Near the start of every year, business observers release their predictions. Search Google for “2015 business predictions,” and you’ll find over 86 million results. Many of these predictions are informed by innovations in technology that enable companies to run smarter, simpler and faster.
I spoke with Tim Minahan, CMO, SAP Cloud and Line of Business, about his predictions for the future of business commerce. Tim is a recognized thought leader on cloud and business networks and will serve as host of the mainstage talks at Ariba LIVE, which takes place April 7 to 9 in Las Vegas and 8 to 10 June in Munich.
Q: Tim, what trend is having the greatest impact on business commerce?
There are actually several trends that are reshaping business-to-business commerce:
- Globalization – As companies look to reach new and emerging markets, they’re recognizing that their supply chains can help them establish footholds in these markets. Companies gain market intelligence and experience when they build relationships with local suppliers. And they can leverage this to transform the supply chain from a cost center to a strategic advantage for business growth.
- The Virtual Enterprise – Companies are less vertically integrated than ever and are turning to a variety of partners to serve critical needs within their business – including suppliers, consultants and contingent workers. This approach extends an organization’s eco-system and requires greater levels of transparency and collaboration as these partners take on responsibility for areas ranging from product innovation to customer service. It enables greater agility, but also requires a networked platform to support knowledge sharing and co-innovation and minimize risk.
- Procurement as a platform for innovation – Companies are realizing new ways to generate business growth and boost working capital through their supply chains by enabling new processes that are only possible in a networked environment. Savvy payment practices such as dynamic discounting for instance, companies improve working capital while enabling suppliers to get quicker access to cash. Or contingent workforce management through which they can identify and manage highly-specialized resources needed to develop that next-generation product.
Q: Collaboration is a common thread across these trends. How else is collaboration influencing supply chain practices?
Increasingly, companies are recognizing the importance of being the customer-of-choice among their suppliers by maintaining mutually-beneficial relationships. Today’s businesses are operating in an era of growing scarcity. There’s a finite amount of raw materials, resources and manufacturing capacity. Companies are looking at developing joint roadmaps with their suppliers and devising new service models where suppliers oversee service support, maintenance and repairs. In the automotive industry, 55% of the profit from an auto sale comes in the after-sale market. Companies are looking to replicate this approach to create new revenue streams with their suppliers. The information sharing among devices – the Internet of Things – will propel and automate these revenue opportunities. For example, an industrial manufacturer can monitor its customers’ turbines to ensure the equipment delivers optimal efficiency. When a part starts to deteriorate, the equipment can transmit an alert and order a replacement part to ensure minimal downtime.
Interested to learn more from Tim? Stay tuned for the second part of our conversation, where Tim shares more insights on the future of business commerce and the journey to procurement transformation.
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This blog originally appeared at Ariba Exchange.