The e-spin on supply and demand

My rare glimpse at a TV commercial recently surprised me by underscoring the ever-shortening distance between consumer and manufacturer and, more significantly, the expectation by consumers that this will be to their benefit. It showed a car in a production line being painted red in response to a couple’s order at a dealer. The paint applicator halted in mid-spray when the man suggested that maybe another colour would be better, then resumed when he let himself be overruled by his female companion who flashed her matching red purse to indicate her colour preference. To those of us who have been watching the automotive industry over the years streamline the supply chain to make the legions of auto-related manufacturers more responsive to each other and the end consumers, that scenario seems only mildly far-fetched.

InfoWorld journalist Ephraim Schwartz in his article “Putting the squeeze on suppliers” described another recent commercial that depicted a small producer of bananas outbidding a giant food conglomerate for business. He recalls that the giant food producer, totally befuddled as he watches the price of produce drop, shouts, “How can someone sell bananas at cost?” while the camera switches to the banana plantation where one farmer sits at a desktop PC taking orders.

Perhaps this commercial is closer to today’s truth and, as Schwartz points out, may reflect the reality of e-business benefits for smaller suppliers.

Later in his article, Schwartz describes Awrey Bakeries Inc., a Livonia, Mich.-based baked goods supplier to restaurants and institutions, as being pressured to join at least two and possibly three major food service industry exchanges. The entry fees and set-up costs are a tough sell for such a mid-market manufacturer, according Awrey’s director of IT Marty Carrier. “It’s a myth how efficient the exchanges are right now,” says Carrier.

Schwartz reports that Carrier does believe that everyone benefits when the supplier can watch the inventory levels and make deliveries without the customer getting involved. “In a perfect world if our systems are linked, as soon as our schedule changes an order is sent to the supplier,” he quotes Carrier. Schwartz continues: In two to three years all actions will generate from one source, the ultimate or end customer, Carrier says. “That is what we are all shooting for.”

That word all has an inclusive global ring to it that must strike a daunting knell to the many companies still wishing for the days of success through product differentiation.

Even if it is just confirming shipping dates, sharing information at electronic speed along a supply chain with partners who were competitors yesterday and could be again tomorrow is the way of doing business in a global market.

The technology required to participate without exposing your valuable competitive secrets, or opening your company to a crippling cyber attack, is gradually becoming more affordable and friendly. But, be careful. Even the commercial writers know that a lot of hype and unrealistic expectations abound.