The Growing Importance of Commerce Today: Why Supply Chain Leaders Should Engage
By: Jim Tompkins – Chief Executive Officer, Tompkins International
Gene Tyndall – Chief Strategy Officer, Tompkins International
There are several factors that exist today that collectively drive companies to think more about Commerce than ever before. We at Tompkins International have recently reorganized into seven Business Units and have adopted an ecosystem model for the overall enterprise. The model defines our business into four core competencies Strategy, Commerce, Logistics, and Technology. The inclusion of Commerce is unusual; yet, this reflects the services and products companies need today, along with the other processes, in order to achieve profitable growth.
Tompkins International has included “SELL” in our mega processes supply chain model (PLAN, BUY, MAKE, MOVE, DISTRIBUTE, SELL), and our focus on these has helped companies achieve profitable growth. Many supply chain managers, however, have virtually ignored the critical SELL process, leaving this up to sales, merchandising, or other customer-focused business processes.
It is important to consider why Commerce has become a critical business process that involves supply chains more than ever before. The new Commerce – really “Digital Commerce” includes functions that are more the responsibility of supply chain managers than others in typical companies. This discussion provides guidelines for improving the supply chain operating models for Digital Commerce in order to facilitate profitable growth.
Digital Commerce in Today’s World of Business
This discussion is intended to explain the value of Commerce today, and why business and supply chain leaders need to step up to get involved in your company’s customer programs. Customer success is no longer the exclusive domain of sales and merchandising. It has become a critical success factor as the world of online business transactions grows in many directions.
The term eCommerce has permeated the language of business primarily due to the amazing growth of online buying and eFulfillment. Indeed, the news is replete with plans, surveys, and results that measure the extraordinary growth of this sales channel.
For example, recent reports show:
- eCommerce sales are reported at 15% of total and 27% increase in 2018.
- Amazon now does 43% of all online purchases.
- Most companies experience 15% and higher growth.
- Costco eCommerce sales are up 22%.
- Walmart totals are disappointing at 3% but the increase in 2018 was 20%, with Gross Merchandising Value up 17%, indicating huge potential if its customer base begins to use this channel more often.
These growth numbers reflect the expansion of “unichannels” and Digital Commerce. We are seeing infinite capacity, as customers can buy anywhere and have it delivered anywhere they choose.
It is commonly known that companies that do not embrace online sales and reinvent their businesses to accommodate and facilitate growth, first stagnate, then lead to massive store closings and bankruptcy.
We also note that smart companies are beginning to include supply chain leaders in board positions and C-Suite positions. The Chief Supply Chain Officer title is expanding in more and more companies. More importantly, we are beginning to see supply chain experts being appointed into COO, CEO, and other top executive positions. Along with these talent changes, smart companies are giving more authority and responsibility to supply chain teams for leading changes in their operations strategies, distribution networks, inventory positioning, and technology decisions.
While these changes are not yet evident at every company, it is becoming more and more clear that they are fundamental for a business’s success in today’s world. Focused attention to Commerce is becoming an industry imperative.
Improving Commerce to Enable Profitable Growth
The fundamental need in all companies is the adoption of passion and resources toward fulfilling customer needs and demands. We have experienced periods in the past that have escalated customer success to the executive agenda. However, few companies have committed so much to meeting customer needs in services and innovation. The goals of innovation have been assigned to products, rather than services, and there are numerous examples of this Apple, Intel, Samsung, Johnson & Johnson, Nike, Colgate-Palmolive, and selected auto companies.
What is needed in today’s customer era, is focused strategies for gaining customer orders, increasing their reasons to buy, and providing tailored services that delight customers, whether with personalization or with market-wide innovations.
One of the critical needs today is SPEED. Increasing speed to market, decreasing order-to-cash time, and decreasing what Google refers to as “site speed”, stating that 53% of shoppers will abandon a website if it takes more than three seconds to load. Of course, SPEED must be interconnected with Commerce objectives.
Several important services today are required by Commerce:
- Distribution network design: the evaluation of options today must enable customer success; while in the past the business objective has been cost management.
- Inventory positioning: distributing the right inventories in the right locations and maintaining the right levels for “Flow” is a critical success factor.
- Channel design and management: new methods are required for understanding how channels work and how partners integrate.
- Cross-border movements: planning and managing product flows, along with accommodating changes, requires collaboration to achieve speed and customer needs.
- Digital supply chains and process integration: conversions to digital methods facilitate speed and also improve collaboration, which is necessary for today’s Commerce.
Last, but far from least, is the strategic value of resource reallocation. Re-thinking the executive agenda for capital investments, business priorities, and goal definition can often payoff even without new products or innovative new services. With the value creation potential of Commerce, it is increasingly important to redefine the company strategies, and include supply chain along with others to maximize how the business competes.
This discussion is intended to explain the value of Commerce in today’s world of business and why all supply chain leaders need to step up to get involved in your company’s customer programs. Customer service is no longer the exclusive domain of sales and merchandising. It has become a critical success factor as the world of online business transactions grows in many directions.
All businesses today must focus on Commerce in addition to Strategy, Logistics, and Technology. The very survival of most companies is at stake. The profitable growth of all companies is dependent on effective and fast supply chains in achieving customer success more than ever before, as well as the urgent understanding of Digital Commerce and its importance and value.