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In today’s  economy, where even the most local markets face global competition, “innovative”  is a term many companies use—and sometimes overuse—to describe themselves as  they seek differentiation. Yet they do so with good reason: The pressure to  bring unique products to market rapidly and cheaply has never been greater. “In  the coming years, innovation is going to be a huge driver and necessity in  order for firms to gain ground and increase revenue,” notes Heather Ashton,  research manager for manufacturing and retail insights at International  Data Corporation (IDC).i

 

 

The source  of most innovations is not the invention of a completely new product or method,  but through combining ideas, processes, or technologies in ways that produce  new outcomes. In this environment, having the ability to support innovation  through effective collaboration with your customers can make the difference  between success and failure. It also gives you a crucial way to differentiate  yourself at a time when the specter of commoditization looms large (and has  already put many sellers out of business). Read on to learn why and how becoming  more collaborative can help you ride the innovation wave instead of being  swamped by it.

 

 

 

 

Pressure points and trends: Why collaborative innovation matters


So what’s behind the ever-escalating need for buyers and  sellers to collaborate—and innovate—better? Multiple market forces play a role:


  • Globalization: As buyers  extend their supply chains worldwide to find efficient, qualified sellers, their  risk rises as well. Collaboration across geographies is supported more  effectively through commerce and product development technologies that help  both sides streamline communication, synchronize tasks, and stay on top of  performance changes throughout production cycles—making it easier to tune  product capabilities to market needs on a global scale.


  • Intensifying  competition: As knowledge and technologies become ubiquitous, your competitors everywhere  are empowered the same as you. Fortunately, buyers who work closely with  sellers can find the increased agility needed in product development to respond  to this competitive pressure, whose leading drivers includeii:


    • The need to launch products quickly: 61%
    • Customer demand for lower-cost products/price  competition: 47%
    • The need to capitalize on new market opportunities: 37%
    • The need to win customers with products tailored to  their needs: 37%
    • The need for flexibility to develop/manufacture in  multiple supply chain/factory locations: 20%

 

  • Outsourcing  of competencies: Companies increasingly need to leverage external  resources rather than keeping all their development and testing in-house,  especially where they lack internal expertise. And for a growing percentage of  products, sellers are taking on more design responsibility in addition to  manufacturing. At the same time, effective deployment of outsourcing depends on  collaborative technologies that can enable processes—often in real time—across development cycles and supply chains.


  • The digital revolution is driving transformation in not just products and  services, but markets and their delivery mechanisms as well. For example, segments  such as books, games, and media are becoming increasingly digital in nature, while  the penetration of e-commerce platforms is enabling real-time customer  interactions across digital and physical channels from billing to product  support. “It’s becoming an omni-channel world for all customer interactions.  It’s no longer good enough to have a call center with a phone number,” says Rick  Chavie, chief solution officer at hybris  software, an SAP company. “You need online chat, screen sharing, and a mobile  interface for all your company representatives, whether before the sale, during  a sale, or for after-sale support; customers expect all of these things.” At  the same time, buyers want sellers to help them solve problems and improve  future product releases by leveraging new streams of market and end customer  use data as a feedback loop into design and production.


  • The consumerization of B2B means sellers are expected to innovate rapidly, based  on the standards being set by consumer tech and cloud companies. And buyers as  well as end customers demand high-quality, user-friendly information about products,  with images, video, initial user feedback, and other electronic features de  rigueur.

 

Collaborative  capabilities and tools let  buyers and sellers innovate in ways that address these needs. The result? Improved  product design and technology, along with new processes that benefit all parties.  And while few buying organizations have perfect strategies in place, most are  actively striving to strengthen seller engagement and collaboration. For  example, Aberdeen research shows that 71% are addressing supply chain  coordination, and 64% are working on managing sellers and partners in the design  process.iii


“Everybody’s  having to build out products globally, and everybody’s Iooking to use the same  kind of tools,” Rick says. The nature of the US market may be more advanced in collaboration  and digitally enabled innovation, but the technology platforms that allow such  collaboration are globally accessible. “Even if some countries or market  sectors have lower penetration today, you see the adoption spreading across  markets, from industrial to consumer products, from services to media.”


 

Becoming a collaborative innovator: Action areas for maximum impact

 

So what steps can you take to give buyers what they  want and need—easier, more effective B2B e-commerce collaboration with an  innovation-minded seller partner? Especially if you’re a small seller, Rick  advises, “You need some kind of an edge. You’ve got to find ways to  differentiate, to be more agile, and to get on board with these tools and  techniques so you’re enabled in the same ways as all the bigger sellers.”  Consider these key strategies:

 

  • Make the  most of networks. Collaborative networks like the Ariba® Network can give you  a major leg up by allowing you to partner and exchange ideas directly with  buyers. For example, rather than just responding to their stated requirements  on an RFP, you can make suggestions about issues the buyer needs to resolve and  offer ideas about products, materials, designs, and other areas to enhance  efficiency and innovation.iv (Check  out this video and this paper to see  other ways business networks make collaborative innovation easier.)


