What B2B procurement can learn from the launch of Amazon Dash
The recent launch of Amazon Dash demonstrates an ever-increasing demand for speed, simplicity and ease amongst consumers – and with businesses also run by consumers, this level of service will soon be expected in the B2B world too. While some may believe that procurement will never become separated from saving money - which isn’t the main driver for Dash - this new Lean Consumption model illustrates how sometimes speed and urgency can outweigh cost.
Lean Consumption - My fridge now runs my life
The ‘Internet of Things’ has long promised fridges that order your milk as soon as it runs out, but Dash is the first real move into the mass market for connected solutions which are usually just for early adopters of tech.
Lean Consumption models run on the premise of making things simple and low maintenance for the consumer - placing a Dash button next to your dishwasher that you press when you are running low on tablets is very much an example of this. An earlier example was when car insurance renewals moved away from brokers and became self-service through websites. The next evolution of this was price comparison sites where transparency was introduced into the transaction to consumers’ benefit yet the reality is these comparison sites are purely another channel for insurance products and the real winners were those who gained consumer data and developed a new brand, often owned by an insurer.
Whilst the benefits to the average lazy consumer (and who isn`t…) are significant, what are the potential consequences? The ability to switch products is still there, no-one makes you push the button, but they are making it harder not to, forgoing the convenience and incurring search costs to go to another product. Price increases by Amazon are likely to be subtle, yet frequent once Dash matures. The consumer may have to become a price taker, or give up on the convenience that it offers them. A value proposition trade-off in action!
Will Amazon take over the B2B world by exploiting lazy buying?
I expect Amazon to move Dash into the B2B world as it has done with other B2B products such as Amazon Web Services (AWS) and more relevantly, Amazon Business in recent years. Initial B2B categories could include stationery and other office supplies, where the benefits of lean consumption would be appreciated most. Some integrated B2B catalogues enable simplistic desk ordering but the reality is often the change of supplier, process or generally poor communication when implementing change means that maverick spend increases when people do not feel the benefits themselves.
Dash takes all this away and provides a direct link to the approved supply chain. The challenge is ensuring over-ordering does not become epidemic. Maintenance Repair Operations (MRO) is another area this could be considered, if Collaborative Planning, Forecasting and Replenishment (CPFR) systems are not already implemented.
I want choice, I don’t want to be told what to do!
We don’t typically have defined rules in our personal lives restricting our choices so maverick spend does not exist from a consumers’ point of view, but that doesn’t mean we don’t artificially impose rules upon ourselves, for example by brand preference or voucher use. From a retailer or brand viewpoint, anything not being spent with them, by their target market, is a form of uncontrolled spend. Maverick Spend often happens when B2B end-users knowingly avoid preferred supplier lists, find order processes too time-consuming and find easier channels, or just prefer another product. With Dash expected to initially have one product per household category this would provide a channel to reduce spend fragmentation. In theory the model could be linked to any catalogue listing and in time this could provide an easy route for B2B procurement demand management.
But who benefits the most - the lazy consumer, Amazon or supply chain?
I’m giving up choice but I don’t have to leave my house, or even open my laptop. Most Dash buttons have just one product per category and many are in areas where there are few brands, a simplicity that could easily appeal to time-pressed employees when ordering new supplies.
The biggest benefit is to Amazon. Dash will allow it to effectively control what Amazon will see as the maverick spend of Prime members who are aware of the service, yet choosing to use other providers. They are playing on the lethargy of customers to significantly make the process easier, allowing it to increase leverage with suppliers and build data that will give it even more insight on usage and demand patterns to increase market share and profitability. Just what good procurement practice in B2B should be doing.
By Jeremy Smith, Director of 4C Associates, a leading procurement consultancy
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SAP Ariba to digitise procurement for Expo 2020 suppliers
The global trade event, this year hosted in Dubai, was rescheduled from last year and will now take place between 1 October 2021 and 31 March 2022.
As the event’s Innovative Enterprise Software Partner, SAP Ariba solutions will fully digitise and automate the procure-to-pay lifecycle, providing a streamlined experience for thousands of market leading, global suppliers and strengthening the global supply chain with enhanced transparency and efficiency. The cloud-based platforms operate through on SAP Ariba’s UAE public cloud data centre and connects to the Ariba Network.
Expo 2020 "a long-term investment"
Mohammed AlHashmi, Chief Technology Officer, Expo 2020 Dubai, said the world trade event is “a long-term investment in the future that aims to enhance opportunities for sustainable business connectivity and growth”, which stretches beyond Expo 2020’s six-month window.
“Our partnership with SAP is an example of what can be achieved with the invaluable support of our technology partners to host one of the most digitally advanced World Expos ever,” he added. “The implementation of SAP Ariba solutions has transformed our end-to-end procure-to-pay cycle and helped set new standards of procurement automation for projects of this scale.”
To date, more than AED 1bn has already been transacted by Expo 2020 suppliers through SAP Ariba. The platform promotes collaborative partnerships and allows registered users to participate in sourcing events, negotiate and initiate contracts, and centralise their invoicing and payments in real time.
Claudio Muruzabal, President of EMEA South, SAP, said: “Expo 2020 Dubai is demonstrating global best practices in digitising its procurement process with SAP Ariba solutions to help gain visibility into its spend, tighten collaboration with its suppliers, and achieve process automation, including completely paperless invoicing.”
About Expo 2020 Dubai
Expo 2020 will take place in Dubai and is the first of the long-running World Expos to be hosted in the Middle East, Africa and South Asia territory. The original World Expo, called the Great Exhibiton, was hosted in 1851 at the Crystal Palace in London, designed as a showcase for the innovations of the Industrial Revolution.
Expo 2020 was originally due to run 20 October 2020 to 10 April 2021, but was last year postponed in light of COVID-19 restrictions - though some business has already taken place virtually. The event will place greater emphasis on innovation in sustainable solutions through the Sustainability District, blending technology and culture. It is expected that around 70 per cent of the 25 million attendees will be international visitors.