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5.2.Change Drivers In The Business Environment
There are four other major forces that suppliers must take into consideration when dealing in business to business markets: customer expertise, sophistication and power; lack of market growth; process thinking; and time-based competition. Customer expertise, sophistication and power. Customers are becoming more and more demanding in their expectations of quality, reliability and compatibility. The growing desire for customization stems partly from a better knowledge base, facilitated by developments in communications and IT, and partly from the concentration of buying into fewer hands. Lack of market growth In many mature markets, such as North America and Europe, market saturation has been reached. This state is characterized by over-capacity, increased competition and eroding margins. Under these conditions, customers are calling for greater operational efficiencies and ‘value for money’ from a smaller portfolio of preferred suppliers.
A direct outgrowth of the technology explosion in information handling and electronic data interchange (EDI) has been the switch from a single-product approach to a systems orientation. The shift from marketing ready-made, tangible products to marketing by reputation, based on manufacturing capabilities and service delivery against exact client specifications, has fundamental implications for how companies organize to meet their customers’ purchasing requirements.
Time horizons continue to become more compressed while the pace of change accelerates. The development of business systems, such as flexible manufacturing and just-in-time (JIT) deliveries, has encouraged companies to compete in terms of the speed with which they can deliver products and services to the market place.
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