Perspectives | Digital Commerce 360 https://www.digitalcommerce360.com/type/perspectives/ Your source for ecommerce news, analysis and research Thu, 02 Nov 2023 21:30:49 +0000 en-US hourly 1 https://wordpress.org/?v=6.3.2 https://www.digitalcommerce360.com/wp-content/uploads/2022/10/cropped-2022-DC360-favicon-d-32x32.png Perspectives | Digital Commerce 360 https://www.digitalcommerce360.com/type/perspectives/ 32 32 As manufacturers go direct to B2B buyers, distributors must digitize to survive https://www.digitalcommerce360.com/2023/11/02/as-manufacturers-go-direct-to-b2b-buyers-distributors-must-digitize-to-survive/ Thu, 02 Nov 2023 19:23:49 +0000 https://www.digitalcommerce360.com/?p=1311626 The distribution industry stands at a crossroads. For decades, the familiar model of manufacturers selling to distributors who then sell to customers has been foundational across industries. But with the emergence of digital tools that empower manufacturers to deal directly with consumers, this time-honored structure has faced deepening disruption. While distribution remains essential, manufacturers can […]

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YoavKutner-Oro

Yoav Kutner

The distribution industry stands at a crossroads. For decades, the familiar model of manufacturers selling to distributors who then sell to customers has been foundational across industries. But with the emergence of digital tools that empower manufacturers to deal directly with consumers, this time-honored structure has faced deepening disruption.

Distributors must reimagine their value proposition and business models for an increasingly tech-focused world.

While distribution remains essential, manufacturers can now own the customer relationship end-to-end with little input from intermediaries. Combined with the meteoric rise of ecommerce, this direct-to-consumer revolution threatens to make distributors obsolete. Amazon and other digital juggernauts are also building formidable logistics capabilities that threaten to undermine the function of traditional distributors.

To survive in this new paradigm, distributors must take a page out of the D2C playbook and undergo their own digital transformation. They need to reimagine their value proposition and business models for an increasingly tech-focused world. Distributors that fail to adapt risk losing relevance as manufacturers bypass them to sell directly to customers online. The choice for the distribution industry is clear: digitize or die.

The threatening dawn of D2C

D2C represents an existential threat to the traditional distribution model. Manufacturers are rapidly exploring innovative sales channels that feed directly to end users, taking cues from disruptive startups like Dollar Shave Club and Casper. These digital native D2C brands have shown that enormous success can be achieved when control over pricing, customer relationships, and end-to-end experiences is kept in-house.

For manufacturers, D2C delivers a gold mine of customer data to tailor products and personalize engagement. Combined with the explosive rise of ecommerce, producers now have direct access to vast pools of customers without the need for distributor middlemen. This trend is unlikely to peter out; between 2019 and 2022, customer-direct purchases increased by almost a third, with sustained growth forecasted through the middle of the decade and beyond.

As D2C continues to gain momentum, distributors are likely to find once-reliable clients starting to question indirect sales. This is particularly true of manufacturers who’ve sunk millions of dollars into their own digital capabilities, and, as a result, are rapidly seeking higher margins by eliminating intermediary markups.

A narrow window of opportunity 

Despite this, distribution remains essential across the majority of modern industries. Distributors provide vital value through their technical expertise, expansive product selection, and customer service. But much of this value can now be replicated or replaced through technology. Even the least future-facing manufacturers are wondering whether they need third-party distributors to the extent they once did — thanks, not least, to the sudden emergence of eye-catching alternatives.

Powerful ecommerce enterprises, like Amazon and Alibaba, have surged into the packing and delivery spaces, offering services once fulfilled solely by distribution specialists. Their expertise in digital shopping and advances in logistics allow cost-effective shipping of products — including large and bulky items — neutralizing an advantage established distribution players previously enjoyed. These digital disruptors are also beginning to match distributors in terms of technical proficiency, leveraging artificial intelligence, algorithms, and data analytics to close the knowledge gap.

For traditional distribution companies, the window of opportunity to secure a sustainable future is closing fast. But it isn’t too late for these tried-and-true providers to cement themselves as essential cogs in the ecommerce machine. To remain relevant in a rapidly digitizing world, they must recognize the need for reform, casting aside antiquated models to deliver the experiences that modern-day manufacturers — and their customers — want.

An investment worth making

Moving forward, distribution leaders must strive to deliver seamless omnichannel journeys formulated to meet fast-evolving customer expectations. Siloed channels and fractured data severely degrade these experiences, so the focus should be on unified commerce solutions spanning web, mobile, and marketplaces.

Investing in flexible, customizable B2B ecommerce platforms purpose-built for the distribution space provides a strong foundation for unified commerce, empowering distributors to blend digital efficiency with high-value account management and the other areas in which they excel.

To fortify fulfillment and logistics as customer demands escalate, distributors must also optimize supply chain operations for speed, transparency, and flexibility. They can achieve these operational improvements by digitizing warehouse management, selectively applying automation, exploring innovative last-mile delivery partnerships, and closely monitoring supplier relationships. While superior fulfillment and logistics remains a distributor stronghold, digital disruptors are advancing quickly, so established disruption players must urgently double down on this advantage before it evaporates entirely.

In both the short term and the long term, those that modernize their supply chains will gain a powerful competitive edge. However, to truly thrive in the evolving distribution landscape, distributors must expand their value proposition far beyond just moving products.

Doing so requires a realization that they shouldn’t be competing with manufacturers, but rather complementing their operations. This means providing services, insights, and specialist know-how that make them the expert distributor, an indispensable partner. With knowledge and relationships baked deeply into the customer experience, manufacturers will be less incentivized to cut distributors from the chain — especially in economically uncertain times when increasing value is imperative.

Ready to thrive 

There’s no doubt that D2C is here to stay, but manufacturers will continue to seek the services of digitally enabled distributors who provide value far beyond basic order fulfillment. That’s why, to remain competitive, distribution players must augment their value proposition by evolving into trusted advisors and strategic partners.

Getting this right relies on comprehensive digital transformation encompassing ecommerce, supply chain, and service delivery operations. Distributors that fail to adapt their business models and stubbornly cling to antiquated, unsophisticated approaches will inevitably fail.

Adapting to this new distribution reality is no small task. But it has become necessary for survival — and with the right tools and technology, it can be a remarkably painless process. With commitment to change, investment in digitization, and a tireless customer focus, distributors can reinvent themselves as next-generation enterprises ready to thrive in all market conditions — now, and in the future.

Yoav Kutner is co-founder and CEO of Oro Inc., an open-source business technology company serving B2B merchants.

