IBM SoftwareSmarter CommerceSmarter commerce forconsumer electronicsRedefining the value chain in the age of theconnected consumer
2 Smarter commerce for consumer electronicsWhen we talk about the world becoming increasingly inter- Consumer electronics today: Industryconnected, instrumented and intelligent, the most ubiquitous challenges and opportunitiesexample is the smartphone. It collects and disseminates data The demand cycle is only one component of the challenges man-while its users are at home and on the go, likely serving up just ufactures face as volatile marketplace forces disrupt the consumeras much—if not more—dynamic, socially driven information electronics industry. The cost of developing and manufacturingas static, always-there web content. And other consumer elec- new electronics continues its rapid climb. Large investments intronics companies are deep in the revolution of smarter prod- licensing new technologies and maintaining expert developmentucts, providing not just one-dimensional devices but entire teams are required for designing and qualifying products thatcustomer experiences. address ever-higher demands for performance, functionality, communication, reliability and power consumption. And build-With the accessibility, mass volume and easy sharing of informa- ing next-generation fabrication facilities has become a multi-tion, a new consumer emerges—one who is empowered and has billion dollar investment. At the same time that costs go up,taken control of the relationship between buyers and sellers. profit windows shorten as demands for new innovations con-Today’s electronics consumers are enabled by technology and tinually replace existing technology.social media in highly mobile smartphones, tablets and countlessconsumer products with Internet connectivity, near-instantly Many of today’s consumers care less about the consumer elec-sharing information with the world as they search for the best tronic device itself and more about the experience it delivers. Asdeals and highest value. They review manufacturers, distributors such, manufacturers must shift their thinking from developingand retailers alike, sharing both positive and negative experi- and building devices to creating experiences. For example, theyences, and may even trust each other’s recommendations more should focus less on selling TVs than on crafting a personalizedthan manufacturers’ websites or marketing campaigns when entertainment, advertisement and shopping experience. Ratherdetermining what and where they buy products. Customers than simply selling a picture-taking device, camera manufactur-can make or break brands with a few keystrokes and clicks of a ers also need to be in the business of creating and sharing mem-mouse, emerging as advocates or detractors. This new kind of ories. Instead of just selling home appliances, manufacturers alsoconsumer is creating a different dynamic between buyer and need to tout how their products simplify and “green” people’sseller and dictating how businesses must interact with them, lives. This transformation from merely manufacturing devicesall the while growing expectations for high-quality service and to creating experiences is made possible by advancements inperformance, competitive pricing, and quick delivery and prod- technology and device interconnectivity. However, such tech-uct returns. nology is paired with a deeper level of development, manufac- turing and supply chain complexity.
IBM Software 3Because different component suppliers may be required for eachproduct release or when suppliers offer improved pricing or a new What is smarter commerce?function for an existing component, the supply chain must bereconfigured to accommodate the changes. At the same time, Smarter commerce is a strategic approach that places the customer at the center of business operations. In turn, busi-companies have merged and consolidated to pursue economies ness results and benefits naturally emerge:of scale, fill product gaps or acquire new technologies—leavingnewly united organizations with disparate, nonstandardized sys- • Get more out of the insight generated through customertems and processes at a time when it is critical to collaborate on interactionsdesigns, procurement and distribution as quickly as possible to • Capitalize on social and mobile commerce • Synchronize the value chain to deliver consistent and pre-meet demand for the next best product. dictable outcomes • Improve collaboration and visibility for your customers andWith ongoing volatility, complexity and increasingly empowered partnerscustomers, consumer electronics companies need a new path • Drive growth by enhancing, extending and redefining theforward. At IBM, we call that path smarter commerce. value you provide to consumersSmarter commerce: shifting focus tothe customer The commerce cycleA smarter approach to commerce starts with embracing empow- A smarter commerce approach helps manufacturers more eas-ered consumers and placing them at the center of your opera- ily manage and quickly adapt their buy, market, sell and servicetions. While customer focus is not a new idea, truly making it processes to center decisions and actions around the customer.happen on a smarter planet requires electronics manufacturers It can increase the value companies generate from their custom-to discover, gather and act on insights generated through social ers and partners by using customer insight to drive an enhancedcommerce. This approach helps companies more effectively and personalized experience and can offer new levels of companymarket, sell and service their products as well as better align differentiation, potentially leading to greater customer loyalty,their supply chains—resulting in improved margins, new rev- revenue and margin growth, and agility.enue streams, better efficiency and improved outcomes acrossthe value chain.
