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Demand Chain Best Practices
Aberdeen Group offers e-commerce tips; the dawn of DCM; much work remains
Posted Aug 28, 2002
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Some companies understand e-selling, others struggle. Market researcher Aberdeen Group collected data from various case studies, en route to a report on demand chain management's best practices -- and has given Line56 readers an exclusive peek. Demand chain management (DCM) is nearly synonymous with e-business. According to Aberdeen's definition, DCM covers the deployment of Internet-based sell-side solutions that automate manual order management processes, cut the costs of sales, increase revenues by extending market reach, and optimize multi-division, multi-channel branding and commerce initiatives. And it's a make-or-break movement facing nearly every company. Everything, of course, starts with the customer. The big change is that the Internet is making customers smarter. "A truly demand-driven enterprise must realize that the Internet's emergence as an omnipresent point of information distribution has empowered buyers with information," says Kent Allen, research director at Aberdeen and author of the study. Now customers demand better service and prices -- through electronic and traditional channels -- and thus demand-driven sellers must empower buyers even more. Empowering today's buyer requires organizations of all sizes to deploy customer-facing technologies outside the enterprise firewall, Aberdeen claims. Technology alone won't do the trick. Effective e-commerce initiatives require long-term internal planning, change management, and extensive intra- and extra-enterprise coordination and integration, according to Allen. To this end, Aberdeen provided a dozen guidelines to aid in DCM planning: 1. E-commerce is simply another channel for managing customer interactions and transactions -- and not a standalone business model. 2. Your buyers' processes have changed -- or soon will. 3. Organizations' pricing power is going, going... gone. 4. Technology is no silver bullet, so do not automate flawed processes. 5. Know thy order costs -- that is, prioritize internal benchmarking exercises. 6. Cost savings are great; increased revenues are better.
7. Channel adoption of technology requires more than an email blast. 8. Sell direct through the traditional channels. Look for more rapid adoption of e-hub models that offer transaction and information processing efficiencies for all participants in the selling process. 9. Inventory management is the next sell-side/demand chain management frontier. 10. Bad news, like hot air, rises to the top. 11. Do not let ROI spoil the party. 12. Selling organizations are Web-based publishers. The upside for companies behind the DCM eight-ball is that majority of companies still have a lot of work to do. According to Aberdeen, a significant majority of players within the traditional sales networks lack the necessary level of e-commerce sophistication that end-customers who use the Internet to conduct commerce will increasingly demand.
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