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India: The emerging B2B ecommerce powerhouse https://www.digitalcommerce360.com/2023/10/25/india-the-emerging-b2b-ecommerce-powerhouse/ Wed, 25 Oct 2023 13:58:32 +0000 https://www.digitalcommerce360.com/?p=1311145 India is not only a rising giant in the global arena, but also a booming market for B2B ecommerce. With its fast-growing economy, large population, and digital transformation, India offers immense opportunities for businesses looking to sell their products and services to other businesses online. This article explores why India should be on your radar […]

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Gaurav Dhingra_RefreshIdeas_cropped-2

Gaurav Dhingra

India is not only a rising giant in the global arena, but also a booming market for B2B ecommerce. With its fast-growing economy, large population, and digital transformation, India offers immense opportunities for businesses looking to sell their products and services to other businesses online. This article explores why India should be on your radar if you want to succeed in the B2B ecommerce space.

JoãoManuel_Vereda-global-cropped

João Manuel

India’s B2B ecommerce market is one of the fastest-growing in the world. By 2030, Redseer projects it will reach $90 billion to $100 billion in gross merchandise volume (GMV). Several factors are driving this growth, such as:

  • The increasing demand from small and medium enterprises (SMEs) for a variety of products and services, especially in sectors like packaging, textiles, apparel, and contract manufacturing. SMEs account for about 40% of India’s GDP and employ over 100 million people.
  • The availability of affordable and reliable internet connectivity and smartphones, which enable online transactions and communication. India has over 624 million internet users and over 500 million smartphone users, making it one of the largest and fastest-growing digital markets in the world.
  • The government’s initiatives to promote digitalization and ease of doing business, such as the Digital India campaign, the Aadhaar biometric identification system, the Unified Payments Interface (UPI), and the Goods and Services Tax (GST). These initiatives have simplified online payments, reduced tax complexities, and improved transparency and efficiency.
  • The emergence of innovative and disruptive B2B e-commerce platforms that connect buyers and sellers across the country and offer solutions for vendor management, supply chain automation, and supply chain financing.

India’s B2B ecommerce market is large, diverse and dynamic. It caters to different segments of buyers and sellers, such as wholesalers, retailers, manufacturers, distributors, service providers, and exporters. It also covers a wide range of product categories, such as industrial goods, consumer goods, agricultural products, healthcare products, and digital services.

India’s B2B ecommerce market is also open to international players who want to tap into this lucrative opportunity. According to a report by PayPal, cross-border B2B ecommerce in India is expected to grow at a compound annual growth rate (CAGR) of 28% from 2021 to 2026, reaching $54 billion. Some of the factors that are driving this growth are:

  • The increasing demand from overseas buyers for high-quality and low-cost products from India, especially in sectors like textiles, handicrafts, pharmaceuticals, engineering goods, and software services.
  • The increasing supply from Indian sellers who want to expand their market reach and access new customers across the globe.
  • The availability of online platforms that facilitate cross-border trade by providing features like currency conversion, payment processing, logistics support, customs clearance, and dispute resolution. Some of these platforms include Amazon Business, Alibaba, eBay, TradeIndia, and IndiaMART.

India’s B2B e-commerce market is also poised to benefit from the recent developments in the global scenario, such as:

  • The successful hosting of the G20 Summit in New Delhi onSeptember 9 and 10, 2023, which showcased India’s leadership role in addressing global challenges like climate change, sustainable development, digital transformation, multilateralism, and women empowerment.
  • The signing of several trade deals and partnerships with key countries and regions like the United States, the European Union, the UK, Japan, Australia, ASEAN, Africa, and the Middle East, which enhanced India’s economic cooperation and integration with the world.
  • The launch of several initiatives to boost India’s manufacturing sector and exports, such as the Production Linked Incentive (PLI) scheme, the Atmanirbhar Bharat (Self-reliant India) campaign, the Make in India program, and the National Export Policy (NEP).

To sum up, India is an emerging powerhouse in the B2B ecommerce space that offers tremendous potential for growth and innovation. If you want to be part of this exciting journey, here are some tips to help you succeed:

  • Understand the market dynamics and customer preferences in different regions and sectors of India. Customize your products and services according to the local needs and expectations.
  • Leverage the existing online platforms that connect you with potential buyers and sellers in India. Alternatively, create your own online presence and brand identity that showcases your value proposition and differentiates you from the competition.
  • Build trust and credibility with your Indian counterparts by providing quality products and services, timely delivery, transparent communication, and responsive customer support. Use online tools like ratings, reviews, testimonials, and certifications to demonstrate your reputation and reliability.
  • Comply with the legal and regulatory requirements of doing business in India, such as taxation, customs, licensing, and intellectual property rights. Seek professional advice and assistance if needed.
  • Stay updated with the latest trends and developments in the Indian B2B e-commerce market. Adapt to the changing customer demands and market opportunities. Innovate and experiment with new products, services, and business models.

India is a land of opportunities for B2B ecommerce players who are willing to explore, learn, and grow. With its huge market size, diverse customer base, digital infrastructure, supportive government policies, and global outlook, India is the place to be for B2B ecommerce in the 21st century.

About the Authors:

Gaurav Dhingra is the co-founder and CEO of New Delhi, India-based ecommerce marketing agency Refresh Ideas. João Manuel is the founder and CEO of international marketing and public relations firm Vereda, which operates without a specific headquarters but maintains a company website at Vereda.global, with content displayed in the English and Portuguese languages.

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India: The rising retail ecommerce giant https://www.digitalcommerce360.com/2023/10/25/india-the-rising-retail-ecommerce-giant/ Wed, 25 Oct 2023 13:55:17 +0000 https://www.digitalcommerce360.com/?p=1311154 The arrival of the Indian probe Chandrayaan-3 on the dark side of the Moon made the world open its eyes to this rising giant that is India. Although it has been growing at rates above 7% per year for over a decade, India is finally receiving the attention it deserves from the world. This article […]

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Gaurav Dhingra_RefreshIdeas_cropped-2

Gaurav Dhingra

The arrival of the Indian probe Chandrayaan-3 on the dark side of the Moon made the world open its eyes to this rising giant that is India. Although it has been growing at rates above 7% per year for over a decade, India is finally receiving the attention it deserves from the world. This article explores why including India in your international e-commerce strategy isn’t just an option — it’s a strategic necessity for companies aspiring to flourish in the ever-evolving digital marketplace.

India presents a tantalizing prospect for those looking to extend their global ecommerce footprint. According to Invest India, the country’s ecommerce market was estimated to be worth over $55 billion in gross merchandise value in 2021. By 2030, forecasters expect India’s ecommerce market  to have an annual GMV of $350 billion. A report from Mordor Intelligence projected that the Indian ecommerce market will reach $246.1 billion by 2026, with a compound annual growth rate of 21.5%.

JoãoManuel_Vereda-global-cropped

João Manuel

India’s demographic landscape is a compelling reason to include it in your international ecommerce strategy. With over 1.4 billion people, India is home to a rapidly expanding middle class, driving the demand for a wide array of products and services. This demographic shift is transforming India from a nation of consumers into a nation of avid online shoppers. The middle class’s increasing purchasing power and their openness to online shopping make India a massive potential market for ecommerce companies.

India is undergoing a digital transformation at breakneck speed. With the widespread availability of affordable smartphones and one of the largest and fastest-growing internet user bases globally, India’s digital landscape is ripe for ecommerce growth. The country boasts over 624 million internet users, and forecasters expect this number only to rise. Mobile shopping is a common practice, making it essential for ecommerce companies to tailor their platforms for mobile users.

