1. IBM Software
Smarter Commerce
Smarter commerce for
consumer electronics
Redefining the value chain in the age of the
connected consumer

2. 2 Smarter commerce for consumer electronics
When we talk about the world becoming increasingly inter- Consumer electronics today: Industry
connected, instrumented and intelligent, the most ubiquitous challenges and opportunities
example is the smartphone. It collects and disseminates data The demand cycle is only one component of the challenges man-
while its users are at home and on the go, likely serving up just ufactures face as volatile marketplace forces disrupt the consumer
as much—if not more—dynamic, socially driven information electronics industry. The cost of developing and manufacturing
as static, always-there web content. And other consumer elec- new electronics continues its rapid climb. Large investments in
tronics companies are deep in the revolution of smarter prod- licensing new technologies and maintaining expert development
ucts, providing not just one-dimensional devices but entire teams are required for designing and qualifying products that
customer experiences. address ever-higher demands for performance, functionality,
communication, reliability and power consumption. And build-
With the accessibility, mass volume and easy sharing of informa- ing next-generation fabrication facilities has become a multi-
tion, a new consumer emerges—one who is empowered and has billion dollar investment. At the same time that costs go up,
taken control of the relationship between buyers and sellers. profit windows shorten as demands for new innovations con-
Today’s electronics consumers are enabled by technology and tinually replace existing technology.
social media in highly mobile smartphones, tablets and countless
consumer products with Internet connectivity, near-instantly Many of today’s consumers care less about the consumer elec-
sharing information with the world as they search for the best tronic device itself and more about the experience it delivers. As
deals and highest value. They review manufacturers, distributors such, manufacturers must shift their thinking from developing
and retailers alike, sharing both positive and negative experi- and building devices to creating experiences. For example, they
ences, and may even trust each other’s recommendations more should focus less on selling TVs than on crafting a personalized
than manufacturers’ websites or marketing campaigns when entertainment, advertisement and shopping experience. Rather
determining what and where they buy products. Customers than simply selling a picture-taking device, camera manufactur-
can make or break brands with a few keystrokes and clicks of a ers also need to be in the business of creating and sharing mem-
mouse, emerging as advocates or detractors. This new kind of ories. Instead of just selling home appliances, manufacturers also
consumer is creating a different dynamic between buyer and need to tout how their products simplify and “green” people’s
seller and dictating how businesses must interact with them, lives. This transformation from merely manufacturing devices
all the while growing expectations for high-quality service and to creating experiences is made possible by advancements in
performance, competitive pricing, and quick delivery and prod- technology and device interconnectivity. However, such tech-
uct returns. nology is paired with a deeper level of development, manufac-
turing and supply chain complexity.

3. IBM Software 3
Because different component suppliers may be required for each
product release or when suppliers offer improved pricing or a new What is smarter commerce?
function for an existing component, the supply chain must be
reconfigured to accommodate the changes. At the same time, Smarter commerce is a strategic approach that places the
customer at the center of business operations. In turn, busi-
companies have merged and consolidated to pursue economies
ness results and benefits naturally emerge:
of scale, fill product gaps or acquire new technologies—leaving
newly united organizations with disparate, nonstandardized sys- • Get more out of the insight generated through customer
tems and processes at a time when it is critical to collaborate on interactions
designs, procurement and distribution as quickly as possible to • Capitalize on social and mobile commerce
• Synchronize the value chain to deliver consistent and pre-
meet demand for the next best product.
dictable outcomes
• Improve collaboration and visibility for your customers and
With ongoing volatility, complexity and increasingly empowered
partners
customers, consumer electronics companies need a new path
• Drive growth by enhancing, extending and redefining the
forward. At IBM, we call that path smarter commerce. value you provide to consumers
Smarter commerce: shifting focus to
the customer The commerce cycle
A smarter approach to commerce starts with embracing empow- A smarter commerce approach helps manufacturers more eas-
ered consumers and placing them at the center of your opera- ily manage and quickly adapt their buy, market, sell and service
tions. While customer focus is not a new idea, truly making it processes to center decisions and actions around the customer.
happen on a smarter planet requires electronics manufacturers It can increase the value companies generate from their custom-
to discover, gather and act on insights generated through social ers and partners by using customer insight to drive an enhanced
commerce. This approach helps companies more effectively and personalized experience and can offer new levels of company
market, sell and service their products as well as better align differentiation, potentially leading to greater customer loyalty,
their supply chains—resulting in improved margins, new rev- revenue and margin growth, and agility.
enue streams, better efficiency and improved outcomes across
the value chain.

