon Connexion here.