The Indian government’s Digital India campaign has paved the way for a more connected, digital-savvy population. Initiatives like Aadhaar, the biometric identification system, and Unified Payments Interface (UPI) have made online transactions more accessible and secure. The Goods and Services Tax (GST) has streamlined taxation across the country, reducing logistical complexities for ecommerce operations.

India’s consumers are increasingly looking beyond their borders for unique products and competitive prices. Cross-border ecommerce has gained momentum, presenting international ecommerce businesses with an excellent opportunity to tap into this market. Ecommerce giants like Amazon and Alibaba have recognized this potential and are actively expanding their presence in India.

Being an early entrant in a market with vast potential can provide a significant competitive advantage. While India’s ecommerce market is competitive, it is still evolving, and businesses that establish themselves now can secure a strong foothold and build brand loyalty before the market becomes saturated.

We gathered seven advisements for a successful strategy for companies wanting to sell products in India:

1. Understand the climatic and geographic diversity of India

India is a vast country with different climates, seasons, and terrains. It has more seasons than any other country in the world, ranging from hard monsoons to harsh droughts. These factors affect the demand and supply of various products and services. For example, some products may sell better in certain regions or seasons than others.

Therefore, it is important to consider India’s climatic and geographic diversity when planning your product portfolio, pricing, distribution, and marketing strategies. You may need to adapt your products or offer different options for different segments of customers based on their location, climate, and season.

2. Customize your product to suit the local tastes and preferences

India is a country with rich cultural diversity and heritage. It has 23 official languages and hundreds of dialects. It also has various religions, cuisines, festivals, and traditions. These factors influence the tastes and preferences of Indian consumers. They are often looking for products that reflect their identity, values, and lifestyle.

Therefore, it is essential to customize your product to suit the local tastes and preferences of your target audience. You may need to modify your product features, design, packaging, or branding to appeal to them. For example, even big companies like McDonald’s have to alter their menu in India to offer vegetarian options and avoid beef products.

3. Use English as your primary language for marketing

One of the advantages of selling products in India is that you don’t need to translate your marketing content or technical information into multiple languages. English is widely spoken and understood in India, especially among urban and educated consumers. It is also the official language of business and commerce in India.

Therefore, you can use English as your primary language for marketing your products in India. However, you should also be aware of the regional variations and nuances of English in India. You should use simple and clear language that is easy to comprehend by your target audience. You should also avoid using slang, jargon, or idioms that may not be familiar to them.

4. Optimize your website for mobile devices and low-speed internet

India has one of the largest and fastest-growing mobile internet user bases in the world. Moreover, most of these users access the internet through low-cost smartphones with limited data plans and low-speed connections.

Therefore, it is crucial to optimize your website for mobile devices and low-speed internet if you want to reach and engage your potential customers in India. You should make sure that your website loads fast, has a responsive design, uses minimal images and videos, and offers a smooth user experience.

5. Leverage influencer marketing to promote your products

Influencer marketing is one of the most effective ways to grow your online business in India. Influencers are individuals who have a large and loyal following on social media or YouTube. They can influence the opinions and purchase decisions of their followers by creating and sharing content about various products or services.

Therefore, you should leverage influencer marketing to promote your products in India. You should identify and collaborate with influencers who are relevant to your niche, have a good reputation, and have a high engagement rate with their audience. You should also provide them with creative freedom and incentives to create authentic and engaging content about your products.

6. Use PR activities to boost your brand image and SEO

Public relations is another powerful tool to boost your online business in India. PR helps you create and maintain a positive brand image by generating media coverage, press releases, and other PR activities. PR also helps you introduce yourself to a broader audience, increase brand recognition and credibility, and establish yourself as an authority in your industry.

Additionally, PR activities can also contribute to your website’s search engine optimization (SEO). Media mentions and backlinks from reputable sources can improve your website’s search engine rankings, making it easier for potential customers to find your products or services online.

7. Explore ecommerce marketplaces as an alternative or complementary channel

Ecommerce marketplaces are platforms that connect buyers and sellers of various products or services. They offer various benefits such as a large customer base, easy payment and delivery options, and customer support. Some of the most popular ecommerce marketplaces in India are Amazon, Flipkart, and Myntra.

Therefore, you should explore ecommerce marketplaces as an alternative or complementary channel to sell your products in India. You can use them to test the market, reach new customers, or expand your product range. However, you should also be aware of the challenges and limitations of selling on ecommerce marketplaces, such as high competition, low margins, and dependency on the platform.

In the ever-evolving landscape of international ecommerce, India represents an unmissable opportunity. Its burgeoning middle class, widespread internet access, government support for digitalization, diverse consumer preferences, and cross-border ecommerce potential make it a compelling addition to your global ecommerce strategy.

By embracing India as a strategic imperative, businesses can unlock unprecedented growth, expand their global footprint, and secure a competitive edge in the digital marketplace. The time to include India in your international ecommerce strategy is now, and the rewards are bound to be substantial.

About the Authors:

Gaurav Dhingra is the co-founder and CEO of New Delhi, India-based ecommerce marketing agency Refresh Ideas. João Manuel is the founder and CEO of international marketing and public relations firm Vereda, which operates without a specific headquarters but maintains a company website at Vereda.global, with content displayed in the English and Portuguese languages.

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Digital commerce is a multi-color transformation at PPG https://www.digitalcommerce360.com/2023/10/18/digital-commerce-transformation-at-ppg/ Wed, 18 Oct 2023 20:16:47 +0000 https://www.digitalcommerce360.com/?p=1310895 Editor’s note: There is nothing black and white about how PPG Industries, the maker of Glidden paints and numerous other types of paints and coatings, approaches digital commerce and transformation. In fact, at PPG, a 140-year-old manufacturing company with annual revenue of more than $17 billion, digital transformation is a strategic priority. From rolling out […]

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Editor’s note: There is nothing black and white about how PPG Industries, the maker of Glidden paints and numerous other types of paints and coatings, approaches digital commerce and transformation. In fact, at PPG, a 140-year-old manufacturing company with annual revenue of more than $17 billion, digital transformation is a strategic priority.

Brad Budde

From rolling out a new global ecommerce platform in the coming months to using headless commerce and artificial intelligence to expedite manufacturing and distribution operations, PPG is using digital technology to streamline how it does entire – and global – business lines. In this question and answer article, chief digital officer Brad Budde, sits down with Digital Commerce 360 and details why ecommerce and many colorful iterations of new technology, are helping one of the most iconic names in American manufacturing literally reinvent itself.

Digital Commerce 360: How big a strategic priority is B2B digital commerce for PPG and why?

In January, our new CEO Tim Knavish launched an enterprise growth strategy. Digital was one of five key elements along with others such as a focus on customer productivity and sustainability. Most of my work has been to align our digital initiatives with modern customer expectations and our biggest growth opportunities.

