Evolution of Industrial Fabric
Manufacturers must adapt to the new organization of final markets, namely, electronic commerce, which is considered as online selling, as we have seen, but also intermediation, which is defined as a new form of harmony of supply and demand.
This adaptation is mainly done at two levels:
• Internal organization and
• Mode of interaction between companies.
In terms of internal organization, the distinction between a front office in contact with intermediaries and a back office where the products and services sold are actually produced is becoming increasingly clear. (If the company manages to integrate the brokerage function vertically with customers)
Thus, the production process is divided between:
• A product and service identification phase, a phase where the agent has the advantage of knowing customers about all aspects of their consumption (horizontalization);
• Both should benefit from strong economies of scale.
• It is also a true production phase that must accept reduced lead times to serve differentiated demand.
On the one hand, we can talk about vacancies to characterize these new firms that subcontract and reposition their actual production. (in any case, production stages that do not offer a clear differentiation perspective)
On the other hand, intermediaries for the management of their customers, besides taking risks, are the main function of transforming standardized production into products adapted to each type of customer, which remains for such a firm.
In terms of interactions between companies, it needs to control the quality and delivery dates of subcontractors and suppliers. Each company will try to closely control the upstream of their production processes.
Marketplaces will therefore have fewer marketplaces in their trade image, more production coordination centres, and will be implemented gradually from below.
Thus, firms appear as primary nodes, routing centers between two horizontal clusters:
• On the one hand, the production of more or less standardized elements (to reduce costs with the effect of scale)
• Demand management, on the other hand, is also a horizontal activity given the economies of scope of intermediation.
The quality of their services (i.e. the key factor that will differentiate them) will lie in the way business and production IT systems, which today are largely independent, can adapt and work together.
A diagram of the evolution of the industrial fabric following the flattening of end markets is presented. Here, of course, we have only represented information flows used for the coordination of processes.
Physical flows such as order taking, sales, and logistics also include sales pitches, determinants, traditional distribution channels, etc. will include.
Networkcompanies mainly perform the function of harmony between a complex demand. It changes rapidly.
It becomes stable by functioning in communities with production that are frequently relocated, including large workshops, due to the importance of variable but fixed costs.
It provides standardized intermediates. There are products that need to be customized for each customer segment.
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Under these circumstances, competition between companies will mainly depend on the following differentiating factors:
- Where the economies of scale achieved in control itself outweigh the interests of direct connectivity. Whether this control is done directly or passes through Marketplaces depends on the quality of the control for upstream production.
- There is differentiation quality of products and services based on elements provided by intermediaries.
- Companies need to integrate vertically against intermediaries as long as they can horizontally integrate with neighboring products that form a relevant whole for a given community.
- The gap between demand and primary production should be managed at appropriate times.
- The entrepreneurial qualities of risk taking are important for financing innovation, identifying new products, and also managing the resources necessary for that innovation. In particular, the management of a workforce (knowledge workers) must be independent and idiosyncratic.
TRANSITION TO THE ECONOMY ON THE NETWORK
The new economy is not limited to technical adaptations of old economic models to networking constraints.
The example of e-commerce highlights that the Internet changes value by creating a new element, intermediation, as it enables relationships between Internet users. {production - advertising - distribution - referencing}
More generally, traditional coordination, markets, and hierarchies are being replaced by the development of networks.
The Internet can strengthen these models, and this is the argument provided to justify the financing of its development.
In reality, the Internet is shifting these models towards a new kind of coordination. It must be the level between the anonymous freedom of the market and the subordination of hierarchies.
