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 / Summer 2003 / Issue 31(originally published by Booz & Company)


Rational Exuberance: The Wireless Industry’s Killer “B”

Finally, if the innovation threatens to disrupt the company’s business model and also radically transform the organization, then the company will have to modify its existing business model or create a new one to address significant competitive threats. Because most companies are unwilling to take such actions, as Clayton M. Christensen showed in The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Harvard Business School Press, 1997), transformative m-business technologies, such as those that span B2E, B2B, and B2C applications, will take more time to be adopted.

M-business interests differ by industry, and within the solution sets, industries also differ in their specific areas of interest. (See Exhibit 3.) B2E solutions, for example, fall into three categories: mobile office (e.g., messaging, remote office), customer care (e.g., sales force automation, contact management), and operational productivity (e.g., fleet management, authorization). The primary solution set in B2B applications is supply chain management (e.g., order tracking, asset tracking, just-in-time delivery, procurement). The two most commonly used B2C applications are customer service (e.g., call center, order processing, billing, payment) and information and commerce (e.g., location services, personalization, and notification).

Industry Differences
When synthesized, the differences among industries become even more apparent, revealing distinctions in the needs they perceive and their strategic priorities. For instance, such sectors as insurance, manufacturing, utilities, retail, health care, services, technology, and government are focusing on performance improvement applications in the B2E arena. Exploring more deeply, though, we can see additional correlations among industries. Banking and insurance traditionally emphasize customer service. But both industries are also placing emphasis on wireless B2E mobile office technology, reflecting the higher degree of mobility of the sectors’ work forces.

Few companies are investing in B2B efficiency improvements. Some, though, are experiencing striking gains. Ethicon Inc., a Johnson & Johnson company that is the world’s leading supplier of sutures and other surgical supplies, is representative of firms seeking operational efficiency improvements through m-business. (See “Ethicon’s B2E Efficiency Effort,” below.)

Focus: Ethicon’s B2E Efficiency Effort

Ethicon Inc., a Johnson & Johnson company, is a leading supplier of sutures and other surgical supplies, providing more than 3,500 products to some of the largest hospitals all over the world. Daily restocking of surgical supplies in emergency and operating rooms is critical to these institutions and to the lives of their patients. In the past, hospitals relied on time-consuming manual methods of checking inventory, registering supply needs, and placing orders.

Ethicon estimated that nearly half of all health-care facilities still placed orders via a fax machine or pager, and another 40 percent placed orders by telephone. These labor-intensive processes were both time consuming and error prone.

Compounding these problems was the fact that many hospitals lacked the information technology infrastructure to automate their supply reorders, and the cost of building such an infrastructure was prohibitive.

Given these constraints and the compelling need for hospitals to maintain their inventories, Ethicon determined that providing an affordable, simple wireless order-entry system for its products would clearly differentiate the firm from its competitors. It took less than six weeks for Ethicon, working with IBM, to develop a handheld mobile solution called E-sy Scan that allowed users to scan the bar codes on items in the surgical supply closet, enter the quantity of items needed into the device, confirm the order, and wirelessly transmit it to Ethicon. This “mobilized” process allows supply managers to relay orders to Ethicon instantly, saving customers significant time while reducing the possibility of errors in the manual maintenance of inventory. Ethicon first tested this wireless service in November 1999 at the Manchester Royal Infirmary in the U.K. Following its success, Ethicon installed this system in 14 other hospitals over the next 16 weeks.

Ethicon’s mobile system demonstrates how value can be created for both the customer and the provider by the application of wireless technology. Ethicon customers using the system report an 80 percent reduction in the time it takes to place orders, a 10 percent reduction in the time supply managers spend ordering inventory each day, access to bulk purchase savings, and a streamlined supply chain management process.

— V.S., T.O'D., and D.R.

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  1. Caroline Junqueira, Sajai Krishnan, and Gregor Harter, “Capturing Value in the Wireless Enterprise Market,” s+b enews, 12/19/01; Click here.
  2. Raul L. Katz, Maximilian E. Weise, and Daniel H. Yang, “Consolidation: The Wireless Way,” s+b, Fourth Quarter 2002; Click here.
  3. Venkatesh Shankar and Tony O’Driscoll, “How Wireless Networks are Reshaping the Supply Chain,” Supply Chain Management Review, July/August 2002; Click here.
  4. Venkatesh Shankar, “Wireless Internet: Growing Pains vs. Gains,” working paper, University of Maryland, 2001; Click here.
  5. Pooneh Fooladi, Ned May, and Euan Davis, Understanding Client Needs: Succeeding at Wireless Professional Services, IDC (2001); Click here.
  6. Ravi Kalakota and Marcia Robinson, M-Business: The Race to Mobility (McGraw-Hill, 2001)
  7. Falk Müller-Veerse, Mobile Commerce Report, Durlacher (November 1999); Click here.
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