PPG’s purpose statement is this – “we protect and beautify the world.” That is not just about PPG products, it is about the ecosystem of people using the products and how they go about solving their daily challenges. So, in our digital program we really focus on making our customers better at their jobs. I think about the hundred million engineers, architects, designers, and painters who need to choose a coating or paint for their jobs. One of the reasons I love this job is that it can reach so many people.

PPGs specialty chemical portfolio is diverse and therefore so are the segments of customers that we need to reach. Digital can help with that reach also. For someone who’s new to the portfolio it’s almost difficult to imagine all the applications we provide to the market: airplane coatings and the front “windshield”, four-layer coatings systems on automobiles, thermal and corrosion resistance on electric vehicle (EV) batteries, powder coating on agricultural equipment, coating of ceramic cookware, coating of an aluminum soda can, autobody paint and equipment. That is all additional to what is the traditional view of our billions of dollars of wall paint.

I am here because this opportunity is so big within this company and the served markets. The fact that PPG is a key player in our served markets means we have an opportunity to set the pace for our industry.

Digital Commerce 360: How does reinventing digital commerce tie in with PPG’s broader mission of digital transformation?

My B2B ecommerce peer group will understand the pain and hard work of digitizing the product catalog and fulfillment operations. That is core to everyone’s digital program and no different for us. We are building the catalog and ecommerce capabilities to enable the key buying step in the customer’s digital journey.

The unique aspect of PPG’s digital ambition is the specification activities and choosing color. To protect and beatify the world, we need to move upstream in our customer’s workflows to digitize these steps. A digital catalog needs to provide coating performance specifications as the physical assets are being designed for their environment and the protection throughout their full product lifecycle. We also need a clear definition of color and one that can be orderable in ecommerce.

Color is a fun area from a digital technology and digital experience standpoint. The role of color can be immensely important to a brand owner and homeowner. Think Ferrari red, think John Deere green. Think about the yellow lane markings for pedestrian crosswalks. Consider the amount of time and the cycles you take to pick color for a room upgrade in your home! Color must be part of our digital product definition to be successful with ecommerce.

We are also pushing to re-shape the fulfillment and operations in our Pro Painter business to help those customers be more productive at their jobs. Online ordering, unlike a store, is open 24×7. In our markets in the USA and Europe we are really driving digital commerce programs to the Pro Painter to support this objective. We have also expanded our partnership with retailers like The Home Depot in the U.S. market to help more professionals complete more jobs faster. Digital product merchandising is an important part of that collaboration.

Another example of our unique digital ambition is to color matching and product tinting capabilities further out to customers. In our automotive refinishing business, which supports thousands of autobody paint shops around the world, we launched the LINQ product a few years ago to help customers scan and color match. Then we launched the Moonwalk system to automatically mix a small batch of paint at the autobody shop, which helps the car painter save time. This is a notable example that we don’t only want customers or partners ordering through ecommerce, we want them to see measurable productivity, speed, and quality improvements in their daily operations.

We also work closely with our operations team to bring the digitized product into foundational data models, which is part of our artificial intelligence program. We are rolling AI into batch operations and our quality assurance (QA) process for automotive original equipment manufacturer (OEM) customers. As we expand more formulation data models across our organization it creates a tie from the plant operations to the product fulfillment and all the way up to the ordering process.

Digital Commerce 360: What are your top ecommerce priorities for next year and how will you achieve them?

We know what ecommerce and digital plays can do for our customers, with a strong focus on the Pro Painter. The work we need to do internally is push that across more markets and businesses. PPG is a big company, reporting $17.7 billion in sales in 2022. We need to drive more product informational management (PIM) and product catalog work, scale our ability to deploy across the globe, and ensure our sales and store colleagues can use the tools effectively with customers.

Digital Commerce 360: How is PPG using new digital applications such as generative AI and headless commerce?

Yes, we love artificial intelligence. Generative AI is already today being built into workflows for content summarization and translations of unstructured content and catalog. This workflow must become a part of our daily activity if we are going to scale across the enterprise and across the globe.

Headless commerce allows us the flexibility to fit our standard technology stack to the complex underlying ERP systems we have across the business. We are slightly leaning to our own custom APIs more than the components of the ecommerce platform.

Digital Commerce 360: Does PPG have a marketplace strategy and what marketplaces is PPG utilizing?

We use marketplaces in the USA and Europe. Primarily the biggest and general marketplaces rather than the specialty chemical marketplaces that have sprung up.

The focus is brand exposure and customer acquisition, but it is not yet a big growth driver. We must stay focused on our key brands in key markets like Glidden through Amazon US, Johnstone’s through Amazon U.K., or Ripolin through Mano Mano in France.

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Sign up for a complimentary subscription to Digital Commerce 360 B2B News, published 4x/week. It covers technology and business trends in the growing B2B ecommerce industry. Contact Mark Brohan, senior vice president of B2B and Market Research, at mark@digitalcommerce360.com. Follow him on Twitter @markbrohan. Follow us on LinkedIn and be the first to know when we publish Digital Commerce 360 B2B News content.

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6 ways retailers are using generative AI right now https://www.digitalcommerce360.com/2023/10/17/6-ways-retailers-are-using-generative-ai-right-now/ Tue, 17 Oct 2023 17:29:43 +0000 https://www.digitalcommerce360.com/?p=1308657 When the Digital Commerce 360 editors embarked on the October edition of Strategy Insights, we knew we wanted to focus on generative AI, but we weren’t sure how much we’d find. The OpenAI consortium released its generative AI bot ChatGPT for public use during Q4 2022, and it quickly became the hottest topic around. Months […]

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When the Digital Commerce 360 editors embarked on the October edition of Strategy Insights, we knew we wanted to focus on generative AI, but we weren’t sure how much we’d find.

The OpenAI consortium released its generative AI bot ChatGPT for public use during Q4 2022, and it quickly became the hottest topic around. Months later, everyone in the online retail industry is still buzzing about generative AI, but how many businesses are actually using the technology today? And how many would want to talk to us about it?

Turns out, quite a few.

While many merchants we talked to are still just piloting and exploring how best to use the burgeoning technology, many brands have live generative AI programs up today. This Strategy Insights, “6 ways retailers are using AI right now and how generative AI will change ecommerce,” showcases examples of many large retail brands (and a few smaller ones) and how they are using generative AI right now.

Below is just a sampling of examples you’ll find in the rest of this report. Download the entire Strategy Insights here.

1.) Stitch Fix taps generative AI to write  ad headlines and product descriptions

Apparel retailer Stitch Fix uses generative AI to write headlines for Facebook and Instagram ads. In the past, it would take about two weeks to develop a creative campaign and draft copy. But now, human copywriters can evaluate a headline created by the generative AI system in less than one minute — and they approve the machine-created content 77% of the time, Stitch Fix says.

