Energy & Utilities B2B Integration Has Become Mission-Critical

The electric utilities industry is undergoing a revolution, according to Europe’s trade association Eurelectric.

“The EU power sector is going through one of the most profound changes in its history,” the report stated. Strategy consultant Jesse Jenkins, in noting the report, speculated that Europe’s need for revolution reflects conditions in the energy industry world-wide, the message being, “they must evolve or die.”

Four major trends are reshaping the power sector, he said: the growth of renewables, a more decentralized system, foundations of the smart grid, and retail competition/new services.

The Eurelectric report cites several evolutionary improvements in services that are critical to the future, including improved system flexibility: “A market involving B2B [business to business] customers is already emerging and is likely to extend to the B2C segment through two-way digital communication enabled by smart grids and the increased penetration of smart appliances and home control technologies.”

The report concluded that real evolution in the industry requires not just technological innovation, but new innovative business models. A successful example is Entsog, the European Network of Transmission System Operators for Gas, which is smoothly facilitating the integration of trading across borders by leveraging the AS4 interface standard.

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Hidden Barriers in Customer-Centric Supply Chain Strategy

Customer centricity is informing and advancing strategy in a number of product and service delivery domains, overwhelmingly for the better. The increasing ubiquity of big data and feasible analytics implementation have worked to make customer-centric strategy viable at many levels.

But there are some potential difficulties in realizing a customer-centric strategy in supply chain operations that might not be readily obvious, suggests industry commentator Steve Banker. For one thing, what customers say they want and what they really want are not always the same thing:

“If you ask customers what they want, they will say ‘We want lower prices, cooler products, and better service.’ But what really matters to them? What will cause them to buy more goods from you? What will they pay extra for?” Banker has said that deeper study – conjoint analysis, in particular – might be required to tease out the data needed to make the supply chain truly customer-centric.

Analyst Lora Cecere points out another hidden barrier: a lack of organizational alignment.

“As long as sales incentives are tied to volume, marketing is rewarded on market share, and operations on cost, companies will never achieve a customer-centric response,” she said. “In a customer-centric strategy, the value chain makes choices on how to serve and respond to the customer based on cost-to-serve, channel and value chain strategies…the key is to orchestrate cross-functional alignment with an outside-in focus.”

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Integration is the Key Component in Gartner’s New S&OP Model

Integration is the new stage in the Sales and Operations Planning maturity model that IT advisory giant Gartner has disseminated widely through business and industry worldwide.

The original 4-stage model – React; Anticipate; Collaborate; Orchestrate – did not adequately align supply chain strategy with anticipated consumer demand, argued industry executive David Vallejo. The new 5-stage model achieves this, he said.

“Stages three and four of this model evolve toward establishing a demand-driven S&OP process for a more profitable supply chain response that is aligned with strategy. Companies in these stages begin to look outside-in,” Vallejo said. “They sense and translate demand signals around their different products and channels, and they segment supply chain processes based on service expectations and volatility. Companies with the most mature processes extend their demand-driven approach to structured trading partner collaboration and orchestration of the extended value network.”

The new model “provides a more granular description and advice for each stage,“ he said.

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Omni-channel’s Day is Soon Arriving in B2B Integration

Omni-channel marketing, ubiquitous now in business, has been an important component of marketplace visibility. Those challenges have mostly been shouldered by retailers in the past, but have now become a priority in B2B integration.

Beyond its role as a buzzword, omni-channel is the concept of operationalizing customer viewpoint across transaction processing. It allows for more effective market segmentation and customer profiling, and the fine-tuning of demand and response – all primarily marketing concerns.

But omni-channel’s core principles – continuity in cross-channel execution, and data consolidation across channels – are perhaps even more central to B2B integration than to marketing. Removing inefficiencies in data is central to B2B integration, and data consolidation aids significantly in that effort. And omni-channel implementation encourages the streamlining of process, which is just as important.

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