The elevator I take to my office every day has a small video monitor that flashes snip-its of news, some stock tickers and, often, advertisements for products. The last week, a series of those advertisements from Dell grabbed my attention. Each had a singular picture of a particular user, say a hospital, a classroom or what looked like a small agency. And next to the pictures was a brief blurb about a specific solution for that customer. What grabbed my attention is that what is historically thought of as a device manufacturing OEM was completely positioning itself as a solutions provider.
This move of device manufacturing OEM’s to position themselves as solutions providers is definitely a trend and is not isolated to computing. I have seen this same positioning in many parts of High Tech as well as in automotive, industrial and healthcare device manufacturing sectors. Just what is a solution as compared to a traditional product or service offerings? It’s best shown with a couple of solutions examples.
- The Connected Classroom: Several of the market-leading computing OEM’s have offerings for the connected classroom. These solutions typically provide a teacher with the ability to view desktops, to record lectures, to post lesson plans and to foster student collaboration. Students and teachers can download classroom specific applications throughout the usage phase of the products. The OEM’s can also monitor the devices to improve supply chain performance. These improvements come from the ability to use device monitoring information to trace poor supply quality, to sense shifts in product usage that will impact demand, to quantify demand consumption and to better manage field service parts. The solution provides big value to the education market vertical as well as the OEM’s operational performance but is only enabled with integration of hardware, software and services.
- The Digital Consumer / Virtual Grocer: In order to grow market share in Korea, Tesco had to find a way to grow volume without expanding its store footprint. Recognizing a market need to reduce the amount of time needed to shop for groceries, Tesco created a virtual grocery store called Homeplus. Billboards with pictures of products that look exactly like store shelves were placed in busy pedestrian areas like train stations. Consumers can use their mobile devices to scan barcodes which then adds the item to their virtual carts. This data is sent to a Homeplus location where the products are picked and then delivered directly to the consumer’s home. This business model is a device dependent solution in which data integration to the grocer is required to execute plan, source and deliver business processes. For more information on this solution, check out: http://www.youtube.com/watch?feature=player_embedded&v=nJVoYsBym88#at=115 … pretty interesting.
So what does any of this have to do with supply chain? A lot. The biggest gap in today’s ecosystem around solutions delivery is the disconnected networks that exist between the “what” of solutions and the “how.” Product development, services and marketing organizations are largely determining what solutions are needed for customers. In almost every case, these solutions are reliant upon the right integration of physical, digital and data networks. This integration is not just about infrastructure, but is actually most constrained by an understanding of the connection of business process to manage the physical distribution networks and the virtual worlds of data management and electronic software delivery.
Supply chain organizations have long been utilized for process optimization, cost management and network management. These three skills are essential for the “how” of managing a solutions business model. It won’t be long before Chief Supply Chain Officer’s (CSCO’s) [in collaboration with the rest of the C-level staff] will help their manufacturing companies move from product and service OEM’s to Original Solutions Orchestrators (OSO’s). The cutting edge OSO’s will become the new supply chain leaders with dominant brands based on data-focused value networks. A key objective will be to sense, respond and manage the customer’s experience with the system and the solution. So let’s level set on the definition of an OSO…
- Original Solutions Orchestrator (OSO): Manufacturer, service provider or other corporate entity that connects data from the extended customer value cycle with the upstream supply chain to create complete solutions offerings. An OSO comprehensively solves unique customer issues with the right mix of hardware, software and services across the extended customer value cycle. “Solution” examples include remote services, automation, “smart” products (smart city, smart grid, smart control, etc), self-help and device enabled applications.
The data generated and captured across a customer’s experience is the biggest source of potential value in the evolution to becoming an OSO. This new network of information integration with product and service offerings is what I call the Solutions Supply Chain (SSC)…
- Solutions Supply Chain (SSC): The process and activities required to capture and manage information from the extended customer value cycle generated in the system of physical, digital and solutions networks to enable a total solutions offering. The SSC connects data generated from the extended customer value cycle with the physical and digital supply chains.
Currently, there is no clear owner for designing, integrating and managing the SSC as part of the OSO business model. I believe supply chain, as an end-to-end enabler of corporate strategy, has a vital role in connecting physical, digital and solutions networks. For those interested in more information on the OSO business model and the Solutions Supply Chain, my colleague Ray Barger and I will be hosting two webinars on the topic on Tuesday 8/9. For more details, see: http://my.gartner.com/portal/server.pt?open=512&objID=202&mode=2&PageID=5553&ref=webinar-rss&resId=1733521
What do you think? How will supply chain play a role in providing solutions to customers? Do you think any companies are truly OSO’s today?