by Phil Phillips, PhD
Contributing Editor
phillips@chemarkconsulting.net
It’s not a news revelation that the internet has had an impact on the rules of competition. These so-called vertical markets have been magnified in our daily routine to the point we can
no longer consider “marketing as usual” in any segment target
space we play in now or plan to do so in the future.
These vertical markets guarantee four elements will change:
• Improve design collaboration & supply chain planning
• Force enhanced capacity operation across an industry
• Lower business costs
• Expose the fundamental economics of a supplier’s business
In due course, these changes will lead to unraveling of the
value chains of activity forcing companies to:
• Discard operations
• Keeping only those that are considered (by the market-
place) as the best available.
The same supplier/customer forces prevail today as they did
in the last 40+ years. OEMs always insisted on at least annual
if not bi-annual price reductions while suppliers created many
methods to appease their customers while “showing” price reductions and making the same or more
profits. The Internet’s vertical and horizontal market and industry interactions,
is starting to convert this situation while
impacting each step of the value chain.
Buyers in the coatings, paints, adhesives and sealants market spaces can now
effortlessly track prices and use them to
regulate the prices they pay for purchased
components. They can also contrast the
prices of their present suppliers with others through the use of on-line auctions.
These tactics can both place tremendous
cost back-pressure on the suppliers but
also increase the rate of deal-making in
the process.
Businesses today must perform with
some realistic steps to plan for whatever,
the internet insurgency brings. This focus
must exist in reshuffling the value chain
and vertical integration method of com-
panies to unlock value and create the
marketplace valuation of becoming the best offered capabilities.
As a first move, every business head should ask themselves, how
the internet will impact their business model.
Reexamining the company’s long-term positioning within
the value chain will help capitalize on the impact of the in-
ternet–instead of just surviving it. The chart below relates to
Important Questions and Related Questions a business execu-
tive must consider. CW
The Value Chain &
Its Collision With The Supply Chain
