Business to consumer (B2C) firms make most of the headlines when it comes to digital business. From books to travel to banking, consumers have given a thumbs up to the digital channel, in turn unleashing new business models (e.g. Amazon, Kayak, Atom) that disrupt the established order.
Business to business (B2B) sectors (e.g., resources, manufacturing, services) don’t get the same attention. Their brands are less appealing to headline writers. And on average these firms have experienced lower magnitude digitally-driven disruption to date.
But beneath the surface, B2B digital has been gathering pace. Buyers demand the same flawless digital interface from their B2B suppliers as they get at home from Apple or Amazon…and suppliers have realised that SG&A costs can be halved through targeted automation. B2B ecommerce in the US is expected to be double B2C ecommerce by 2020, according to Forrester.
But digital has a lot more to offer B2B players than simply e-commerce. The Internet of Things (networks of connected sensors) can improve asset utilisation (e.g., using vibration sensors to schedule equipment maintenance before catastrophic failure). Machine learning techniques can drive improved yield (e.g., tuning parameters used during production). Worker productivity can we improved by using sensors to track their physical movement during manufacturing processes. Intelligent computer aided design (CAD) software can almost remove humans from some design processes.
More fundamentally, digital in B2B is starting to disrupt entire business models. Alibaba’s chemical market for example allows manufacturers such as BASF to cut out traditional intermediaries. GE’s Predix and John Deere’s Farmsight platforms are enabling a shift from product to service business models.
Digital is already having a big impact on B2B sectors. But many B2B firms are just getting started with their response to these important shifts. Expect a lot more action to come.