4 Smarter commerce for consumer electronicsA smarter commerce approach can help transform and improveefficiency at each stage of the commerce cycle: buy, market, selland service. BuyBuy—Optimize supplier and partner interactions based onchanges in shopping and buying behavior from across the sup-ply chain. Generate new and differentiating customer value byreconsidering partner roles and relationships.Market—Deliver timely and personalized engagement across Service Customer Marketmultiple touchpoints by using deep insights about customersgleaned, in large part, from the global conversations takingplace online.Sell—Facilitate customer and partner engagement so theycan collaborate across touchpoints using the interactionmethod—such as person-to-person, digital, social or mobile—of their preference. SellService—Enable streamlined customer service across customerinteractions and channels, and anticipate customers’ behavior Figure 1: A smarter commerce approach can help transform and improveand take action to keep them loyal. efficiency at each stage of the commerce cycle.To achieve this depth of personalization in a four-part customer- Consumer-driven buying experiencescentric process, smarter commerce focuses on two key busi- Today’s consumers are empowered—perhaps more than everness imperatives to support the empowered customer: create before—so it’s imperative to align the buying process itself withconsumer-driven buying experiences and develop adaptive what they want. This alignment can be thought of as an “out-supply chain networks. side in” way of driving corporate processes because it doesn’t start with a business’s internal processes and work outward to determine what customers can have and how they can have it.
IBM Software 5A 360-degree view of the customer For example, with traditional data capture approaches, you mightBusinesses have access to smarter commerce solutions that can identify a few distinct customer segments. Manually developingprovide insight and a 360-degree view into the customer life online campaigns for four or five segments is not too onerous acycle—well beyond what happens at the time of purchase. This task. But with dramatically improved target segmentation, youvisibility can help a company influence preferences when a con- could have hundreds or thousands of “microsegments.” Thissumer is thinking about a new purchase. And after the purchase, increased insight is practically useless unless you have the capac-companies can enhance loyalty by treating customers with first- ity to act on it, making automation a necessity.class service—in the way they expect to be treated—after the sale. Real-time customer personalization Additionally, deeper customer insight can help businesses intel- Is it time to buy I am interested ligently decide what to present to customers at the time of an a new one? in the product. online or phone-based purchase. “Next best action” recommen- dation technology adjoins the real-time behavior of a customer with that customer’s buying history and interaction preferences to determine which cross- and up-sell products to offer. The goal I need help. I made the is to sell solutions—however the buyer defines them—and not purchase. just products. The key to doing so is making the process as seam- less and natural-feeling to the customer as possible. The consumer electronics manufacturer has to think about cross- I wish I could do … How do I use this? channel selling differently than the retailer, which deals directly with the end consumer. Typically, only a small percentage of theFigure 2: With smarter commerce, you can guide sales, shape the demand for manufacturer’s business will be direct to the consumer. Mostelectronics and simplify complex ordering. often, consumer sales occur through their channel partners, suchImproved customer segmentation as retail companies, meaning manufacturers don’t have detailedWith insights from a 360-degree view of the customer, companies point of sale data by store. However, you can use the customercan more precisely delineate marketable customer segments— insights you have gleaned from marketing analytics applied tobeyond typical demographics- or psychographics-based segmen- social media to develop more compelling offers and terms fortation. Deeper insight enables businesses to segment customers your channel partners. These insights can also help you offerbased on actual customer behaviors and sentiments expressed in channel partners better information on how to increase theirvarious online or social media venues. Smarter commerce solu- own sales.tions not only make it easier to capture and analyze customerdata from such venues but also automate responses in line withthat better segmentation, which would practically be impossibleto do manually.
