22 July 2014 | Ben Bird
Consumers are increasingly likely to reach for their tablet or smartphone to make their next purchase and the world of professional procurement is no different. The inexorable rise of Generation Y and Z is bringing with it changes in approach that have the potential to build stronger businesses and transform B2B buying behaviour.
These so-called digital natives are bringing with them a preference for sourcing and buying goods and services online, as well as a drive to collaborate and take the initiative. Research into the habits of Gen-Zers, for example, has revealed they are more reliant on technology than their predecessors and are almost always “connected”.
For procurement professionals, the process for building and maintaining a supply base is no longer rooted in legacy relationships, trudging around trade shows and face-to-face meetings. The modern procurement professional would rather utilise a vast range of online resources and communication methods to identify and establish the right supply partnerships. These partnerships tend to be more agile in nature and are focused on much more than just delivering today’s products at today’s prices.
The question that many businesses must contend with, however, is how much they should embrace the digital behaviours of the post-millennial generation and if so, how quickly? When a supply chain is so integral to shaping a company’s competitive edge – for example, by enabling faster outbound deliveries, quicker production rates or optimising inventory control – is there really a willingness to make supply processes more visible and collaborative?
The transparency that comes with doing business online can be advantageous, but there could also be a degree of risk. There’s no doubt when it comes to sourcing suppliers, sites like Alibaba have made the process much easier and quicker. Once suppliers are in place, however, will these partnerships stand the test of time and could they be developed to add value to the supply chain by working more collaboratively, for example? Such relationships may bring benefits but it may also be important to protect market knowledge and insight to retain a competitive edge.
Suppliers are much more likely to engage with customers that are open about their strategic future from the start, therefore putting the relationship on a collaborative footing.
A supplier’s willingness to engage in this way will always increase if there are limited competing organisations within the current supply chain. Furthermore, these types of relationships need to be created in an effective and mutually beneficial way and move away from the stereotypical buyer negotiations, which are focused on cost reduction. For millennials and post-millennials, buying decisions are more likely to be driven by value for money or a supplier’s specific value-added proposition.
If these mitigating factors are addressed at the outset, businesses will find it easier to adopt innovative online processes that allow for the sharing of more real-time data. The increased transparency that such systems allow has enormous potential to increase efficiency and drive value across the supply chain. Online open innovation networks could be established, for example, or more agile processes could be developed to react to consumer demand for customisation.
For the millennial and post-millennial generations, collaboration is considered a critical part of supporting business innovation and getting the best out of supply chains. Businesses need to take this into account now and aim to find ways of working together more closely without compromising market position or significantly increasing risks.
☛ Ben Bird is a director at Vendigital