Sunday, 14 December 2008
Draft Article for the Marketer (comments?)
Business to Business: the Heart of the Revolution?
Walmart grabs the headlines with its sustainability policies, but it is their suppliers - not just of the goods they stock - but also energy, buildings, transportation and so on, who have to meet these targets. We have seen a quiet revolution over the last ten years in the corporate supply chain. My prediction for 2009 is that we will see the sustainability/efficiency revolution now diffusing into smaller businesses; often in the form of aggregators, internet exchanges and buying co-operatives which can bring your non-core functions ‘Fortune 500’ level efficiency and costs. Why pay more, after all?
Energy. Larger companies such as BT, Ford and Timberland are securing their energy costs and supply, by investing in building wind farms and similar. The global IT industry, is a bigger user of energy than the global airline industry (according to Gartner research). As the balance of costs shifts from hardware to energy use, we see many more initiatives both on energy (Google’s Renewable Energy Cheaper than Coal) and also on energy using technology; with the likes of IBM and Cisco reasserting the need to buy on lifetime cost and impact, not price.
Communication and transportation. Large companies can save millions in costs, plus a corresponding amount of time, by building more flexibility and remote working tools, and less travel into their business. Supply chain transportation is in revolution, with moves to manufacture closer to markets, to rationalise the movement of goods and also to build ‘a second supply chain’ to bring back and re-use valuable materials in used goods.
Built environment. Companies are learning that sustainable working environments are healthier, more productive and cheaper to run. The standards used to be set by developers, seeking to minimise their costs, but now – for instance with LEED building standards – a much more user centred (and sustainable) approach is becoming the norm.
Printing and packaging. Printing is the fifth most harmful industry; although improving rapidly and some British printers (eg Seacourt) are among the most sustainable in the world. Don’t expect 2009 to be an easy year for direct mail, packaging, point of sale, but correspondingly look for many breakthrough innovations, ranging from hyper efficient post office vehicles, through to re-usable packaging and stationary.
Sourcing. Sustainable sourcing of all materials is now in the spotlight. Witness the protests over palm oil, biofuels, water and so on – this is ‘the new child labour’. Business has run out of places in the world to go to get costs down and avoid regulation. 2009 could also be the year when business models that are unsustainable start to get exposed. And with costs and financing already under strain, who can afford to get found out?
The network procurement revolution is at least as big a deal as ‘the long tail’ in consumer markets. Its implications include open innovation, reducing barriers to entry to firms of any size, increasing co-operation between buyer and seller, and avoiding waste by finding new uses for it in the business ecosystem – for instance wood waste is already used for products ranging from equestrian flooring to biofuels.
Sharing and barter. The same networks that enable open procurement also hold the potential for businesses to cooperate and share resources. The clustering of businesses - either in physical locales or online communities of interest - can enable them to co-operate in purchase power aggregation, barter, trading in surplus stock and resources, sharing delivery vehicles and many other such ways.