SDCExec.com |

New York  February 12, 2002  "Collaboration" may have been the most overused marketing tagline of 2001, but beyond the hype, global manufacturers moving to collaborative, relationship-based networks of trading partners are actually proving more profitable than those still employing traditional supply chains, according to a new study that examines value chain networks in the technology sector.

The study, from Deloitte Research, a division of consulting companies Deloitte & Touche and Deloitte Consulting, highlights the benefits of what the consultants term "digital loyalty networks." Such networks represent a new type of business model, where partnerships of companies provide a complement of products and services to meet their customers' needs in a profitable manner, one customer at a time, Deloitte argues.

What does a digital loyalty network look like? As an example, Deloitte cites a computer hardware company that partners with a software company and a management consulting company to solve a customer's need in a given area, such as human resources, supply chain management or manufacturing. The partners collaborate to deliver  for each customer  a superior, differentiated experience that meshes with that customer's unique requirements. By solving a customer's need as a collective group, the partnership creates a loyal customer, Deloitte argues.

As a result, the consultants conclude that companies that create and maintain "digital loyalty networks" are 81 percent more profitable than those with below-average supply chain collaboration and sub-par customer loyalty.

Released today, the report, entitled, "Competing on Collaborative Customer Solutions: Differentiation in High-Tech Digital Loyalty Networks," also showed that companies with loyalty networks are significantly more successful than companies with excellent supply chain integration but mediocre customer loyalty. In fact, they are twice as profitable and up to four times as likely to show superior shareholder value, sales growth, market share and return on assets.

"The complexity of technology has made it virtually impossible for a single company to be everything to its customers," said Doug Tuttle, global high-tech leader at Deloitte Consulting. "The technology companies who succeed in the maturing technology marketplace will be those that build and maintain 'digital loyalty networks,'"

Citing a technology industry example, Jeff Balentine, industry leader for Deloitte & Touche's Technology, Media & Telecommunications (TMT) Group, equated the supply chain in a digital loyalty network to an ecosystem: "The supply chain becomes an ecosystem, with companies dynamically working with key partners to provide industry vertical solutions, not just hardware and software. This collaborative approach creates a new value proposition that will differentiate the companies that adopt the digital loyalty network business model and help build unbreakable customer loyalty."