Supply Chains Need P2P Plumbing

Thursday, May 1, 2008 by Mistlee

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Supply Chains Need P2P Plumbing

By James Cherkoff

Supply chain management is not a term to get the blood rushing but it is a vital corporate function that describes taking raw materials from the field to the shelf.

I spent a few years at a large consultancy and saw first hand quite how complex the planning of such supply chains can become. Armies of smart consultants would spend months mapping out the passage of exotic supplies through global megacorps, before turning the whole process into bits and bytes.

To date, supply chains have been just like company plumbing. When blockages appeared they were quickly flushed out to keep the pipes to retailers and customers flowing freely. However, these days, there are some new pipes that are changing the nature of markets - and supply chains. They are the P2P pipes that customers have set up themselves. And these P2P and networked media environments have created blockages that can't just be flushed out with a corporate enema.

Think of the effect that Shawn Fanning's Napster had on the music industry. By linking together all the customers in the market he stuck a spanner in the companies' supply chains and they've never recovered. But all he did was recognise that the marketplace was demanding something different and used the tools at hand to meet it.

What if the music industry had extended their supply chains to include some of these new P2P pipes? By focusing on rebuilding the marketplace, rather than protecting their industry, they could have trousered the revenues that their customers wanted to give them - rather than suing them for the ones that they didn't. Instead they despatched a million writs, let Apple hijack the entire marketplace and joined the DRM-free party when it was too late and their reputations were dirt. But that's all hindsight right? Well yes, but it's also a warning for companies who still that think their supply chains stop at the corporate walls. Compare the experience of the music labels to Lego who have extended their own supply chains into the 'grey' market where their customers are busy innovating - and plumbed them right back into the business. The company's vision in this area has transformed its fortunes.

So where do you start? The first step is to understand which P2P pipes are relevant - and remember they may 'just' be small discussions about problems or innovations. There are many ways to do this. Dell's IdeaStorm and MyStarBucksIdea should help both companies stay on top of any new plumbing appearing beyond their firewalls and allow them to act. Alternatively, you can ignore the whole thing and hope that the next Shawn Fanning isn't doing some P2P plumbing on your supply chains as we speak.


About the Author:
James Cherkoff is a Director of Collaborate Marketing, a consultancy in London which helps companies in Europe and the US operate in networked media environments. He is editor of the blog Modern Marketing and contributes articles to the FT, BBC, Independent, and the Guardian. James speaks at conferences and events around Europe and the US, including MIT MediaLab and Reboot in Denmark. You can here him here. When he isn't knee deep in the blog-world he is likely to be discussing Arsenal FC or playing peek-a-boo.
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