The industrial economy has long needed a digital transformation.
The mainstays of industry – where things are made, the tangible goods from semiconductor chips to cars to industrial agriculture (fertilizers etc.) to… well, you name it – have yet to fully complete some of the innovations seen in other sectors catch up. These are the “chimney” links in supply chains that pass on raw materials that are eventually transformed into finished products that help us go about our daily lives.
The Federal Reserve said earlier this month that three years after the pandemic first rocked the world, supply chains are back to normal.
But the pandemic has of course exposed inefficiencies inherent in a number of sectors as buyers and suppliers migrated to work-from-home environments. And suddenly the faxes, the paper checks, the paper contracts and the phone calls were no longer tenable.
Although things have returned to some semblance of normalcy, according to the Fed’s findings, forward-thinking companies have found the willpower to more comprehensively modernize their processes so they are prepared for the next potential earthquake. Inflation, of course, remains a major factor spurring companies to rethink how they go to market, how they find suppliers and, of course, how everyone gets paid.
In this first part of a series, we look at the emergence of platforms and some of the so-called “consumerization” of B2B interactions for industries that have been around for hundreds of years.
And against this background we see the blurring of the digital and the spiking of the physical realms. As Karen Webster of PYMNTS noted in a column on Monday (March 27), “The app economy that emerged in the 2010s inspired innovators to create the infrastructure and apps for the consumer-centric version of the digital-physical convergence worlds. Innovators weren’t inspired to create apps that asked users to leave the physical world, but instead used technology to create more convenient ways to live in it.”
Both sides… now
The most immediate digital innovations, transforming the way things were done in the “chimney” economy, we note, are tied to bringing together the different sides of a transaction. The more readily buyers and suppliers can come together – while pricing at the same time – the more tightly convoluted supply chains can become.
The steel industry is probably one of the most visible examples here. As PYMNTS wrote last year, Shep Hickey, CEO of online platform Bryzos, told Karen Webster, “There are certain sectors that have a decent amount of inventory and prices may not be as volatile. Then there are other sectors that are in the middle of a supply shock and it’s difficult to find what you need.” The Bryzos platform, he noted, connects buyers and sellers through anonymous transactions with both parties until the deals are completed and completed (via Bryzos checkout and documentation processes). There is also a Buy Now, Pay Later (BNPL) component. Paying over time in visible installments is proving to be a lure for other marketplaces as well. Within the construction, DOZR, which announced late last year that it is introducing new BNPL functionality, has embedded this functionality into its checkout process.
In another example, ChemDirect has cemented its place as an online marketplace for specialty chemicals and a central hub to bring buyers and suppliers together. As with most online platforms, the offerings are extensible, with integrated logistics planning, credit terms and real-time inventory delivered directly from verified suppliers. “We integrated logistics into our platform,” David Haase, President of ChemDirect, told PYMNTS. “So when you buy a chemical, when we’re shopping, we take into account the total acquisition cost and plan the logistical part of the procurement.”
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