2.) Babylist uses generative AI to write email subject lines

Baby products marketplace and registry says its marketers are expected to use generative AI to help create ideas, content and copy, says Lee Anne Grant, chief growth officer. Babylist finds that ChatGPT-generated subject lines increased open rates for marketing email in half of their tests. It concluded that ChatGPT is a “great resource for when the team needs subject line inspiration or help writing one,” Grant says.

3.) J’evar uses generative AI to create product models

Online-only jewelry merchant J’evar has its product designers use generative AI to speed up how it creates custom jewelry pieces. Instead of going through dozens of product mockups over the course of weeks, genAI can help its designers produce product samples in minutes, says J’evar founder and CEO Amish Shah.

4.) Newegg uses generative AI to summarize customer reviews

Online electronics retailer Newegg built a generative AI tool in house that creates one product summary for a product based on all of the published customer reviews. This review is published at the top of all the reviews. Reviews are an important feature for Newegg, as 20% of Newegg.com shoppers read reviews, and these shoppers spend 40% more money on the site than non-review reading shoppers, says Andrew Choi, director of brand and website experience for Newegg.

5.) UrbanStems creates images with genAI

Online flower merchant UrbanStems is using generative AI in multiple ways, including having it create images of potential products it wants to sell. For example, the brand can tell its generative AI software to create an image of a 10-stem red and white arrangement of peonies in a glass vase and white background — and send that image to its merchandising team to create the product in real life. This helps the brand quickly experiment with new designs, without having to purchase flowers and conduct a photo shoot just for a design mock up, says Katie Hudson, content director for UrbanStems.

6.) EBay enables its marketplace sellers to use genAI to write product descriptions

Marketplace giant eBay built a tool based on Open AI’s ChatGPT that creates a product description based on data sellers provide about a product’s category, condition, color, brand and more. Roughly 20% of sellers shown the generative AI tool use it, and of those, 90% accept at least part of the description, says Xiaodi Zhang, vice president of seller experience at eBay.  

Download the free Digital Commerce 360 October Strategy Insights, “6 ways retailers are using AI right now and how generative AI will change ecommerce” here.

—April Berthene, Editor, Strategy Insights

Additional reporting from Digital Commerce 360 editors Don Davis, Gretchen Salois and Abbas Haleem.

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Why manufacturers can’t ignore digital tools in 2024 https://www.digitalcommerce360.com/2023/10/13/why-manufacturers-cant-ignore-digital-tools-in-2024/ Fri, 13 Oct 2023 18:03:26 +0000 https://www.digitalcommerce360.com/?p=1310718 To remain competitive as the business landscape continues to evolve, it’s absolutely necessary for manufacturers to keep up. Including digital tools in your strategy for 2024 is a crucial step toward securing future success. It’s not an option, but a necessity if you want to stay ahead of the game. This article will explore the […]

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Kristina Harrington, CEO, GenAlpha Technologies

Kris Harrington

To remain competitive as the business landscape continues to evolve, it’s absolutely necessary for manufacturers to keep up. Including digital tools in your strategy for 2024 is a crucial step toward securing future success. It’s not an option, but a necessity if you want to stay ahead of the game.

While digital tools are crucial, they should not replace the personal touch that some of your customers may prefer.

This article will explore the reasons why incorporating digital tools is so critical for your future manufacturing success.

Catering to the New Generation of Customers

Millennials and Gen Z already make up 45.5% of the US labor force, and that number will only grow. This new generation of customers, often referred to as digital natives, are redefining the marketplace. These tech-savvy individuals are accustomed to seamless online experiences and expect the same from the products they purchase. If you fail to provide digital tools, you risk losing out on this substantial customer base. Whether it’s online product configurators, ecommerce, or digital parts catalogs, these tools can enhance the customer experience and attract a younger, digitally driven audience.

Mitigating Financial Risk

Manufacturing is a competitive industry; not keeping up with technological advancements can have financial consequences. Investing in digital tools might seem like a financial commitment, but the long-term benefits far outweigh the costs. Streamlining processes, reducing errors, and increasing sales are just a few of the financial advantages that come with adopting digital tools. In contrast, resisting digital transformation can lead to inefficiencies, higher operational costs, and ultimately, financial risk.

Maintaining Market Share and Customer Base

As digital tools become more commonplace in the manufacturing industry, companies that embrace them gain a competitive edge. Staying relevant in the market requires staying ahead of the curve. 60% of B2B customers find buying products online more convenient than going through traditional channels. So those manufacturers who don’t adapt to digital commerce risk losing market share to competitors who offer a more interactive, digitally enhanced experience. Furthermore, customers may start to associate a lack of digital tools with outdated products and services, which could result in a loss of trust and loyalty.

Balancing Digital and Personal Touch

It’s important to note that while digital tools are crucial, they should not replace the personal touch that some of your customers may prefer. While a growing number of consumers enjoy the convenience of online interactions, some still value human connection through phone calls or emails. A well-rounded sales and service strategy should cater to both preferences, offering options for customers to engage digitally or through traditional means … meeting customers where they are on their own digital journey.

In conclusion, as we enter 2024, it’s important to recognize the significance of including digital tools in your plans. Failing to do so puts you at risk of missing out on a new generation of customers and exposes you to financial vulnerabilities. To secure market share and maintain customer trust, there should be a balance between digital innovation and the personal touch, ensuring a seamless and satisfying experience for all.

Embracing digital tools is not just an option — it’s a necessity for anyone looking to thrive in the ever-evolving business landscape.

Kristina Harrington is the co-founder and CEO of GenAlpha Technologies, which provides digital commerce technology for manufacturers. Prior to GenAlpha, Kris worked for more than 10 years in leadership positions at two large multinational original equipment manufacturers, Bucyrus International and Caterpillar, supporting the mining industry. In her various positions, she worked with internal stakeholders, dealers, and customers to deliver business results both in aftermarket and equipment sales. She can be reached at kharrington@genalpha.com.

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4 vital digital skills for integrating MRO supply chains https://www.digitalcommerce360.com/2023/10/09/4-vital-digital-skills-for-integrating-mro-supply-chains/ Mon, 09 Oct 2023 13:00:03 +0000 https://www.digitalcommerce360.com/?p=1310282 Integrating a supply chain with a maintenance, repair and operations program requires dedicated effort and critical skills. People who excel in this role must have strong digital capabilities and be open to using various technologies — including emerging ones. Here are four top skills that will set people in this industry apart from their peers […]

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EmilyNewton

Emily Newton

Integrating a supply chain with a maintenance, repair and operations program requires dedicated effort and critical skills. People who excel in this role must have strong digital capabilities and be open to using various technologies — including emerging ones.

Here are four top skills that will set people in this industry apart from their peers and ensure success in their careers.

1. Artificial Intelligence

Artificial intelligence has rapidly emerged as a notable technology, particularly as people grapple with item shortages and demand fluctuations. However, anyone who currently works with MRO-integrated supply chains or plans to soon should get some AI skills under their belt and progressively work to improve their competencies.

Predictive algorithms help professionals know which supplies to order and when, greatly reducing the chances of stockouts. Executives are also realizing AI is essential to their operations, which suggests they should see it as an in-demand skill when hiring new team members.

