Organisations wanting to retain their competitive advantage amidst a
myriad of disruptive entrants must evaluate new technologies and decide which
would enhance their effectiveness.
Professor Soumen Ghosh, professor of operations and supply chain
management in the Scheller College of Business at Georgia Institute of
Technology told a Gordon Institute of Business Science (GIBS) forum that
companies should evaluate technologies on their own merits. Emerging tools such
as mobile devices, the Internet of Things, 3-D printing, big data analytics and
cloud computing must be analysed individually.
“Organisations have to see the role of technology for its ability to
provide differentiation and customisation, and not attempt to integrate
technology for its own sake.”
Successful disruptors are those which are able to match an existing
product or company’s differentiated proposition, but at a lower cost. They are
then able to push the competitive frontier forward.
“Technology is enabling disruption and can create competitive advantage
almost overnight,” Ghosh explained.
Supply chain reinvention
Consumer demand, led by the proliferation of smart phones and
technology, had created a fundamental shift from the physical supply chain to
what Ghosh termed “collaborative digital supply networks.” The linear,
traditional supply chain is dead, he added.
This “front end flip in the supply chain,” enabled by technology, represents
a major change, as manufacturers no longer need to hold inventory. By having a
real-time picture of customer demand, manufacturers and distributors are able
to supply according to need.
Integration of new technologies and the ability to successfully and
efficiently execute the new digital supply chain would ultimately determine the
retention of future competitive advantage.
Much of the disruption experienced by customer-centric industries such
as transport, retail and hospitality has been generated by consumers’ use of
technology, driven by mobile devices and smart phones, Ghosh said.
Consumers are using technology in unexpected ways and have become the
driving force that has compelled businesses to rethink how they can package and
deliver their products to consumers. Ghosh used the example of Uber’s on-demand
transportation model, or Amazon’s “fulfillment centres” with same day
grocery delivery to illustrate this.
“Smart phone technology has fundamentally changed consumer behavior, and
consumers are now using digital devices to create demand.”
There has been a rapid and dramatic change in consumer behavior and
preferences as the millennial generation has gained ever-greater purchasing
power. This new generation demands alternative ways for goods to be delivered
and presented to them, which may see the eventual demise of brick and mortar
retail stores. The onus is on companies to use technology to meet customer
demands and consumer preferences, Ghosh explained.
Consumers now expect ever-higher levels of differentiation, at a lower
cost. “The demand for customisation or differentiation is increasing
exponentially,” Ghosh said. However, the burden this places on companies to
keep costs under control and to maintain sufficient supply chains is a huge
The cost of doing business is under pressure due to the demand for
constant product variety.
Consumer demands that companies have to satisfy now include speed,
accuracy, cost, responsiveness and differentiation or customisation. “Companies
have to fulfill these, or the customer will find someone else who does. There
is very little to no loyalty with today’s consumer,” Ghosh said.
Organisations that are able to successfully respond to additional
customer demands are completely interactive, always on, create a connected
community and employ intelligent optimisation and end-to-end transparency.
Very few established companies would exist in their current format in
the near future Ghosh said, as they will be forced to reinvent themselves in
order to survive the onslaught from new disruptors. “The younger generation can
think about these things with more clarity. Established organisations are stuck
with old paradigms.”
Top Five Points
Organisations wanting to retain their competitive
advantage amidst a myriad of disruptive entrants must evaluate new
technologies on their own merits.
Organisations have to see the role of technology
for its ability to provide differentiation and customisation, and not
attempt to integrate technology for its own sake.
Successful disruptors are those which are able to
match an existing product or company’s differentiated proposition, but at
a lower cost and push the competitive frontier forward.
Consumer demand, led by the proliferation of
smart phones and technology, has created a fundamental shift from the
physical supply chain to collaborative digital supply networks.
Smart phone technology has fundamentally changed
consumer behavior, and consumers are now using digital devices to create