Digital Business & the “Programmable Economy”

| November 9, 2015 | 0 Comments
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Digital business sounds like another post-modern term; yet, in the never-ending quest for improved cost savings, efficiency, and seamless workflows, procurement has only more recently become integrated, and hence, successfully digitized. The maturation path of digital business is the doorstep upon which the industry stands now entering into an era of “programmable economies,” as coined by Gartner 2014.

 

Top-tier electronics distributors have harnessed digital power to make purchasing’s job easier. Parametric searches can find a device based on spec and not just part number. Buyers can download RFQs and BOMs and receive responses in real-time. Secure registration enables buyers to skip the tedious log-in process and systems remember what has been bought in the past to refine and provide smart searching. Dashboards help users check the status of their orders and make changes without dozens of frantic phone calls. Distributors can now have a competitive presence in the global market without the requirement of a local physical presence.

There are still many procurement departments and suppliers who continue to work in the old school, phone or person-to-person manner when it comes to sourcing. Not to say there are flaws with this approach, but to best meet the agility and lean demands of global leaders, the integration of automated, or near-autonomous, procurement processes presents significant benefits to those who have jumped in. Enter the rapidly growing set of leading electronic marketplaces for securely purchasing authorized semiconductor and electronics components, subassemblies, and parts.

Electronic marketplaces offer the competitive advantages of agility, greater efficiencies, event-specific strategies, and “frictionless solution” implementation to leading, global procurement departments. Leveraging the successes of these secure exchanges is moving the semiconductor and electronics industry towards Gartner’s “programmable economy,” the next future epoch of business. Digitized B2B solutions such as secure, authorized, electronic marketplaces, for example, Verical.com,  offer new and highly effective strategic solutions to globalized companies working to manage increasing volatility and lean inventory mandates.

One significant advantage of these deeply rich sourcing platforms is the ability to have access to verified suppliers who have suddenly been faced with unsold inventory and are able to sell these authorized holdings.  Agility is quickly realized when within minutes, procurement departments can locate, price, and order from over 500 component manufacturers and franchised distributors holding over 1 million SKUs worth over US $8 billion.

Another advantage to this next wave of digital B2B solutions is the ability for procurement departments to autonomously build sourcing strategies and implement solutions that meet diversified location needs through single-site exchanges. Recently, Gartner’s Symposium/ITxpo focused on the growing impact of what Gartner termed “the programmable economy.”

David Furlonger, vice president and Gartner Fellow, explains: “As the move toward digital business gathers momentum, we can already see the emergence of the next phase — autonomous business. However, these phases still rely on 20th century economic models and Gartner’s Maverick research anticipates that beyond autonomous business lies an era of more radical technology-enabled transformation that will eventually have an impact equivalent to that of the Internet.”

While procurement along the semiconductor supply chain has a good way to go to reach Gartner’s envisioned next era, leading companies with secure electronic marketplaces are a real step in this direction. IoT may initially have envisioned the connection of “things” but the real leap will come with the integration of processes, such as procurement and sourcing. The agility, interoperability, and seamless interconnect for user-driven (or autonomously programmed) sourcing solutions to be constructed and enacted through electronic marketplaces is very much part of the emerging programmable economy wherein buyers and suppliers are pre-vetted and connected in real-time through leading global companies.

Of course, as Furlonger cautions, the growth of truly autonomous business processes that involve critical decision making requirements will be a bumpy road rife with challenges and, at least initially, require human oversight: “The impact of these changes will not, of course, be uniformly positive. […]Every major new technological development has brought with it unfortunate and even dangerous consequences and the programmable economy will be no exception. The adverse impacts of the programmable economy will, for example, include the ethical challenges associated with machines making autonomous decisions, and the potential for illegal financing activities.”

 

 

 

 

 

 

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Category: Featured Blogs, Smart Purchasing

About the Author ()

Lisa Ann Cairns, Ph.D., Contributor Lisa comes to EPS with a diverse background that includes 10 years of hands-on experience in IT as well as in semiconductor and electronics distribution. The majority of that time, Lisa spent in the role of Senior Market Analyst and Senior Contributor at a leading, independent distributor of semiconductor and electronics. Prior to that tenure, she was a professor of linguistic anthropology, engaged in social science research, modeling, and analysis. The skills of observing and explaining complex social patterns adds a rich framework in which to indentify and to understand the range variables that constantly affect today’s globalized marketplace. Lisa’s admixture of experiences brings a fresh eye and a contextualized understanding of the global semiconductor and electronics supply chain. Lisa’s market analyses provides readers with unique views spanning micro- to macro-level industry events, synthesized insights bridging business and economics, as well as connecting the dots between upstream to downstream industry events that affect and inform distribution strategies. Lisa has a Ph.D. and A.M. in Linguistics from The University of Chicago, during which time she was awarded the prestigious National Science Foundation Doctoral Dissertation Research Improvement Grant. She holds a B.A. from Hofstra University, where she was Hofstra's first woman undergraduate to be awarded a Fulbright-Hayes Grant for independent research prior to attending graduate school. Lisa is currently consulting and freelance writing and can be reached at lcairns@lcairnssolutions.com.

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