Large organisations role in bridging the digital divide
By Alan Day
One of the WSIS conferences focuses was on the education and development of SME's from developing nations as a catalyst to reducing the digital divide. We saw that there are a number of programs in place to address this, for example the United Nations e-Trade Bridge which supports and educates SME's in this area.
The e-Trade Bridge program and others like it are achieving good results with a bottom up approach, however an opportunity exists to incorporate a top down approach which would focus on the influence that large multi-national organisations hold. This article looks at how large organisations and their supply chain practices can facilitate the adoption of e-Trade in developing nations SME's.
Whilst there is a lot that can be done to encourage SME's in developing nations to embrace e-Trade, it is often challenging to get these companies to make it a priority unless it is a requirement for doing business (i.e. the customer is asking for it). The change driver within organisations is usually market facing. If a source of revenue is threatened or a new business opportunity exists, small organisations are more likely to change their behaviour (in this case introduce 'eTrade').
Supply chain has a significant sphere of influence in this area, in that multinational organisations have Purchasing and Supply Chain department(s), which typically employ a significant number of individuals (200+) to focus on suppliers and supplier development. As these organisations' spend is usually very large they hold a great deal of influence over supplier's behaviours.
Large organisations are constantly seeking improvement, and usually have the money to invest in adoption of 'e' technologies earlier than their SME counterparts. Therefore it is common for large organisations to push e-Trading applications down the supply chain by demanding on line joint forecasting, real time freight, online stock tracking, and the use of e-Trading tools such as e-procurement, e-auctions and e-RFP's etc.
Taking this concept one step further we see that most multi-nationals have 15,000+ suppliers and if you then factor in their suppliers suppliers, and supplier suppliers suppliers and so on, you are talking hundreds of thousands of organisations many of which are SME's, from developing nations. What you start to see is the supplier pyramid, as depicted below. The challenge then, is to utilise the market forces of the supplier pyramid to derive change within the pyramid base or SME businesses.
How do you do this? There are four distinct phases that a lead organisation (i.e. large multinational) needs navigate to make the change within the supplier pyramid.
1 - Awareness
The large organisations 'C level' executives are aware and understand the benefits and implications of the program
2 - Knowledge
The 'C level' executives have instigated a programme and the procurement/supply chain team understand the concept and can articulate it to their suppliers and in turn their suppliers suppliers.
3 - Mastery
A large organisation is actively practicing the top down approach of driving change within their suppliers suppliers organisations
4 - Educating
The organisation is seen as an industry leader in this field, and educates other organisations on the benefits and various approaches to adopt the programme
So what are the benefits of large organisations taking a role in bridging the digital divide? The benefits of driving change via e-Trading technologies across the supply chain are two fold; for the large organisation embracing e-Trade enables organisations to have better visibility which leads to a stronger ability to control the supply chain, enabling organisations to challenge non-value added activities and therefore improve margins.
For SME's having the customer drive the change leads to higher profile and faster uptake of e-Trade (i.e. the decision is embrace e-Trade or lose business). Having your customer drive this change allows the SME to gain access to the larger organisations expertise and support networks. In addition e-Trade improves processes leading to cost efficiencies. And the best benefit of all for the SME organisation is the introduction to new sales channels, resulting in business growth.
Large corporates can use their sphere of influence for mutual business benefit by driving change within their supply chain and by default the developing nations SME's. By driving this change they are assisting the SME to embrace e-trade, therefore up-skilling their organisations, enabling 'e' efficiencies, and creating new market opportunities.
Ultimately this program should be run in conjunction with other programs such as the United Nations e-Trade Bridge to enable organisations to derive benefits from both the top down and bottom up approach. If implemented successfully this then will add speed to the reduction of the digital divide.
The first step for implementing a program of this sort is to raise the awareness among large organisations of the benefits to themselves, and the developing nations SME's. Large organisations may choose to undertake this as part of a good corporate citizen program, however the author believes there is benefit enough to sell the program on its own. However appealing to the good corporate citizen may be the best approach to gaining momentum within large organisations.
By Alan Day
Alan Day is Managing Director of State of Flux Limited, a supply chain change solutions organisation. For the past 15 years Alan has consulted to many large multi-national organisations on their supply chain strategies and implementing process improvement. Recently Alan Day has acted as a Senior Consultant as part of the UN's e-Trade Bridge program, working with a number of SME's predominantly in India.