4. 4 Smarter commerce for consumer electronics
A smarter commerce approach can help transform and improve
efficiency at each stage of the commerce cycle: buy, market, sell
and service. Buy
Buy—Optimize supplier and partner interactions based on
changes in shopping and buying behavior from across the sup-
ply chain. Generate new and differentiating customer value by
reconsidering partner roles and relationships.
Market—Deliver timely and personalized engagement across
Service Customer Market
multiple touchpoints by using deep insights about customers
gleaned, in large part, from the global conversations taking
place online.
Sell—Facilitate customer and partner engagement so they
can collaborate across touchpoints using the interaction
method—such as person-to-person, digital, social or mobile—
of their preference. Sell
Service—Enable streamlined customer service across customer
interactions and channels, and anticipate customers’ behavior
Figure 1: A smarter commerce approach can help transform and improve
and take action to keep them loyal. efficiency at each stage of the commerce cycle.
To achieve this depth of personalization in a four-part customer- Consumer-driven buying experiences
centric process, smarter commerce focuses on two key busi- Today’s consumers are empowered—perhaps more than ever
ness imperatives to support the empowered customer: create before—so it’s imperative to align the buying process itself with
consumer-driven buying experiences and develop adaptive what they want. This alignment can be thought of as an “out-
supply chain networks. side in” way of driving corporate processes because it doesn’t
start with a business’s internal processes and work outward to
determine what customers can have and how they can have it.

5. IBM Software 5
A 360-degree view of the customer For example, with traditional data capture approaches, you might
Businesses have access to smarter commerce solutions that can identify a few distinct customer segments. Manually developing
provide insight and a 360-degree view into the customer life online campaigns for four or five segments is not too onerous a
cycle—well beyond what happens at the time of purchase. This task. But with dramatically improved target segmentation, you
visibility can help a company influence preferences when a con- could have hundreds or thousands of “microsegments.” This
sumer is thinking about a new purchase. And after the purchase, increased insight is practically useless unless you have the capac-
companies can enhance loyalty by treating customers with first- ity to act on it, making automation a necessity.
class service—in the way they expect to be treated—after the sale.
Real-time customer personalization
Additionally, deeper customer insight can help businesses intel-
Is it time to buy I am interested ligently decide what to present to customers at the time of an
a new one? in the product. online or phone-based purchase. “Next best action” recommen-
dation technology adjoins the real-time behavior of a customer
with that customer’s buying history and interaction preferences
to determine which cross- and up-sell products to offer. The goal
I need help. I made the is to sell solutions—however the buyer defines them—and not
purchase.
just products. The key to doing so is making the process as seam-
less and natural-feeling to the customer as possible.
The consumer electronics manufacturer has to think about cross-
I wish I could do … How do I use this?
channel selling differently than the retailer, which deals directly
with the end consumer. Typically, only a small percentage of the
Figure 2: With smarter commerce, you can guide sales, shape the demand for manufacturer’s business will be direct to the consumer. Most
electronics and simplify complex ordering.
often, consumer sales occur through their channel partners, such
Improved customer segmentation as retail companies, meaning manufacturers don’t have detailed
With insights from a 360-degree view of the customer, companies point of sale data by store. However, you can use the customer
can more precisely delineate marketable customer segments— insights you have gleaned from marketing analytics applied to
beyond typical demographics- or psychographics-based segmen- social media to develop more compelling offers and terms for
tation. Deeper insight enables businesses to segment customers your channel partners. These insights can also help you offer
based on actual customer behaviors and sentiments expressed in channel partners better information on how to increase their
various online or social media venues. Smarter commerce solu- own sales.
tions not only make it easier to capture and analyze customer
data from such venues but also automate responses in line with
that better segmentation, which would practically be impossible
to do manually.

6. 6 Smarter commerce for consumer electronics
Automated configuration and entitlements rules Improved ecosystem visibility
If you sell highly configured products and services, then one In a survey of chief supply chain officers by IBM, the number
challenge you may have is in enabling your salespeople, your one challenge mentioned was that of visibility.1 The problem
channel partners and your end customers to accurately, reliably of visibility has grown more acute over the years as supply chains
and quickly configure an order and the associated terms of have grown in complexity—in number of trading partners, prod-
shipping, installation, packaging and more. For many compa- uct and service offerings, channel and distribution partners, logis-
nies, this is an error-prone and costly manual process—one tics disruption risks, and so on. A smarter commerce approach
filled with numerous exceptions that consume scarce time and can improve visibility and supply chain transparency to connect
money to resolve. With a smarter approach to commerce, you the commerce ecosystem, helping you minimize risk to your busi-
can automate configuration and entitlements rules, signifi- ness and to the fulfillment of your customers’ orders.
cantly reducing huge amounts of manual exception process-
ing and delivering the product according to the service level
agreements you have established.
By using insight to create a customer-driven buying experience,
consumer electronics manufacturers can shorten sales cycles;
increase customer acquisition rates and loyalty; and reduce sell-
ing, general and administrative costs per converted lead.
Adaptable supply chain networks
While smarter commerce is about refining the knowledge of and
response to individual customers, it’s also about optimizing stra-
tegic, tactical and operational planning across the supply chain.
A smarter approach to commerce can help you adapt your sup-
ply chain processes so you can provide an optimal solution to
customers based on their priorities and your capabilities at a
reduced cost to you.
Many manufacturers have reasonably good processes around sales
and operation planning, but these processes and many others are
seldom optimized with advanced technology. Smarter commerce Figure 3: A smarter commerce approach can help you connect functions
solutions optimize processes through better collaboration and across enterprises so you become aware of potential disruptions and under-
insight across the enterprise, better enabling you to align your stand overall supply chain performance as well as contributors to, and root
causes of, risks.
supply chain with customer wants. For example, better collabora-
tion and insight across the supply chain can inform you of how
much inventory to have and where to have it.

