Wisdom comes by disillusionment.- George Santayana
As Geoffrey Moore said in his seminal technology marketing book, Crossing the Chasm, markets don’t become mainstream and cross the chasm until there is a whole product solution available. Another view of this can be found in Gartner’s “Hype Cycle”. As companies buy into the potential benefits of a new product or service and expectations are high, the new product reaches the “Peak of Inflated Expectations”. As early adopters realize that providers of the new product do not have a complete solution to meet their objectives (or as Moore would say, a whole product solution), companies fall into the Trough of Disillusionment. Eventually, clients experience meaningful benefits from the new product and move on to the Plateau of Productivity.
Is supply chain finance in the trough? I believe we will get there soon unless supply chain finance solution providers and prospective clients recognize the whole product requirements for the head of the supply chain, the buyer. The whole product solution is much more about the supply chain, the procurement/merchandising organization and the services they need than it is about financing. Ultimately it’s the procurement organization that needs to execute against the working capital and cash flow objectives, not the treasury or finance functions. I almost wish I could take the F out of SCF. Yes, financing is a part of the solution. It’s not the sharp end of the stick though and it’s the effectiveness of the other aspects of an SCF solution that means the difference between wallowing in the Trough and feeding on the Plateau.
Published April 15, 2012