That irony is not lost on many of the high technology executives who at one time advocated disintermediating their entire dealer channel and taking their largest customers direct only to discover that trust is the greatest catalyst of efficient transactions of all (Smith, Manna, 2004, 377, 378).
4.
Why Disintermediation Failed to Live Up to the Hype
Before discussing the reasons why disintermediation failed to live up to the hype associated with it, there are exceptions that need to be taken into account. The first is in those industries that have undifferentiated supply chains and where price and availability alone are the only differentiators, disintermediation often takes hold. Such is the case with the Indian tea market, and many sectors of the consumer electronics industries that sell on a commodity-based strategy. These are the industries most susceptible to disintermediation as the middle tier of the distribution channels don't deliver that much value-add to the sale of a product that competes just on price or being in stock or not (Dutta, Sarmah, Goyal, 2010, 531). A second area where disintermediation also occurs is in the area of services where the Internet can provide the replacement of advisor, yet the brand supporting this initiate must have earned credibility and trust to be seen as viable to consumers (McCubbrey, Taylor, 2005, et.al.). Disintermediation of the travel industry has become pervasive due to online brands becoming more trusted and seen as more convenient on a 24/7 basis compared to travel agents (Law, 2009, 770). The disintermediation of travel agents has at its basis the convenience factors, supplanted and strengthened with trust in the brands themselves. With these areas of disintermediation in mind, the factors that led to disintermediation overall failing to completely reorder and disrupt supply chains are next analysed.
4.1.
Trust and the Selling Process
The more complex the user's needs are, the more challenging the products or services are to create, the greater the need for having a trusted advisor present in defining how to create viable and stable solutions to these problems. Examples of these types of needs are found in the aerospace and defence industry, where the development, specifying and manufacturing of products is often highly customized to specific needs (Rossetti, Choi, 2008, 507). This approach to manufacturing is often called engineer-to-order, and leads to a product being produced that is unlike any other in the world. Extreme examples of this including the landing gear on a spacecraft or the shielding for the U.S. Space Shuttle. These products require an incredibly complex supply chain that is often governed by specific compliance requirements to military standard specifications as well (Rossetti, Choi, 2008, 507). In this type of supply chain scenario, trust wins over price or availability, and expertise is crucial for the success of the program. The disintermediation of the aerospace and defense industry certainly is happening in the less differentiated and commodity-based products yet will never influence the more complex engineer-to-order areas where trust and expertise is as important as the product itself (Rossetti, Choi, 2008, et.al.). The concept of the trusted advisor, which has been discussed so much by professional services firms globally as part of their unique value proposition, has merit as a defense against commoditization and disintermediation. The greatest value any supplier can provide is knowledge and expertise of how to interpret customers' problems and develop workable solutions. When customers have this level of expectation from a supplier, manufacturer or service provider, this need for expertise is an impenetrable defense against disintermediation. This is where the entire argument of en masse disintermediation in the technology industry fell apart, as many industry analysts incorrectly characterized the entire industry as one that is centered on price and availability -- missing the trusted advisor roles so critical for configuring high-end servers, workstation and entire networks (Smith, Manna, 2004, 376). No Chief Information Officer (CIO) will ever buy a massive, expensive company network entirely online. That need for expertise that connotes trust was far more powerful than many of the industry analysts, authors and pundits had predicted. Trust now dominates the selling process, so much so that every social network has a series of metrics for evaluating the trustworthiness of anyone offering products or services online (Bernoff, Li, 2008, 38, 39). The need for trust will always win over the economics of disintermediation, especially in very complex, expensive and mission-critical systems and components, which are commonplace in the aerospace and defense industry (Rossetti, Choi, 2008, 507).
4.2.
Revenue Follows Knowledge and Accuracy Not Transaction Brokers
The...
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