Editor’s note: United States manufacturing is not at crossroads with implementing widespread digital commerce. Manufacturers already are well down the path to serving an increasingly digital-first customer base. But the pace of implementation is uneven. There are about 243,000 manufacturers of all types in the US and last year, collectively, these companies generated total sales of $6.036 trillion, according to the US Department of Commerce. Of that total, digital sales accounted for $4.10 trillion — 68% — of all sales. But that figure is dominated by electronic data interchange. B2B ecommerce remains the fastest-growing channel, yet the rollout of digital commerce is sporadic and varies widely by industry. In this question-and-answer story, Maurice Liddell, principal and national manufacturing industry leader at management, accounting and consulting firm BDO, looks at why many manufacturers have their work cut out implementing and expanding B2B ecommerce.
Q: Is B2B digital commerce now considered mainstream business by US manufacturers?
Liddell: While we have seen a significant increase in manufacturers focusing on digital commerce, they have a long way to go before it can be considered mainstream.
The pandemic has forced all companies to adapt their sales channels to facilitate a remote workforce and no-contact sales approach. Manufacturers are taking a page out of retail’s handbook and are adopting electronic sales mechanisms.
Many manufacturers are adding adaptation of B2B digital commerce to their strategic plans and, as a result, are ramping up their implementation of technologies to support digital commerce.
While organizations vary in their development of these capabilities, manufacturing as an industry is not yet mature in this journey.
Q: How, in general, are manufacturers succeeding with expanding ecommerce in the wake of supply chain disruption, COVID and other obstacles?
Liddell: COVID-19 was the catalyst that forced manufacturers to re-think their sales channels and adopt solutions to facilitate digital sales. While retail and financial services have been comfortable with ecommerce for many years, this is a new capability for many manufacturers.
As identified in BDO’s 2022 Manufacturing CFO Outlook survey, many organizations believe strengthening the customer experience by adopting transformative technology is essential for business growth.
We often hear from manufacturing leaders that they need to provide end-to-end visibility of current orders and past orders to their customers – think of the Domino’s Pizza Tracker, but for procurement. However, many organizations are saddled with legacy systems, making it difficult to integrate end-to-end order tracking effectively.
The organizations that are digitally advanced and have implemented modern systems, such as cloud and ERP, face fewer challenges to achieving ecommerce success, compared to legacy manufacturers.
Modern technological business systems that integrate with suppliers and 3PL providers, coupled with plant floor visibility, are the necessary infrastructure foundations to support robust ecommerce solutions.
Q: What significant challenges remain for manufacturers to expedite b2b ecommerce and how are they overcoming them?
Liddell: While legacy technology is one obstacle on the path to B2B ecommerce, the business’ organization, culture, manual processes, and workforce enablement can compound issues. B2B digital commerce is a new sales channel for many organizations.
Trying to roll operations and management under existing sales and operations structures will present significant challenges. These organizations are typically not well equipped to employee digital marketing techniques, including ADA compliance and WCAG (Web Content Accessibility Guidelines).
Additionally, data privacy, cybersecurity, and business resilience elements must all be addressed. An unsophisticated organization is more likely to succeed by acquiring experienced and capable leaders and supporting them with proper resources and organizational structure.
Additionally, organizational change management will need to be employed, as a legacy culture may reward achieving certain performance KPIs, which may not be applicable to an electronic sales channel.
Traditional customer support provided customers with an email address or phone number to obtain order status. These solutions allowed for the use of slow and manual processes by customer service to retrieve the requested information and provide an email or call-back response.
These methods will not meet customer needs in an ecommerce channel. To provide an automated order update solution, like the Domino’s Pizza Tracker, a digital thread must exist to connect the various systems, departments, suppliers, and logistics providers to create an end-to-end flow of information pertinent to the customer and their orders.
Finally, the customer support team must be trained on how to address common technology-related issues their customers may encounter, how to support new customer interaction channels (e.g., live chat), and how to interact with new systems creating the digital thread throughout operations.
Q: How successful, in general, are manufacturers in meeting the user experience expectations of digital-first buyers?
Liddell: The Amazon effect has established a new set of expectations for consumers and businesses alike. Consumers expect to have historic order details, online order tracking, technology enabled support (e.g., live chat, re-order, returns, product availability) and the ability to conduct commerce entirely online.
The manufacturing ecommerce maturity journey typically begins by implementing online sales channels with an order catalog and shopping cart that is minimally integrated with Sales, Inventory & Operations Planning (SIOP) systems.
Thus, manual processes or low-fidelity interfaces are used to fulfill orders. As organizations mature in their ecommerce journey, a digital thread is created between the sales channel, the back-end fulfillment systems, suppliers, and logistics providers to provide end-to-end visibility of an order.
The digital thread can only exist if smart integrations exist between the various systems and organizations of the supply chain. Digitally mature companies are more likely than legacy manufacturers to be weaving the digital thread and thus, will be able to better meet the needs and expectations of digital-first customers.
Maurice Liddell is a principal in BDO Digital, facilitating innovative uses of technology for addressing clients’ business problems. In addition, Liddell is BDO’s Distributed Ledger Technology (DLT). He develops cross-disciplined DLT teams to address the entire business lifecycle from ideation to execution.
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