Phil Phillips, Contributing Editor07.20.15
It’s not a news revelation that the internet has had an impact on the rules of competition. These so-called vertical markets have been magnified in our daily routine to the point we can no longer consider “marketing as usual” in any segment target space we play in now or plan to do so in the future.
These vertical markets guarantee four elements will change:
• Improve design collaboration & supply chain planning
• Force enhanced capacity operation across an industry
• Lower business costs
• Expose the fundamental economics of a supplier’s business
In due course, these changes will lead to unraveling of the value chains of activity forcing companies to:
• Discard operations
• Keeping only those that are considered (by the marketplace) as the best available.
The same supplier/customer forces prevail today as they did in the last 40+ years. OEMs always insisted on at least annual if not bi-annual price reductions while suppliers created many methods to appease their customers while “showing” price reductions and making the same or more profits. The Internet’s vertical and horizontal market and industry interactions, is starting to convert this situation while impacting each step of the value chain.
Buyers in the coatings, paints, adhesives and sealants market spaces can now effortlessly track prices and use them to regulate the prices they pay for purchased components. They can also contrast the prices of their present suppliers with others through the use of on-line auctions. These tactics can both place tremendous cost back-pressure on the suppliers but also increase the rate of deal-making in the process.
Businesses today must perform with some realistic steps to plan for whatever, the internet insurgency brings. This focus must exist in reshuffling the value chain and vertical integration method of companies to unlock value and create the marketplace valuation of becoming the best offered capabilities. As a first move, every business head should ask themselves, how the internet will impact their business model.
Reexamining the company’s long-term positioning within the value chain will help capitalize on the impact of the internet–instead of just surviving it. The chart below relates to Important Questions and Related Questions a business executive must consider.
These vertical markets guarantee four elements will change:
• Improve design collaboration & supply chain planning
• Force enhanced capacity operation across an industry
• Lower business costs
• Expose the fundamental economics of a supplier’s business
In due course, these changes will lead to unraveling of the value chains of activity forcing companies to:
• Discard operations
• Keeping only those that are considered (by the marketplace) as the best available.
The same supplier/customer forces prevail today as they did in the last 40+ years. OEMs always insisted on at least annual if not bi-annual price reductions while suppliers created many methods to appease their customers while “showing” price reductions and making the same or more profits. The Internet’s vertical and horizontal market and industry interactions, is starting to convert this situation while impacting each step of the value chain.
Buyers in the coatings, paints, adhesives and sealants market spaces can now effortlessly track prices and use them to regulate the prices they pay for purchased components. They can also contrast the prices of their present suppliers with others through the use of on-line auctions. These tactics can both place tremendous cost back-pressure on the suppliers but also increase the rate of deal-making in the process.
Businesses today must perform with some realistic steps to plan for whatever, the internet insurgency brings. This focus must exist in reshuffling the value chain and vertical integration method of companies to unlock value and create the marketplace valuation of becoming the best offered capabilities. As a first move, every business head should ask themselves, how the internet will impact their business model.
Reexamining the company’s long-term positioning within the value chain will help capitalize on the impact of the internet–instead of just surviving it. The chart below relates to Important Questions and Related Questions a business executive must consider.