6 Smarter commerce for consumer electronicsAutomated configuration and entitlements rules Improved ecosystem visibilityIf you sell highly configured products and services, then one In a survey of chief supply chain officers by IBM, the numberchallenge you may have is in enabling your salespeople, your one challenge mentioned was that of visibility.1 The problemchannel partners and your end customers to accurately, reliably of visibility has grown more acute over the years as supply chainsand quickly configure an order and the associated terms of have grown in complexity—in number of trading partners, prod-shipping, installation, packaging and more. For many compa- uct and service offerings, channel and distribution partners, logis-nies, this is an error-prone and costly manual process—one tics disruption risks, and so on. A smarter commerce approachfilled with numerous exceptions that consume scarce time and can improve visibility and supply chain transparency to connectmoney to resolve. With a smarter approach to commerce, you the commerce ecosystem, helping you minimize risk to your busi-can automate configuration and entitlements rules, signifi- ness and to the fulfillment of your customers’ orders.cantly reducing huge amounts of manual exception process-ing and delivering the product according to the service levelagreements you have established.By using insight to create a customer-driven buying experience,consumer electronics manufacturers can shorten sales cycles;increase customer acquisition rates and loyalty; and reduce sell-ing, general and administrative costs per converted lead.Adaptable supply chain networksWhile smarter commerce is about refining the knowledge of andresponse to individual customers, it’s also about optimizing stra-tegic, tactical and operational planning across the supply chain.A smarter approach to commerce can help you adapt your sup-ply chain processes so you can provide an optimal solution tocustomers based on their priorities and your capabilities at areduced cost to you.Many manufacturers have reasonably good processes around salesand operation planning, but these processes and many others areseldom optimized with advanced technology. Smarter commerce Figure 3: A smarter commerce approach can help you connect functionssolutions optimize processes through better collaboration and across enterprises so you become aware of potential disruptions and under-insight across the enterprise, better enabling you to align your stand overall supply chain performance as well as contributors to, and root causes of, risks.supply chain with customer wants. For example, better collabora-tion and insight across the supply chain can inform you of howmuch inventory to have and where to have it.
IBM Software 7Better asset recovery rates Smarter commerce in consumer electronics—how itReturned products are an increasingly important issue to con- really workssumer electronics manufacturers. Returns are often initiated by Smarter commerce is more than just an idea—when applied,a channel partner, such as a retailer or distributor, and sometimes it provides real business results. The proof is how IBM helpedprocessed by a third party, such as a logistics service provider or these consumer electronics companies transform their approacha repair depot. For many companies, the return process lacks to commerce by focusing on the customer.technology and process sophistication, relying mostly on man-ual steps. Smarter commerce solutions can help consumer elec- • FCI, a leading European electrical connectors manufacturer,tronics companies gain visibility into returns to improve the is using commerce solutions from IBM to extend its catalogconsistency and speed of determining the disposition of returns and electronic commerce capabilities to its customers and dis-(repair, replace and so forth) and boost the asset recovery rate tributors. FCI has been able to increase its capacity to handlefor returned goods. rising volumes from new government institutions, enabling rapid growth. In the process, it has also reduced operating costsCreating adaptive supply chain networks that align with and can by US$1 million each year.deliver on customer expectations can help you optimize inven- • Jabil Circuit implemented an IBM-based unified integrationtory and cash flow; reduce logistics cost; achieve higher on-time, platform that helps reinforce commercial interaction standardsin-full performance; and facilitate more scalable and efficient and customer service levels to improve supply chain visibility,business-to-business trading partner collaboration. enhance business efficiencies and boost customer service. • SMA Solar Technology, with help from IBM consulting andIBM for smarter commerce IBM WebSphere® Commerce software, created a business-For more than 100 years, IBM has been offering comprehensive, to-business online marketplace for its clients. The onlineintegrated solutions that are flexible, open and able to provide marketplace provides a common platform for SMA and itspositive business outcomes to businesses of nearly every kind. clients to automate the entire ordering process, includingOur comprehensive smarter commerce solutions span both the placing orders, exchanging order status information and pro-buy and sell sides of commerce, helping you place your cus- viding product information.tomer at the center of your operations using social businesscapabilities, collaborative processes and business analytics. Our For more informationintegrated products and capabilities are industry focused, and To learn more about smarter commerce for consumer elec-our business analytics offerings enable you to gain a single view tronics from IBM, contact your IBM representative or IBMof the customer and track the customer’s behavior across chan- Business Partner, or visit:nels and touchpoints. To handle the increased need for storage ibm.com/smartercommerceand computing power generated by new demands and devices,IBM offers workload-optimized software and servers tailoredto address those requirements.