Buying and Selling via the Internet of Things
The Internet of Things (IoT), Machine to Machine (M2M), along with allied technologies such as additive manufacturing, are rapidly altering the perceptions that many of us have regarding how things will be made and sold in the very near future.
Many people forecast a significant disruption in the arena of marketing and selling. Some even go so far as to suggest that sales is a dying vocation; I think that is a stretch. While there will be significant changes in the how and when of sales, selling will nonetheless be required.
Consider how things were sold in the past versus the picture of contemporary selling that is rapidly evolving.
The year is 1975.
The large lobby of the purchasing department of the Johnson Company is busy every Monday morning. Each Monday, the purchasing agent for Johnson posts new bid requests for products and services that Johnson wishes to buy. The bid requests are posted on a series of clipboards hanging along the edge of the reception counter.
The lobby is filled with sales reps who have all previously registered with Johnson as eligible sources of products and services for the company. These sales reps are waiting for their turns to review the bid requests for any products that they might be able to supply. This ritual is repeated every week for most of the folks who are milling around in the lobby.
Joe, who represents the Copier and Printer Supply Company, flips through the bids on each clipboard looking for opportunities that he can address. Occasionally he jots down a bid request number until he completes his review. Once done, he hands his list of numbers to the clerk at the reception desk who pulls the corresponding bid requests and makes copies for Joe.
Joe returns to his office, and using his pricing lists, a few phone calls to his suppliers and a quick strategy session with his manager, prepares a response to the Johnson Company’s bid requests.
He types up his proposal later that week. He is quoting on providing several thousand reams of letter-size bond paper for use in the Johnson Company copiers. It’s a big order, so he has arm-wrestled his management and suppliers to apply a sizable discount.
The bid is notarized and then mailed, via registered mail, back to the purchasing agent at Johnson.
Several weeks go by until one afternoon Joe gets a phone call from the purchasing agent. He is asked to come in and discuss his bid.
The next day he is sitting across a table from the PA negotiating further concessions that are related to delivery of the paper, billing and finally the overall price.
Joe leaves the meeting feeling pretty good. He has won the business, and yet he still managed to hold on to a portion of the margin built into his bid. He knows that paper sales is a cutthroat business that gets by on razor-thin margins. Price is king when you sell paper.
The PA is happy because he has squeezed a few more pennies out of Joe’s price for paper; he’s getting a year’s worth of paper at a sub-market price. The PA is confident that he will get a bonus for this contract.
Joe returns to his office and places his order with his suppliers on behalf of Johnson.
He takes the rest of week off since he is now in the lead for salesman of the year.
Fast-forward to near present day 2018
A printer/copier device that’s located in an office somewhere within the confines of the Johnson Company runs low on paper. The internal counter hits a threshold number. This triggers an M2M communication with a paper supplier that’s located thousands of miles away. A volume is requested, and a price is quoted. After repeating this process several times, the machine makes a selection that’s based on predetermined business rules, and a vendor is selected for the order. The order is placed. The entire process takes less than three minutes.
No bonuses are paid; no time off for celebration. In fact, the business folks at either end may not even notice that the transaction has occurred until the end of the month when activity reports are generated and reviewed.
What does this mean?
The biggest difference for selling operations is that the nature of the sale has changed. The human-to-human aspect of selling had nearly nothing to do with this specific transaction. Months, or perhaps years ago, a relationship was negotiated between the supplier and the buyer.
The networking infrastructure was put into place to ensure that the supplier’s systems could communicate with the buying company’s systems. Business rules related to pricing, quantities, delivery schedules and product specs were entered into both selling and buying systems.
The relationship was built on human-to-human communication, and the transaction was negotiated, approved and executed at the machine level. Selling in the future will feature emphasis on building the relationship, not on moving so many reams of paper.
This is good news for sales with incumbent or entrenched vendor supplier relationships in place. As long as the products purchased and shipped remain within spec and are priced competitively, this relationship will remain strong.
The challenge for selling will be to break into these established relationships by offering some compelling reason to give their product or service a chance.
Learn more about how Cincom is making IoT work for manufacturers: https://www.cincom.com/iot.
Source: Manufacturing Business Suite