Amazon engages its vendors through a web interface it calls Vendor Central. Parties invited to become vendors register on the platform and their relationship with Amazon is managed on it. Why does Amazon operate in this way? Because it is the most cost-efficient way of doing business. All commerce will eventually follow Amazon's lead and engender the efficiency that platforms offer.
This is the third in a series of posts from our recently published vision statement called The Infrastructure Supply Chain Platform. Today we discuss how infrastructure manufacturers will engage with their vendors on a platform to save time, reduce costs and add more value to the end users of the products they produce.
Integrating Manufacturers With Their Vendors
Manufacturers can benefit from engaging their vendors on a platform in the same way that they offer more value to their customers by engaging with them on a customer-facing platform. The platform creates a tight eco-system of vendors that enables them to:
- Maintain closer relationships with the manufacturers;
- Reduce their costs; and therefore
- Pass on greater value to the manufacturers.
This can happen because the platform eliminates costs that do not add value. Consequently, the manufacturer can save money and the vendor can price the good for full value in the most cost-efficient manner possible. If this sounds familiar, it is because this is the fundamental premise of Lean Manufacturing practices.
A vendor-central platform eliminates materials costs that do not add value to the manufacturer.
Consequently, end users (asset managers) will realize the most benefit from the accumulated savings of all those participating before them on an integrated supply chain platform.
How will the platform reduce costs for vendors and manufacturers? Here are a few examples:
Real-time materials records
Barcodes or RFID tags on materials delivered by the vendor to the manufacturer are scanned and automatically entered into the manufacturer's ERP system. As the infrastructure products are manufactured the materials consumed are counted and recorded to reflect a real-time value of the amount of materials on hand. Inventory meters can provide real-time views of critical supplies and inventory levels can be automatically updated in the manufacturer's ERP system.
The vendor will benefit in the same way and will be better able to offer just-in-time deliveries, reducing inventory costs for both parties.
Idencia already offers a rudimentary version of this for managing our customers' RFID tag inventory levels.
Vendors have preferred status with manufacturers.
Vendors who participate on the platform are preferred by manufacturers over those who do not because they can provide better value. With a critical mass of manufacturers on the platform it is easier for vendors to market and sell to them, thus lowering the cost of customer acquisition to the vendor. Using the platform as a marketing medium further reduces the cost to vendors.
We envision a marketplace on the platform called VendorExchange that will enable vendors to connect more easily with manufacturers directly and by using new apps that are offered through the platform by third parties.
Quicker payment for vendors.
By metering material levels using the platform (as described above), the vendor will encourage the manufacturer to re-order in the most timely manner possible. The platform will also be open to financial service partners who provide payment services to participating manufacturers and vendors.
We envision a service called VendorConnect that will accelerate payments and reduce the cost of working capital for participants on the platform.
We call our platform Connected Concrete™. It is centered in data sharing through RFID product tracking and is built to integrate with both internal and external systems. Two weeks ago we presented how it may be used for internal system integration. Last week, we discussed the value that manufacturers can provide to their customers by using it as a customer-facing platform.
If you would like to learn more, please click below to start a dialog or read Idencia's vision for an infrastructure supply chain platform.
Our mission at Idencia is to elevate the productivity of infrastructure product manufacturers. We offer RFID tracking solutions that improve productivity and offer value throughout the value chain. As a cloud-hosted product tracking system that is seamless between manufacturers, contractors and asset managers, Idencia adds information value to all, eliminates redundancy and saves time.