  • Get  your technology up to speed. While  technology has helped level the playing field—allowing even the smallest companies  to deliver the same collaborative capabilities as huge competitors—plenty of  sellers are still behind when it comes to B2B e-commerce. “Most  suppliers haven’t gotten on board yet in terms of being able to present their  products digitally, share content, or work collaboratively,” Rick notes. For  example, many still rely on printed catalogs, but buyers don’t want paper  anymore. “They want digital content; they want to be interacting back and forth  with their supplier from a tablet.” Globalization pushed procurement towards e-commerce  long ago, and now buyers need sellers enabled with the same tools. Areas to  embrace include:

 

  • Social listening channels to  monitor trends and capture customer and prospect feedback

 

  • Big data monitoring of input  from social on existing products


  • Configure/price/quote (CPQ) and  engineer-to-order tools embedded in commerce platforms to support:  
    • Real-time configuration of product build-outs, making it easy to visualize final results
    • Private-label orders and the growing demand for product customization
    • Buyers’ need for interactivity and technical assistance while they’re  configuring your product with end customers


  • Shared content development software like digital asset management and graphics visualization tools, which  allow you to:  
    • Exchange ideas and info in real time with global business partners to collaboratively design and build products, make modifications, and shorten development cycles
    • Give buyers the necessary digital representations when it’s time to sell
    • Easily promote your products online—at a much lower cost than advertising in traditional media—by using the content you’ve already developed

 

And don’t wait: Customers are increasingly demanding  these capabilities as a condition to buy from you. Producing great products or  services has long been a given, but the ability to produce great multimedia  content is now essential as well. “If you can’t demonstrate your offerings  digitally, buyers may not even find you, and they certainly will struggle to sell  your products or services online,” Rick asserts. “If you want to grow or even  stay in business, you must respond.”

 

  • Use direct selling to provide direct feedback. As a seller, you have direct access to end customers—e.g., via in-person  sales, digital tools, and the social web—that you can use to advantage, so  maintain at least a small percentage of your business selling to them. “Think of it  as the little seller’s access to big data,” Rick says. “Because with all the  digital tracking of everything you’re doing with an end customer, you can capture  such a rich set of information on how they’re using the product, when they’re  using it, how they’re buying it, the issues they’re having after the sale, and  support.” Direct selling relationships also let you experiment and adapt  quickly, because you get response signals immediately.

    You can then share  the information you gain with your buyers  and compare notes; their different channels offer  additional insights, and both parties  benefit through accelerated development and innovation. This strategy also works  as relationship life insurance by distinguishing you from competitors. “If you don’t bring good ideas to the table  because you have no insight into the end customer, you have no leverage,” Rick notes.  “Smaller suppliers are going out of business or being acquired because they’re  not bringing enough of this kind of insight, and they’re too slow to react.”  (Learn more about the benefits of direct  selling from this video and this Forbes article).


  • Leverage your expertise in local markets. Don’t underestimate the value of your knowledge about local regulations that  have potential supply chain implications for your customers. By conveying inside  information vital for compliance and risk management across geographies, you  strengthen their position as well as your own.

 

  • Offer resources unavailable elsewhere. Innovative value-adds provide another edge, as they offer buyers unique advantages  and distinguish you from the competition. For example, rather than just a  product, sell a complete solution: bundling aftercare services, customer  training, 24x7 tech support, custom engineering, and similar capabilities others  can’t replicate. By differentiating your business, this helps you avoid the  relentless price squeeze of commoditization. It also lets you sidestep private  label pressures—where buyers want to determine more of the manufacturing  process (but not actually produce the product) while getting the brand benefits  themselves—by providing something they can’t easily deliver on their own.

 

As a seller in this digital world where global  competitors are just a click away, it’s true that the pressure on you to help  customers cut supply chain costs and reduce development cycle times is  relentless and an area of necessary collaboration (i.e., “survival by  subtraction”). Nonetheless, you also have a clear and compelling upside for  growth through collaborative innovation—“thriving by combining”—and now have the  technologies and platforms available to help you realize that upside.



 

i “Collaborative Supplier Networks—Innovation, Risk Management, Cash Flow: Building Supplier  Networks that Drive True Value,” Insight white paper, Procurement Leaders Global  Intelligence Network in association with Ariba, Inc., an SAP company, 10  November 2014.

ii Reid Paquin, “Integrating  Suppliers and PLM for Profitable Product Development,” Aberdeen Group, 6  February 2014.

iii Ibid.

iv “Collaborative  Supplier Networks.”