7. IBM Software 7
Better asset recovery rates Smarter commerce in consumer electronics—how it
Returned products are an increasingly important issue to con- really works
sumer electronics manufacturers. Returns are often initiated by Smarter commerce is more than just an idea—when applied,
a channel partner, such as a retailer or distributor, and sometimes it provides real business results. The proof is how IBM helped
processed by a third party, such as a logistics service provider or these consumer electronics companies transform their approach
a repair depot. For many companies, the return process lacks to commerce by focusing on the customer.
technology and process sophistication, relying mostly on man-
ual steps. Smarter commerce solutions can help consumer elec- • FCI, a leading European electrical connectors manufacturer,
tronics companies gain visibility into returns to improve the is using commerce solutions from IBM to extend its catalog
consistency and speed of determining the disposition of returns and electronic commerce capabilities to its customers and dis-
(repair, replace and so forth) and boost the asset recovery rate tributors. FCI has been able to increase its capacity to handle
for returned goods. rising volumes from new government institutions, enabling
rapid growth. In the process, it has also reduced operating costs
Creating adaptive supply chain networks that align with and can by US$1 million each year.
deliver on customer expectations can help you optimize inven- • Jabil Circuit implemented an IBM-based unified integration
tory and cash flow; reduce logistics cost; achieve higher on-time, platform that helps reinforce commercial interaction standards
in-full performance; and facilitate more scalable and efficient and customer service levels to improve supply chain visibility,
business-to-business trading partner collaboration. enhance business efficiencies and boost customer service.
• SMA Solar Technology, with help from IBM consulting and
IBM for smarter commerce IBM WebSphere® Commerce software, created a business-
For more than 100 years, IBM has been offering comprehensive, to-business online marketplace for its clients. The online
integrated solutions that are flexible, open and able to provide marketplace provides a common platform for SMA and its
positive business outcomes to businesses of nearly every kind. clients to automate the entire ordering process, including
Our comprehensive smarter commerce solutions span both the placing orders, exchanging order status information and pro-
buy and sell sides of commerce, helping you place your cus- viding product information.
tomer at the center of your operations using social business
capabilities, collaborative processes and business analytics. Our For more information
integrated products and capabilities are industry focused, and To learn more about smarter commerce for consumer elec-
our business analytics offerings enable you to gain a single view tronics from IBM, contact your IBM representative or IBM
of the customer and track the customer’s behavior across chan- Business Partner, or visit:
nels and touchpoints. To handle the increased need for storage ibm.com/smartercommerce
and computing power generated by new demands and devices,
IBM offers workload-optimized software and servers tailored
to address those requirements.

8. © Copyright IBM Corporation 2011
IBM Corporation
Software Group
Route 100
Somers, NY 10589
U.S.A.
Produced in the United States of America
November 2011
All Rights Reserved
IBM, the IBM logo, and ibm.com are trademarks of International Business
Machines Corp., registered in many jurisdictions worldwide. Other product
and service names might be trademarks of IBM or other companies. A cur-
rent list of IBM trademarks is available on the web at “Copyright and trade-
mark information” at ibm.com/legal/copytrade.shtml
References in this publication to IBM products or services do not imply
that IBM intends to make them available in all countries in which IBM
operates.
The information contained in this documentation is provided for informa-
tional purposes only. While efforts were made to verify the completeness and
accuracy of the information contained in this documentation, it is provided “as
is” without warranty of any kind, express or implied. In addition, this informa-
tion is based on IBM’s current product plans and strategy, which are subject to
change by IBM without notice. IBM shall not be responsible for any damages
arising out of the use of, or otherwise related to, this documentation or any
other documentation. Nothing contained in this documentation is intended
to, nor shall have the effect of, creating any warranties or representations from
IBM (or its suppliers or licensors), or altering the terms and conditions of the
applicable license agreement governing the use of IBM software.
All customer examples described are presented as illustrations of how those
customers have used IBM products and the results they may have achieved.
Actual environmental costs and performance characteristics may vary by
customer.
1 IBM, The Smarter Supply Chain of the Future: Insights from the Global Chief
Supply Chain Officer Study, October 2010.
Please Recycle
UVB12349-USEN-00