In 1918, Henry Ford created an efficient environment to facilitate the manufacturing of automobiles. Lacking the cooperation of parts suppliers, the key components required were manufactured on site, providing the just-in-time arrival of parts needed to streamline Ford’s assembly lines. The effects were a reduction in time, in cost, the creation of the world’s most celebrated manufacturing facility, and the death of other automobile manufacturers that refused to follow suit. The Packard automobile for example, the last quality-made, major automobile manufacturer in America took another 40 years to perish, in no small part due to the actions of the firm’s suppliers. Time and time again, the failure of a business can be traced back to a poor retailer/supplier relationship.
Integration provides a window into the soul of business
Ask any convenience store operator how he views his suppliers, and nine times out of 10, he or she will speak about the problems and the serious mistrust that exists between themselves and their trading partners; citing 65% of all invoices containing errors, with each error costing as much as $400 to reconcile. They will claim that most of the time the retailer eats these losses. They will point out the unfair ‘deals’ they must accept in order to get the much needed discounts, and how the suppliers short them on deliveries, and fight over space inside the coolers and on the sales floors.
When we talk to the suppliers, they will talk about how they struggle to keep peace in the relationship, how the retailers expect more than the suppliers ever intended to deliver, how long it takes to get paid, the enormous cost of the deliveries and the endless arguments as to who is at fault in most situations. They will blame invoice errors on mistakes made by retail store managers when ordering and receiving stock, and say that most of the time the supplier ends up absorbing the losses.
The sustainment of this continuous love/hate relationship between suppliers and there retailers keeps retailers ready to switch suppliers at the drop of hat, and suppliers must live in the constant fear that a large retailer will suddenly stop ordering. The relationship begins to die, even before the ink dries on the agreement.
Retailers that are growing, are those that seek to integrate with their suppliers and other trading partners
The facilitator of this paradigm shift is Cloud Computing. Cloud Computing makes possible a new relationship between retailers and suppliers — a mutually beneficial environment that guarantees the successes of both. It dissolves the mistrust that exists between them, and provides a playing field where both can function for the betterment of one another.
But it’s not so much about the technology; it’s about how retailers will progress, as visionaries begin to abandon traditional desktop computer systems and local area networks, and are encouraged to embrace new technologies required to make integration a reality. While successful partnerships may thrive, the carnage could be horrific, because it will annihilate the bulk of the existing information technology work-force who will be bulldozed into graveyards alongside typewriter salesmen and buggy-whip manufacturers.
The cycle of life over death
The demise of information technology (as we know it) started the moment it began. ‘IT’ is one of the few technologies that was born and evolved specifically for the purpose of destroying itself. While the Internet continues to flourish, one use of the Internet proved to be a disaster. The ‘dot com bubble’ in 2000, is a real-life example of an idea that exploded and caused many companies to fail. Like smashing a spider and seeing hundreds of little spiders spewing in multiple directions, the death of one technology generally results with the creation of hundreds more fledgling technologies filling the void. Technologies that may not fare well with the technologies that created them. Technology is both dead and alive at the same time. Companies that latch themselves onto dying technologies will die with them, or at the least become incredibly sick.
All technologies are transitional and their genealogy can be traced through generations that proceeded them, and their ancestors to come. For example: Celluloid film evolved into video tape; video tape into laser disks, laser disks into DVDs and DVDs into downloadable, streaming video as evidenced by the rise of NetFlix and the resulting death of Blockbuster Video.
Desktop computers running DOS, Windows, Unix, Linux and Mac OS, are transitional technologies as well, and will be remembered as temporary bridges from ‘time-sharing’ of the 1970s, to large data centers accessible over the Internet. It will be decades more before desktop computers will become entirely extinct; however, they have already begun their deadly slide into oblivion as thin clients like cell phones and tablets rise up to fill the gap. A company no longer needs to own a computer, but the resistance to change only applies at the local level. The Cloud exists whether we accept it or embrace it. Technology evolves whether we choose to recognize it or not.
90% of desktop computers and local area networks are obsolete and going nowhere
Retailers, for example, will be compelled to join global networks of interconnected businesses in order to survive. Suppliers will need to change as retailers will demand more timely deliveries of the right inventory to meet ever accelerating customer needs and desires. Today, most retailers are accustomed to carrying twice the inventory needed, and as markets change rapidly, the results have been warehouses crammed to the ceiling with obsolete and unsellable merchandise.
Suppliers’ inventory control systems are antiquated and desperately in need of re-engineering
The proof will come as we begin to see more cloud networks forming between trading partners and advanced by the throngs of cash-poor data centers operating at a mere 10% capacity. The era of Cloud Computing is reality. If history has taught us anything, as we evolve into something even greater, the mass movement to Cloud Computing will just be beginning, and the cycle of life and death will go on.