Making Changes

Increase Revenues By Improving B2B Capabilities – AMR
by: Jerry Liao

One of the hardest thing a company will go through is change, actually not just for companies but for all. Change is something people are afraid of because of its uncertainty – what’s going to happen? Will it be good? Or will it be bad?

For a company who is doing well, a minor and a calculated change might be acceptable especially if the change will bring more profit to the company. To comapnies who are having second thoughts in adding e-commerce to its corporate strategies, here’s a study that might help convince you to get into the B2B business:

AMR Research reported that 61 percent of consumer products companies increased revenue as a result of improved B2B initiatives. The survey established strong agreement among respondents on the importance of B2B capabilities in growing relationships with key retailer accounts. According to the study:

– 90 percent of average respondents cited that the strength of their B2B programme enables differentiation from their competitors;
– 95 percent of average respondents cited that the flexibility of their B2B programme is important to delivering a customised shopper experience;
– 93 percent of average respondents cited that the strength of their B2B programme is an important factor in getting more shelf space and new products on the shelf at key accounts; and
– 98 percent of average respondents cited that the flexibility of their B2B programme demonstrates to retailers the ease of doing business with them.

The AMR Research survey also found that by improving their B2B programmes, 67 percent of respondents experienced a reduction in costs; 61 percent reduced the costs to serve customers; and 59 percent improved cash-to-cash efficiency. Other findings addressed the proliferation and growth of B2B outsourcing among consumer products companies and the growing use of electronic B2B with small to mid-sized trading partners. For example, more than half of the companies surveyed plan to increase spending on B2B outsourcing initiatives by an average of 23 percent in 2008.

Lora Cecere of AMR Research said, “Often B2B initiatives are relegated to the IT department with a mantra of reducing costs. Based on this data, we feel that it is time for Line-of-Business managers to take more ownership of these programmes and take them more seriously in the building of demand networks that serve their key customers.”

Overall, the revenue growth and operational efficiencies attained through B2B e-commerce are driving increased levels of internal and external spending. According to AMR Research, 59 percent of the survey respondents plan to increase spending on B2B initiatives by an average of 21 percent in 2008. In addition, nearly half, 49 percent, of consumer product suppliers are trading electronically with their small to mid-sized retailers, with that number expected to increase to 53 percent over the next 18 months. The use of B2B e-commerce among consumer products companies is strong in the demand chain as well; 48 percent are exchanging electronic orders and invoices with direct materials suppliers, with that number expected to increase 5 percentage points in the next 18 months.

Today’s consumer products market is changing more rapidly than ever before. Retailers are demanding that suppliers accommodate their increasingly divergent business processes; consumers are demanding more frequent new product introductions and shareholders are demanding faster international expansion to capitalise on overseas growth markets. Even the largest consumer products companies are struggling to keep pace with the velocity of changes being thrust upon them. To address these demands, consumer products companies will be making significant investments in B2B spending and B2B outsourcing in 2008, giving them new capabilities, greater geographical reach and faster time to market for their products.

The 150 companies that participated in the survey range in size from approximately $250 million in revenue to more than $10 billion. They represent a variety of industry segments including apparel, media/consumer electronics, consumer packaged goods and food and beverage. The study was commissioned by GXS, a leading provider of business-to-business (B2B) e-commerce solutions.

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