I am

CEO

INDUSTRY 4.0 IS IMPACTING YOUR B2B MARKET

I am

CEO

INDUSTRY 4.0 IS IMPACTING YOUR B2B MARKET

The future of your company is not hidden in your financial numbers. It will be based on the future design of the market. Since that design will change several times, supply chain redesign will be your lifetime job.

Many people believe Industry 4.0 is all about increasing internal efficiency and providing a better answer to (yesterday’s) challenges. The most important impact of I4.0, however, is not within the walls of your company. Industry 4.0 happens outside, on the market. Industry 4.0 is changing the game of the market in every sector – and definitely when you are into B2B. CEO’s who want to prepare for I4.0, should therefore be careful not to spend too much time with technology providers. Go see the market first. And go all the way downstream towards the final consumer of each supply chain in which you play some role of importance. Go see down-hill to the very end, even if the consumers are three, four, five, or more stages away from your business. Evaluate the supply chain you are currently working in, and simulate the effects of several potential new supply chain designs tomorrow. That’s where the future of your company is. This is no exact science, though, and there is only one certainty: thanks to I4.0, the future of your company is not where it is today.

DERIVED DEMAND REQUIRES YOU TO LOOK BEYOND YOUR CLIENTS

Allow me five minutes of theory to better understand why the above statements are true. It all is caused by the very nature of B2B marketing, the so-called “derived demand”, i.e. market demand that depends on another market demand. B2C markets have a direct demand: a series of customers need something and that’s your demand. Easy, clear. And very different from B2B. In B2B, your company’s demand depends on the demand of your company’s customers. Their demand on their turn, depends on the demand of their customers, and if their customers are businesses too, their customers’ demand again depends on … etc. That’s a fundamentally different ballgame.

THE FUTURE WILL NOT BE EXTRAPOLATED FROM LAST YEAR’S BALANCE SHEET

When the supply chain design changes, the demand could remain stable, or it could grow along with your customer’s demand, or it could be gone like melting snow, even while your (old) customers are attaining skyrocketing numbers. Derived demand in combination with a changing supply chain design, is why you cannot predict the future of your company based on the information that is contained within the walls of your company and its information systems. So, be careful with extrapolations. Do not overvalue annual forecasting and budgeting based on the numbers of the past three years. Although classic financial planning is useful for sizing and simulation purposes, the future business numbers are hidden in the magic of the undiscovered supply chains.

SUPPLY CHAIN RE-DESIGN WILL BE A LIFELONG TASK FOR THE CEO

When the supply chain design remains stable, CEO’s already have a tough day-to-day struggle to safeguard their numbers and keep on proving they can add value to their box in the existing supply chain, using sales & marketing and sourcing & purchasing as their outward-bound connectors to the other boxes up and down the value stream. But when the supply chain design is changed, there is no way a CEO can safeguard the numbers by merely looking at the internal processes and the connectors. All of a sudden, one has to look for new value chains. And since those designs will change drastically several times over the next decades, this will require a constant attention from the top.

Jan Lagast is managing partner of Forte, European specialists in industrial sales & marketing 4.0. Forte offers career and team mentoring for sales & marketing managers, executive education to enlighten their bosses, and help communications managers create strong industrial brands that are real ecosystem-magnets. Forte boosts your readiness for the commercial side of industry 4.0.