A 2023 poll of C-suite members found that 90% were using AI to achieve better operational resilience. Additionally, 88% depended on it for supply chain enhancements. The potential uses span from interacting with a chatbot to place an order to getting predictions from algorithms about when specific products will sell out or start to run low.

2. Data Analytics

Data analytics skills are also proving essential. Professionals in these roles use them to evaluate the sensor data associated with a piece of equipment or estimate when the current stock of a vital component will be depleted. Knowing how to use data analytics platforms is increasingly important as the number of products moving through supply chains rises.

For example, during a single year, the supply chain for technology brand Lenovo included 2,000 suppliers working to deliver more than 130 million devices. An MRO-integrated supply chain specialist might use a data analytics tool to determine the most reliable suppliers according to their performance across several key performance indicators.

Even if someone doesn’t have strong data analytics skills, they can set a goal to gradually improve in that area. Besides making them more of an asset to their employers, this plan could increase job satisfaction by providing a well-defined career path and growth opportunities. Notably, a 2023 survey found that 84% of employees said clear career paths strengthened their commitments to employers.

3. Cloud Computing

Many leading industrial apps run in the cloud. Authorized users can access them from anywhere, making it easy to check statistics, communicate with stakeholders and more. People also use the cloud to store paperwork or streamline its distribution, such as to approve repairs on specific pieces of equipment or keep track of when maintenance occurred.

Another handy thing about cloud computing platforms is they support remote working arrangements. Even if someone doesn’t work from home all the time, it’s increasingly likely they will eventually. One 2023 survey of Americans found they spend 27% of their workdays at home on average.

Cloud computing tools have some similarities, but people must also learn to work with brand-specific features. It’s helpful for those working with MRO-integrated supply chains to dedicate themselves to learning the ins and outs of cloud software. That might mean using built-in help guides or signing up for provider-offered online courses.

People who grow their skills might spend time mentoring peers or encouraging colleagues to embrace the organizational changes that cloud computing products often bring. This enables employees to become crucial parties that show others how these apps can improve their workflows.

4. Project Management

A continuing commitment to digital skill growth will also put MRO supply chain professionals ahead of their peers. Roles increasingly include time spent with various internet-connected tools and platforms, and many suppliers and distributors prefer digital-only transactions.

Digital project management tools simplify tracking what responsibilities people must handle and when. They also enable smoother communication between various stakeholders, allowing people to comment, upload images or documents, and assign subtasks to other parties.

Once people improve their cloud computing skills, they’ll likely find significant similarities associated with using project management tools. That’s because most of them work in the cloud to make it easier for people to get things done in on- and off-site locations.

Commit to Ongoing Growth

These four skills are among the most necessary in today’s fast-paced and digital-centric world. Anyone involved with MRO-integrated supply chains should stay aware of emerging technologies that could become more prominent in their industry.

Some companies are experimenting with augmented reality to support workflows and improve training. Others use mobile robots to carry supplies around distribution centers and other large facilities. People should pay attention to what’s new in their companies and the industry and be ready to capitalize on new learning opportunities. That will help them prepare for whatever’s ahead while setting good examples for others, bringing their company to the forefront.

About the author

Emily Newton is an industrial writer reporting on how technology disrupts industrial sectors. She’s also the editor-in-chief of Revolutionized, covering innovations in industry, construction, and more.

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Navigating hybrid sales in the wholesale distribution industry https://www.digitalcommerce360.com/2023/09/27/navigating-hybrid-sales-in-the-wholesale-distribution-industry/ Wed, 27 Sep 2023 16:31:10 +0000 https://www.digitalcommerce360.com/?p=1309868 The wholesale distribution industry predominantly comprises mid-sized companies that offer innovative products and services. However, many of these companies have slowly adopted digital marketing and sales strategies leaving them behind in generating business in today’s digital world. Before the pandemic, in-person visits were the cornerstone of effective sales for wholesalers, but the landscape has rapidly […]

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SusanneAdam_SAP_headshot

Susanne Adam

The wholesale distribution industry predominantly comprises mid-sized companies that offer innovative products and services. However, many of these companies have slowly adopted digital marketing and sales strategies leaving them behind in generating business in today’s digital world. Before the pandemic, in-person visits were the cornerstone of effective sales for wholesalers, but the landscape has rapidly transformed.

Protocols define which interactions are digital, which in-person, and who is responsible.

Today, businesses need to master combinations of virtual and face-to-face interactions with customers — the so-called Hybrid Sales Model.

There will be no way back to the old days; the future of sales is hybrid as stated by  McKinsey. Buyers are now used to digital sales and communication channels, backed by a new digital-savvy generation of employees. Wholesale distributors and other B2B companies must cater to customers who favor digital purchasing and opt for video calls over physical meetings while satisfying those who still prefer in-person interactions.

Embracing hybrid sales presents several challenges. Digital communication methods, including video meetings, necessitate distinct skills compared to traditional face-to-face meetings. Video meetings tend to be more focused and often involve presentations, whereas in-person meetings allow more interactions and discussions. Facial expressions, body language, and emotional signals require conversation partners to adjust their behavior accordingly. Replicating this level of understanding in online meetings proves challenging, if not impossible.

To cultivate digital sales skills, businesses have established specialized training and coaching programs. These initiatives focus on improving skills like active listening, effective written and verbal communication, use of messaging and meeting tools, and leveraging social media platforms. Other, simpler challenges, such as a stable internet connection, can significantly impact sales success when not managed accordingly. Connectivity issues disrupting sales meetings create a negative impact if they occur too frequently.

Recent years have led businesses to realize that finding the right balance between virtual and in-person interactions is no simple task. Questions to consider include how much digital communication is appropriate for a certain customer and whether or not the customer’s expectations are clear regarding the communication channels being used.

To address these considerations, some companies have created strict procedures for the entire customer journey to address these considerations. These protocols define which interactions are digital, which in-person, and who is responsible.

For instance, one protocol might determine that contract negotiations must happen face-to-face. Fixed procedures are advantageous as they allow better planning and setup of clear organizational responsibilities and communication lines. However, this approach might fail when those procedures are not differentiated enough, neglecting the need to address different customer groups with other methods. Sales reps should be allowed to react flexibly to address the needs of specific customers.

Similar to other sales activities, customer analytics and segmentation are key success factors for a successful hybrid sales approach. Relevant characteristics for clustering customers in this manner are the customers’ willingness to engage digitally and their preferred channels.

Depending on strategic goals, characteristics like customer revenue or size can further refine these groups, to which guidelines are assigned. Examples for such guidelines are “in-person contacts with large customers only,” “lead generation mainly digitally driven,” or “small customers use digital channels only.”  These guidelines streamline client interactions across the whole organization, benefiting the sales team and the marketing and support teams.

Once a company has mastered the challenges, it can take advantage of a hybrid sales strategy. In combination with internal sales reps managing digital meetings, reduced travel time for external sales teams frees up space for additional sales activities by external sales teams. Incentivizing less profitable customers to move to digital channels reduces sales costs.

