Monday, 26 January 2009

The clouds of Supply and Demand

Much has been written about the development of new business models with the post technological world of the internet.  We only have to look back just 10 years to see a world that was running head long into an interconnected evolution where companies seeing the light of web screens becoming a new communications channel for business sought to figure out how to establish a platform and a presence in the new digital world.  I often smile when watching some late night cop show from the early 1990’s as one of the actors pulls out the high tech “cell phone” that resembles more the size of a shoe box much less a portable communications device. How things have changed.

What  has changed above many other aspects apart from the physical devices is the variety of choice that we see today in the consumer and business marketplace.  You only have to look at the abundance of content and features in business products in all fields of industry to see that making a choice of how to build or  deliver a new product or service is open to many possibilities.

Yet these choices are also difficult to see the underlying trends as each new event of business and technology arrives. Just look at the evolution of such examples as cable and broadband services or the development of healthcare  services or the regional impact of workforce skills and costs in how the underlying dynamics of the marketplace is constantly shifting from the past, today and future.

How do companies position themselves to leverage the dynamics of the market and the evolution or sometime revolutionary imperatives of new or existing challenges.

Cloudy Capabilities

What we see is the boundaries of supply and demand are blurring into a new way of executing business. Where once the supply chain of products and services may have been a singular or group of defined value added connections between customers and suppliers and intermediates, this is now less obvious, less clear.

Some of the characteristics emerging include:

·         Bi directional  nature of products and services

o   Products and services are nolonger just defined, designed and built in a “left to right fashion” of new product development. The collaboration of intermediates, stakeholders and the end customer themselves is part of the process.

·         Redefining what are assets

o   The definition of what it means to own and manage “assets” will evolve into something that is more than the tangible physical materials, features and knowledge. It will include the relationships and location of the assets in a virtual sense and legal property sense.   

·         Scope centricity shifts

o   The location and market place is shifting from the regional and global early adopter model into something that is more marketplace-chain like which described to total value of the business relationships in terms of the interrelatedness of the market participants rather than the individual stakeholders and participant players.

·         Modularity of causality

o   The choice of products and services will be seen more in the light of their modularity and connectedness to other related services and products and the business operating context than as stand alone entities. What will be essential is to understand the split between what is business capabilities and how those capabilities are federated and delivered.

You only have to look at the open source market in how this field has lead many new innovative business models that are challenging some of the early conceived ideas of ownership and exchange. Some radical models have emerged which have pushed the boundary of developing solutions and provisioning which has created blended hybrid and secular services from traditional business legal boundaries.

I was never more reminded of this recently In a meeting with a customer who half way through asked if the infrastructure we had could be used for “their” products and services to their end customers and intermediates. The supplier capability becomes the product and service and the customer demand.  How this has changed the earlier views of Vendor managed Inventory (VMI), Just in time (JIT) and Collaborative Planning, Forecasting and Replenishment (CPFR)  Clearly a new order of value management is emerging and at hand.  

Cloudy Metrics

What this means is that the metrics of competitiveness in this new order are changing and companies need to adapt to measure and stimulate these through end to end innovation; proactive governance leadership and effective well chosen partnerships and vendors.

·         Knowledge management

o   will be key  as this boundary is blurring between participants and associates inside and outside of company operating models and industry markets

·         Speed to market

o   will be a key measure as the transactional cost to execute the capex to opex transition of the product and service will be measured in terms of its effectivess and efficiency of the end business process, not just its inception and “to the customer door” only.   

·         Asset Intelligence leverage and sprawl management

o   As assets become redefined in terms of the higher value addition of the intelligence defined and derived capabilities and services associated with the utilitarian part of the exchange; how the efficiency of these “ mobile” assets will be measured in terms of how effective they can be access and leveraged and minimalized to prevent excessive redundance of capacity versus sustainable service performance. The cost of supply and cost of quality of service will have new extended metrics of service.  

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