Eroding margins, a change in the balance of power between you and your longtime partners, global giants who refuse to negotiate with you and are enforcing new standards: these are all symptoms of a value chain in full transition. How can you make sure you’re still in the game?
B2B and the industrial world are experiencing their share of mini revolutions. The growing importance of e-commerce, the increased use of marketplaces, the rise of Software as a Service (SaaS) models, the Internet of Things (IoT), the increase of private labels, the complexification of logistics outsourcing… In the face of all this, how can you assess how the threats measure up to the business opportunities?
Once working cooperatively, stakeholders in the value chain are now seeing their relationships evolve into an in-between state of coopetition, or even all-out competition. With the discrete but increasingly entrenched growth of B2B e-commerce driven by new technological capacities, the value chain is in a state of complete flux. Relationships between stakeholders and the role that each one occupies are being completely redefined. In the new order of things, some are at greater risk of losing ground. The race is on between those who produce, those who distribute and those who sell to the end user.
Everyone is struggling to adapt to new customer expectations, often modeled on people’s digital experiences in B2C: speed, transparency, autonomy and access, to name just a few.
Players like Amazon, who have their origins in the digital world, often have one thing in common: their model is based on a mastery of demand. The more mature they become and the farther their reach extends, the more pressure they put on stakeholders farther down the value chain.
The upper hand seems to have passed from those who’ve mastered the supply side, to those who’ve mastered demand. Demand that’s been aggregated and blown up to a scale never before seen (Amazon, Ariba, Google, to list a few). For example, a retailer that uses Amazon and its shipping service (Fulfillment by Amazon) will unavoidably see an erosion of its margins and negotiating power.
Companies on the production end of the value chain are seeing their positions and their offering at risk, and are slowly but surely losing their voice at the negotiating table. On one end they are subject to new standards, and on the other, new prices. In this context, it’s probably too little, too late to digitize their activities unless they also engage in some open, courageous and inspired thinking about their business model, in order to find new ways to deliver value. The risk of doing nothing? Becoming a commodity that other players can push around, even circumvent.
To stay relevant, some companies are getting equipped and making transformations. They are trying to take control of the demand side themselves. For example:
Far from a fatalistic prophecy, I encourage you to attend the Salon Connexion, where you will learn about three key strategies, including examples, for reinventing your business model and ensuring you are able to thrive in this new ecosystem over the long term.