Moreover, innovation-minded customers perceive vendors as innovative when  they meet the customers’ expectations regarding modern user experience.

Businesses must proactively define their hybrid sales strategy to navigate both digital and in-person channels effectively. Armed with a clear understanding of customer needs, potential challenges, and strategic objectives, companies can manage hybrid sales successfully and utilize them as a lever for growth.

Susanne Adam is a principal solution manager at SAP for wholesale distribution. She has worked with client companies on customer engagement strategy and various projects in the wholesale and retail industry. Follow her on X @susanneadam3.

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Manufacturers’ game plan: Crafting a strong business case for ecommerce https://www.digitalcommerce360.com/2023/09/25/oems-game-plan-for-ecommerce/ Mon, 25 Sep 2023 14:51:14 +0000 https://www.digitalcommerce360.com/?p=1309576 In today’s digital age, ecommerce has become an essential tool for businesses across industries. For original equipment manufacturers (OEMs) in the manufacturing sector, implementing ecommerce presents a multitude of benefits. This blog post aims to guide OEMs on how to write a persuasive business case for integrating ecommerce into their operations. Specifically, we will explore […]

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Kristina Harrington, CEO, GenAlpha Technologies

Kris Harrington

In today’s digital age, ecommerce has become an essential tool for businesses across industries. For original equipment manufacturers (OEMs) in the manufacturing sector, implementing ecommerce presents a multitude of benefits. This blog post aims to guide OEMs on how to write a persuasive business case for integrating ecommerce into their operations. Specifically, we will explore how digital self-service tools, such as ecommerce platforms, can significantly reduce administrative burdens and drive business growth.

By implementing ecommerce enabled with a good analytics engine, OEMs can analyze search trends to determine what customers are searching for but not ordering.

Reducing Administrative Tasks:

One of the primary advantages of implementing ecommerce in a manufacturing business lies in the substantial reduction of administrative tasks for various teams. If you were to take a close look at the percentage of time your customer-facing teams are spending on administrative activities, you will likely find it is anywhere from 40% to 60% of their daily activity. Efficiency gains in administrative tasks translate into significant time and cost savings. Let’s examine the primary areas where these benefits manifest in an equipment and parts business:

  1. Customer Service: By offering a digital self-service platform, OEMs empower dealers and customers to find product information, track orders, and access support resources independently. This streamlined approach reduces the volume of routine inquiries and frees up customer service teams to focus on more complex issues and proactive customer engagement.
  2. Technical Service: ecommerce platforms can provide comprehensive product documentation, troubleshooting guides, and self-help resources. By enabling customers to resolve technical issues independently, OEMs can reduce the strain on their technical service teams, leading to improved response times for critical cases.
  3. Sales Teams: With ecommerce, sales representatives can spend less time processing manual orders, answering calls or text messages for price and availability, or fielding questions regarding when an order will ship.  They will spend more time engaging in value-added activities like building customer relationships and driving revenue growth. Automated order management and self-service capabilities empower dealers and customers to place orders directly, reducing the administrative burden on sales teams.

Business Growth Opportunities:

While the administrative benefits of ecommerce are compelling, the true power of this digital transformation lies in its ability to drive business growth. Let’s explore how ecommerce can unlock growth opportunities for OEMs and aftermarket organizations businesses:

  1. Product Recommendations and Upselling: Ecommerce platforms equipped with recommendations can help organizations analyze customer behavior, purchase history, and preferences to provide product suggestions (like kits and product upgrades). By leveraging upsell and cross-sell functionality, OEMs can increase average order value and revenue per customer. In traditional environments where call and email volumes are high, it is very challenging to be proactive in this manner for every opportunity and customer.
  2. Serving Long Tail Customers: Long tail customers may have lower purchasing volumes individually but collectively represent a substantial market opportunity. Digital self-service tools enable manufacturers to efficiently reach and serve long-tail customers who may not warrant extensive personal attention from sales teams. By offering a user-friendly ecommerce platform, OEMs can ensure these customers have access to product information, support resources, and a seamless purchasing experience from anywhere in the world. Most often, these customers are better serviced through ecommerce as getting to them can cost both time and money.
  3. Optimized Pricing Strategies: Ecommerce platforms allow manufacturers to implement consistent pricing strategies, offering personalized discounts, tiered pricing, or promotional campaigns. These pricing capabilities, coupled with data-driven insights, enable businesses to maximize margins and increase revenue.
  4. Improved Inventory Forecasting: By implementing ecommerce enabled with a good analytics engine, OEMs can analyze search trends to determine what customers are searching for but not ordering. If these orders are lost due to no product availability, planners can make adjustments to forecasted demand to ensure the right inventory is on the shelf. In the aftermarket, it is commonly known that inventory is often more important than price when equipment is urgently required to get back to work.
  5. Faster order-to-cash process: By providing customers with a self-service online platform, manufacturers enable them to browse equipment and parts catalogs, place orders, and make payments seamlessly. This eliminates the need for manual order processing, reducing the potential for errors and delays. With automated order fulfillment and integrated payment systems, manufacturers can accelerate the order processing timeline, leading to quicker order confirmation, shipment, and invoicing. Ultimately, the faster order-to-cash cycle improves cash flow, enhances customer satisfaction through prompt order fulfillment, and drives overall operational efficiency.
  6. Enhanced Customer Satisfaction and Loyalty: A well-designed ecommerce platform offers convenience, self-service capabilities, and a seamless purchasing experience, leading to increased customer satisfaction. Satisfied customers are more likely to become loyal, repeat buyers, fostering long-term relationships and generating sustainable revenue streams. For OEMs, a better aftermarket customer experience translates into purchasing your whole goods again in the future. The annuity from a great customer experience cannot be understated.

Building the Business Case:

When constructing a business case for implementing ecommerce in a manufacturing business, it is crucial to highlight the quantifiable benefits and tie them back to the organization’s strategic goals. Consider the following points:

  1. Cost Savings: How much time is your customer service and sales team spending on administrative tasks today? Calculate the potential time and cost savings resulting from reduced administrative tasks across customer service, technical service, and sales teams. Emphasize the efficiency gains and the resulting resource reallocation.
  2. Revenue Growth: Demonstrate the potential revenue growth opportunities by leveraging ecommerce, including increased average order value, expanded customer base, optimized pricing strategies, better inventory management, faster order-to-cash, and improved customer satisfaction leading to customer loyalty.
  3. Competitive Advantage: Highlight how ecommerce can give your manufacturing business a competitive edge by meeting customer expectations for digital self-service, personalized experiences, and convenience. Discuss the potential risks of falling behind and potential loss of market share.
  4. Long-Term Viability: Articulate how embracing ecommerce aligns with industry trends, evolving customer preferences, and the shift toward digital transformation. Illustrate the potential risks of not adopting ecommerce and the benefits of future-proofing your business.

In conclusion, implementing ecommerce into your customer support processes brings significant benefits, particularly in terms of reducing administrative tasks and driving business growth. By streamlining customer service, technical service, and sales team processes, OEMs can unlock efficiency gains and allocate resources strategically.

