Internet Usage Inefficient

Manufacturers could become up to 70 percent more profitable by fully integrating their Internet trading system with all their trading partners, according to a study released by Deloitte Research, the thought leadership arm of Deloitte Touche. In research carried out at 850 companies in 35 countries it was discovered that manufacturers concentrate their e-trading integration almost exclusively on the supply chain. This comes from a heritage of management who saw advantage coming solely from product centred elements, cost, quality and branding.

However, today the power has shifted to the customer and it is companies who can integrate with the customer, or demand chain system as well as the supply chain which will not only survive, but thrive. Companies with integrated supply chain relationships, are successful, but those with fully integrated supply and demand systems can enjoy greater shareholder value. The effect is greater for larger businesses and cost reductions gained by liking supply and demand can amount to as much as $2.

5 billion for companies such as Boeing. Digital loyalty networks allow companies to establish customer details and differentiate between individual accounts. This allows manufacturers to better manage the order-to-delivery process and target offerings to their customers on a cost-to-serve basis.

The recent investments many companies have made in customer databases are yielding greater access to information on customer habits and requirements. Allowing firms to prioritise capacity to suit order profitability – this emphasises the old adage that not all sales are valuable sales, only profitable sales are valuable sales. Loyalty networks will help develop business and provide an increase in market share of loyal customers with consistent demands over multiple, possibly infrequent customers with varying needs and demands, and resulting higher cost to serve ratios.

The report suggests that the automotive industry is at the forefront of the move to full integration, with Ford, General Motors and Daimler Chrysler streamlining their whole process through Internet trading exchanges. Exchanges which the tyre industry leaders are fast becoming familiar with..