We live in a world where we can see and be seen, talk and be talked about like never before. We can discover, connect, and collaborate with peers and partners across the street or around the globe more in ways that simply weren’t possible 10, five or even three years ago. We can glean insights and intelligence from entire networks that enable us to learn from the past, capitalize on the present and chart an effective course for the future—all in real time.
But business is moving faster than ever. And real time is no longer enough. To get and stay ahead of the competition, companies must not only sense the present, but also see the future and proactively shape it to their advantage. They must anticipate risks and trends in the market, and develop plans and adapt processes to execute on them before anyone else.
Fueled by business networks, innovative procurement organizations are helping to drive this transformation, seizing the future and creating advantage for their companies they never thought possible.
Leveraging input from real-time market dynamics and historical market trends from networks of partners and peers, they are predicting the future with accuracy. Analyzing the actions and results of other enterprises or individuals within their communities that were exposed to similar conditions in the past, they are assessing a myriad of potential actions and identifying those with the highest propensity for success. And they are capitalizing on these predictions by rapidly adapting businesses processes to execute the optimal action in advance of market changes or the competition.
Why? Because they recognize that what you can’t predict can hurt you. In today’s fast-paced, global economy, knowing that a key manufacturing site just caught fire and orders may go unfulfilled, or that a key supplier outsourced production to a manufacturer cited for workplace safety issues is unacceptable.
Companies that fail to sense potential market, commodity or supplier risks face not only higher costs, but also missed sales opportunities. Businesses without a clear view into their spend can miss opportunities to control their costs and more effectively manage their capital. That’s why, with increasing frequency, procurement organizations are plugging into business networks and mining the intelligence within them as an integral part of their strategies.
They’re teaming up with logistics, and combining in-the-moment purchasing data with historic trends
to predict stock-outs before they happen and taking advantage of direct replenishment. They’re identifying future risks in the sub-tier supply chain by analyzing real-time supplier performance inputs, such as change in payment status, loss of a key customer, change in leadership, commodity price or supply fluctuations, alongside historical results, and combining this data with recommendations for alternative suppliers from other like-buyers on the business network, to quickly mitigate them.
And they’re inspiring a predictive revolution that is transforming every function across the value chain.
Following procurement’s lead, marketing is gathering insights from business network transactions to identify prospects and develop optimal offers to reel them in. Think coupons delivered to the mobile devices of window shoppers as they gaze upon the merchandise on display. Sales departments are engaging customers wherever, whenever and however they want to buy—be it online or in physical stores. Engineering and product development are tapping into social sentiment, and retail or wholesale buying patterns to detect preferences for new products and features to bring the right products to market at the right time. Service organizations are leveraging real-time diagnostics information from Internet-connected products, and cross-referencing it with historical usage and wear patterns to predict future product issues, and head them off before they happen.
The benefits of predictive business are clear and quantifiable. So too are the risks of ignoring it. Everywhere you look, information, objects and activities are moving at incredible speeds. And companies are using technology to share what they do, buy, think and watch—all at the moment it is occurring. It’s a fundamental shift. And it’s driving the future of procurement.
There are going to be laggards and leaders in this brave new world. The laggards are content to process and react to information in real time. Leaders understand the need to move faster, and sense and predict things to drive smarter, better decisions and deliver the business of tomorrow today.
Socialize Work: Get the Eyes of the Crowd on Your Problem
Sometimes Big Data is the intelligence many humans together can bring to bear on shared problems. Sometimes, advantage comes from exposing the insight that one person has to someone else who needs it.
Supply chains are notorious for glitches—even more so today as they extend around the world. That makes visibility to problems anywhere, anytime essential. But when Tony Martins came on to Ratiopharm as the pharmaceutical firm’s vice president for supply chains, breakdowns were so invisible that management often first learned of them months after failure—when customers complained about overdue orders.
After Martins introduced collaboration software, glitches began surfacing in weeks, days, and then, hours.
“Individuals would post the problem and other individuals would solve the problem,” Martins told a reporter. With that new visibility, Ratiopharm improved on-time fulfillment from 82 percent of orders to 98 percent, and held it there for three years.
Optimize and Compete: COSCO’s Logistics Networks
Firms often face tough trade-offs at the margin: safety for speed, speed for accuracy, accuracy for volume. Instead of trading off one highly sought outcome for another, new data help firms get more of everything. They push the possibility frontiers out, optimize better, and get more value from the same or even a reduced input mix.
Take China’s Ocean Shipping Company (COSCO). The company faced a quandary. Its global distribution network was growing by acquisition. Managing for cost, COSCO had to reshape and resize networks and nodes to take best advantage of the new flows now possible.
But COSCO had more goals in mind from the acquisitions—from great customer service to reduced carbon footprint. Modeling with real-time data on thousands of flows, products and customers, COSCO struck gold. It closed 60 of 100 distribution centers without, it reported, losing service quality. It also reduced logistics costs by 23 percent and reduced carbon emission by 15 percent—or about 100,000 tons annually.
“We see the work we’ve done to optimize our supply chain as a win-win proposition,” COSCO’s chief supply chain officer told reporters. “We are stronger competitively. And better able to meet our goal of corporate social responsibility as we grow.”