Additionally, leveraging ecommerce enables revenue growth through product recommendations, improved service to long tail customers, optimized pricing strategies, faster order-to-cash, improved inventory turns, and increased customer satisfaction and loyalty. By constructing a well-crafted business case that outlines these benefits, OEMs can secure the necessary investment for implementing ecommerce and position themselves for success in the digital era.

Kristina Harrington is the co-founder and CEO of GenAlpha Technologies, which provides digital commerce technology for manufacturers. Prior to GenAlpha, Kris worked for more than 10 years in leadership positions at two large multinational original equipment manufacturers, Bucyrus International and Caterpillar, supporting the mining industry. In her various positions, she worked with internal stakeholders, dealers, and customers to deliver business results both in aftermarket and equipment sales. She can be reached at kharrington@genalpha.com.

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Want to keep good ESG data? Foster its source. https://www.digitalcommerce360.com/2023/08/18/want-to-keep-good-esg-data-foster-its-source/ Fri, 18 Aug 2023 16:19:13 +0000 https://www.digitalcommerce360.com/?p=1279663 What’s clear from Deloitte’s Global Chief Procurement Officer Survey 2023 is that environmental and social governance (ESG) is now firmly on the corporate agenda. This year, it leapt right up the priority list, from seventh place to second.  Elevating ESG, however, is tough to deliver. In practice, it is hugely dependent upon good supplier data, […]

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What’s clear from Deloitte’s Global Chief Procurement Officer Survey 2023 is that environmental and social governance (ESG) is now firmly on the corporate agenda. This year, it leapt right up the priority list, from seventh place to second. 

Elevating ESG, however, is tough to deliver. In practice, it is hugely dependent upon good supplier data, which is notoriously hard to achieve and maintain. Exploring why turns the spotlight to its source: suppliers. So, are suppliers themselves the reason we struggle with data?  

Supplier experience expert HICX’s CEO, Costas Xyloyiannis, says they do — but only reactively. Where we really should turn the spotlight, he believes, is toward the experience suppliers receive as they serve big manufacturing brands.  

Letting data live across teams will harm it 

The way in which big brands work with suppliers creates too many entry points for their data. Each digital tool which employees use to engage suppliers is an opening. And by default, suppliers deposit their data in whichever tool they’re expected to use.  

For example, when working with a major brand, suppliers are expected to use different tools for placing orders, sending compliance surveys, assessing performance, and doing many other tasks. Furthermore, most employees across the business work with suppliers in some way. Each time the parties work together in one of these tools, it stores the supplier’s data. Then, when we step back and look at all the data across the brand, as a whole, it is very compromised. 

When the master dataset is created this way, it gets peppered with duplicated, incomplete, and outdated entries. Regrettably in this format, it misguides decisions — including those which shape ESG activity.  

The best team to own supplier data is overrun 

Brands can reverse these weaknesses by addressing the data problem. But someone needs to do it. Despite so many teams contributing to and using supplier data, there is no one perfect owner for the job. 

There is a function, however, which is closest. Procurement. As it already runs the relationship with suppliers, chief procurement officers (CPOs) can probe adjacent issues — such as data.  

A consideration though, is that Procurement teams already have mandates, which they are stretched to deliver. Eating into the function’s bandwidth is the necessity to tackle inflation, demand surges, driver shortages, and other COVID-19-related issues. Also waiting for the function’s attention is digital transformation, an area in which it seriously lags.  

Put data at the heart of current strategies 

Looking at Deloitte’s latest survey results, there is an opportunity for CPOs to work smart. There is a clear path for Procurement to fit the brand’s data goal at the heart of its top two strategies: “increasing supplier collaboration” and “investing in digital transformation.” Supporting this approach is in the interest — and arguably the responsibility — of all C-suite executives.  

How then can fellow executives get involved? First, we can help Procurement’s collaboration strategy by reforming how every employee sees suppliers. Too often, suppliers are just a means to save costs. And while saving costs is important, it’s not everything. Untypically, cost savings slipped off the podium in this year’s survey, into fourth place. This shift in focus — away from squeezing suppliers and towards collaborating with them — will bode well for brands that want to perform in ESG. But only if everyone in the organization can adopt the mindset. 

If they do, brands can offer suppliers a better experience which will encourage them to contribute to improving data. It is human nature to want to give back. Further, we learnt in a recent HICX survey that suppliers are 20% more likely to “go the extra mile” for brands they rate as customers of choice. Therefore, it’s likely that suppliers will want to participate. 

But a willingness to hike data quality is not enough. In addition to company mindsets, brands must tackle a second obstacle: digital processes. 

Redefine what it means to digitize 

Next, we can help Procurement to revamp the tools through which everyone engages suppliers. We know that too many entry points pull down data quality. The opportunity, then, is to guide the way in which Procurement digitizes so that the brand and function can gain control. Thinking about processes in this way is real digital transformation. 

Today’s situation makes maintaining reliable data very hard. Any attempt to cleanse data is undermined by the inflow of new data from multiple sources. It’s like trying to clean the ocean. The rate at which new pollution enters the ocean outstrips most efforts to remove it. And in both cases, it makes sense to control the inflow.  

In a digital environment, this means fitting a solid data foundation. In practice, this is a central repository with one, monitored, front door through which all new data must enter. Master data can be sent to other tools. The rule however is that they can only borrow the data, and never alter it. Good data lives in this foundational repository, where it is looked after.  

A word of caution 

Be aware of quick fixes. A deeper look at the “multiple entry points” situation reveals a deeper integration challenge. Established tools, such as source-to-pay suites through which Procurement and Finance work with suppliers, don’t always mix well with newer tools on the market. One remedy is to use established suites fitted with newer features. But this fails to address the data quality goal. It reminds me of the famous quote by Henry Ford: If I had asked people what they wanted, they would have said faster horses. Using old suites fitted with new features is like using a faster horse. It’s a stopgap. Rather, let’s stop good data’s tendency to evade ESG leaders when they need it most, by tackling the underlying problems once and for all.  

Building for the future 

Truly digitizing, of course, gives suppliers a better experience too, which drives the collaboration goal—and sets in motion a virtuous cycle.  

Now, suppliers who once fed the ESG data problem can contribute to its solution. Leaders who help their CPOs to collaborate with suppliers and digitally transform, for the enterprise, can steer supplier behavior and keep good data. And this, as we know, is the fuel to ESG success.  

About the author 

Costas Xyloyiannis is co-founder and CEO of HICX, the leading supplier experience management solution. Costas founded HICX in 2012 to address the challenges of bad supplier data in the enterprise.  

He holds a Master’s degree in Computer Science from Imperial College London and has 20 years’ experience in helping some of the world’s largest companies to take control of their supplier data and deliver a superior supplier experience. 

He strongly believes in the importance of data and supplier-centricity, as a foundation for digital transformation in business, and is a regular speaker and contributor on this topic.  

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