Editor’s Note. Manufacturers engaged in business-to-business ecommerce are not as far along as product makers doing business-to-consumer ecommerce. But the gap is shrinking, primarily because of the pace of digital transformation propelled by COVID-19, says Eskander Yavar, the national leader of management advisory services and the manufacturing practice at consulting firm BDO USA.
In this question-and-answer article with Digital Commerce 360, Yavar talks about the status of manufacturing, digital technology, and ecommerce transformation—and what lies ahead.
DC 360: B2B ecommerce is accelerating on multiple levels right now, not the least of which is growth in annual sales. In general, where are manufacturers being impacted and why?
Yavar: Despite the recent rise in B2B ecommerce, especially during the pandemic, overall B2B companies are still very far behind where we are on the B2C side. For example, retail and consumer products companies are far ahead of manufacturing companies when it comes to B2B ecommerce. This is largely because these are the industries that trailblazed ecommerce for consumers and are now following that model for their B2B commerce.
Manufacturers who were already ahead of their competitors when it came to digital procurement capabilities pre-COVID-19 had a leg up once the pandemic hit. With a B2B ecommerce platform and automation, routine purchasing orders can be fulfilled automatically according to the customer’s need. When you have global disruption due to events like COVID-19, it is much easier to fulfill orders if much of this process is already automated. This enables businesses to get products to their customers faster, maintain operations and streamline costs.
DC 360: What did COVID 19 teach manufacturers about digital commerce in 2020? What hard lessons should they have learned and why?
Yavar: The biggest lesson in 2020 for manufacturers is that, if you do not transform, your business will not be around for much longer. COVID-19 was a catalyst for digital adoption and transformation. 30% of manufacturers surveyed by BDO took on direct-to-consumer sales in 2020, while another 31% plan to do so in 2021, showing how this disruption has jolted the industry forward. However, the companies that already had some of these digital solutions in place were at a huge advantage going into the pandemic, especially when it came to things like digital procurement and supply chain and operations.
The pandemic was also a boon for digital commerce on the consumer side, with things like curbside pickup and buy online, pick up in store. We have not seen this on the B2B side yet, but it will be interesting to see how these trends trickle down and impact B2B ecommerce.
DC 360: What are the biggest B2B ecommerce challenges facing manufacturers, and how can they overcome them?
Yavar: The biggest challenge is that too few manufacturers are doing B2B ecommerce. The ones that are, are typically not delivering the same customer experience and digital interfaces expected on the B2C side. There is still an opportunity for companies to be a pioneer when it comes to B2B ecommerce. Companies that distribute consumer products are doing a bit better because they are more familiar with ecommerce on the B2C side and can apply lessons learned to B2B.
COVID-19 was a catalyst for more business activities going virtual overall, and I expect that will begin to carry over to B2B ecommerce. For example, if car companies are redesigning their products, they are having these engineering design conversations with their suppliers over video chat, when these used to be in-person conversations. As companies get more comfortable with discussing these highly technical, crucial details virtually, they are going to become more comfortable ordering parts and materials through ecommerce platforms as well.
DC 360: It is still a confusing time for many manufacturers, and many are still unsure how to identify the best path to online growth? What should they be doing?
Yavar: For most manufacturers, the goal is really business growth through digital systems that streamline the manufacturing process, optimize operations, and extend the supply chain to customer demand and consumption models. This should be the most important business goal, rather than just pursuing online growth.
For direct-to-consumer manufacturers, they will need to make sure they are addressing all the above, plus ensure they have a digital presence that presents their product and provides a good customer experience. This includes having a store that allows for discovery, comparison reviews and personalized recommendations. To achieve this, they will need to have the right technology, including things like IoT, AI, machine learning, cloud computing, 5G, and more. That also includes simple UI/UX-based applications, like dashboards, and enterprise resource planning (ERP) and customer relationship management (CRM) systems that can enable data-driven analysis and decision-making.
In addition to leveraging technology to improve the customer experience, manufactures will need to develop the right processes. That includes understanding their data to improve decision-making and focus on predicting situations and process lifecycles. Implementing sensors and monitoring equipment will help prevent disruptions and machine downtime. Portals and models can predict and manage sourcing and lead times. Measurements and process engineering can connect the supply chain and logistics functions.
Once these processes are in place, manufacturers can begin to improve performance when it comes to ecommerce and business growth.
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