Introducing The “Custulator”: Purchasing Power Pushes New Frontiers of Corporate Performance

February 26, 2016

Takeaways

Customers are becoming more educated about product supply chains, and such transparency is good for business.

A new and powerful economic force is emerging from the synergy of high technology, societal challenge, and the age-old lever of purchasing power.  Meet the “custulator” — part customer and part regulator — the creature who will likely transform how enterprises conduct business and buyers buy in the years and decades ahead. 

Today trade press chronicles companies gaining keener visibility of their supply and value chains by harnessing advanced information technology, including cheap and minute sensors.  The ability to granularly oversee and track supplies and suppliers is helping firms achieve new heights in logistical excellence, quality control, and even innovation, yielding greater efficiencies and productivity.

Such uber-transparency is good business practice and an essential risk management tool. Moreover, it’s highly utile at a time when retailers and wholesalers truly own their supply chains, no matter how much they outsource. Evaporating quickly are the days when a seller can blithely respond “I don’t know… Ask my supplier!” to a customer’s inquiry about the provenance of a part or ingredient or how it was produced. 

Evaporating quickly are the days when a seller can blithely respond “I don’t know… Ask my supplier!” to a customer’s inquiry about the provenance of a part or ingredient or how it was produced. 

What’s key is that the same powers that enterprises possess to oversee their supply chains more deftly will flow into the hands of customers.  Not long ago a consumer might shop for a can of chili knowing only the brand, weight, and price of the product.  Eventually the item’s ingredients were revealed. Today labels helpfully contain a raft of important nutritional information.

It’s easy to imagine that soon an app-armed customer will make a purchasing decision between two competing brands of chili based on encoded data that instantly inform the choice more richly:

…where the beans and tomatoes were grown

…what farm raised the beef

…where the spices were acquired, and

…when the food was processed and canned.

 

But that’s just the start.  Buyers will have access to a much deeper and telling mosaic of information:

…whether the beans and tomatoes were cultivated sustainably

…if the cattle ranch raised their cattle in accordance with proper standards

…whether the spices were sourced from a country that doesn’t violate human rights or harbor terrorists

…if the tin were acquired from mines that observe proper labor and safety practices and standards

…how the product compares on price, nutrition, and social responsibility measures

…what ratings the product and its makers received from governmental bodies, industry associations, and NGOs in regard to social, environment, labor, and safety benchmarks

Custulators will have ever more powerful tools to make buying decisions based on a broad sweep of product information, social values, corporate practices, and behaviors and enabling them to wield purchasing power more potently.  Altogether it portends the advent of a novel and intriguing operating system within our free market. While the capability is certainly evolutionary; it just may be that the economic and social implications will be revolutionary by driving  the development of better products, a cleaner environment, safer and better working conditions, and more sustainable business system. 

Here are 10 key questions arising from this gathering force in our economy.

1.     How and when will these tools emerge and fully blossom? 

2.     How will the dynamic play out within different industries?

3.     What new goods, services, and enterprises might this phenomenon spawn?

4.     What economic and social challenges will emerge as “custulator” priorities?

5.     To what degree can and will the “custulator” scale and produce corporate and social change?

6.     How must our companies prepare?

7.     What must our private and public institutions and systems do to ensure that custulator’s standards and expectations are based on accurate information, sound science, and cost-beneficial objectives?

8.     How must government, industry associations, and NGOs get ready?

9.     What downsides and unintended consequences of this new economic force may emerge, and how should we guard against them?

10.  How can America harness this phenomenon to improve our global economic competitiveness?

 

What do you think?  What additional issues and questions would you flag? Future blog posts will dive into the key issues and questions involving what promises to be an interesting and exciting new chapter in America’s economic miracle.