Disruption and how it affects you

May 24, 2017 No Comments by

A phrase that is being spoken across many industries, not just locally but globally, is the term Disruption and how it may affect your particular industry. The disruptive behaviours that exist in many economies are placing pressure in historical markets and indeed industries where traditionally, a single product that was well made and enjoyed a captive audience, is now under threat to survive the next financial year!

The building materials industry is not exempt of such behaviour and if one had the time to look back over the last 5 years, one would notice how certain industry leaders have fallen by the way side as smaller, more flexible companies have taken market share, not through manufacturing a better product, but by servicing the industry better! The key to disruption, ironically, is serviceability! In short, it’s not about the quality or cost of a product, as much as it is about supplying the product to its historical, or indeed new customer base at the customers convenience.

Essentially, this narrative could be split between producers of building materials and those who interface with the materials in a selection process. If one considers the latter, contemporary platforms in which to interact with materials are becoming readily available through mediums such as mobile applications. This give access not only to the traditional market, but everyone, including the homeowner possibly considering what materials to use in a renovation.

Supply Chain:

However, the biggest advancements are yet to affect the manufacturers of materials and with that the entire supply chain. So as a manufacturer of a product “or products” that have traditionally been sold on quality and possibly a good deal every so often, how do you remain relevant to your customers? Your competitor now is not necessarily another manufacturer of a similar product offering as would historically have been the case – your competitor is now the supplier, whose strength lies in not only procuring a similar offering to yours, but multiple offerings in various product segments and with supply, becomes indispensable to their customer whether B2B or B2C.

This is not a new trend, Uber has disrupted the public transport industry, AirBnB the hospitality industry, Skype to telecommunications, Netflix to media and the list continues. The scratching of heads around a board room table duly follows this realisation until the term “diversify” is mentioned, albeit tentatively.

The real disrupters do not even make the building material product you do, but can source, sell and supply a fit-for-purpose equivalent way beyond your capabilities…

For many businesses going forward, a diversified approach to market is really the only real, tangible solution to remain relevant in an ever changing business landscape. This may manifest in one’s product offering (whether increasing or indeed decreasing), or in how the market is served, whether directly or through a B2B channel. The key though is that once this approach has been identified, the underpinning factor that will enhance success and relevance is the ability to serve and supply the market accordingly – and in some ways with innovation at the core.

It is important to add that not all companies are necessarily “geared” to diversify at the flick of a switch. Not only does it change the mechanics of how a business operates, but so too the culture and status quo of the individuals within the business. Historical allegiances naturally form to “tried and tested” processes, so to change the direction (which we are all inherently stubborn to accept), requires a collective company effort and may take time in order to correct.

Price:

The adage of quality will earn the right to sell at a price it deems fit, is only ever relevant in a monopolised environment. With disruptive factors as mentioned earlier at play, monopoly companies no longer have this to leverage from and so the quality of a building product now becomes the value-add, or the “feel good factor” supporting the reason you purchased the product, but not the primary factor anymore.

Price in a South African scenario, will continue to be the main factor and the successful companies of the future will have addressed (read squeezed) all available route-to-market channels in order to place their product of choice in the most economical bracket.

Quality:

Quality will be measured and managed by authorities and standards, no longer in the historical control (as a selling point) from the manufacturer. Sales will be determined by a customer who has product readily available, satisfied with their offering and priced within their affordability.

Confidence:

Finally, the manufacturer of today will be far closer to the end-user than is currently the scenario. The human element will continue to provide confidence to customers that require assurance over their product selection, however with a grounded outlook from the manufacturer, ensuring quality of information is both transparent and consistent.

The measurement of this information will be checked through impartial media (Thought Leaders, Content Marketer’s) to ensure the manufacturer, the client and indeed the entire value chain remains transparent and credible to the industry.

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About the author

Brendan Lowen is a qualified Senior Architectural Technologist and Head of Business Development for a nationally renown building materials manufacturer and supplier. Local and Global materials are constantly scrutinised for their fit-for-purpose offering in South Africa, whilst undergoing a route-to-market analysis. He often acts as an intermediary when engaging with the professional, manufacturing and retail sectors and most notably, when a disconnect becomes present within this chain. He contributes media content to the architectural community, through established industry platforms as well as the Advanced-Building website as its Thought Leader.
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