Across industries, there’s a lot of talk about how digital is rewriting the rules of engagement.
We are shown examples of how digital disruption is impacting almost every aspect of businesses – from reinventing business models to transforming business processes. Re-imagining a business platform is almost a requirement in today’s consumer-led and data-driven economy. (You know the businesses that are quoted in every article on digital.)
A key question here, though, is: whether the consumer products industry is indeed facing digital disruption, or does it really need deeper digital innovation? Disruption turns an industry on its head by offering consumers something that previously did not exist, while innovation enhances an existing value proposition – making it better, faster, or cheaper.
It is important to distinguish between the two, because hype often causes businesses to overlook the true value of digital transformation. Companies may presume such radical changes have nothing to do with them, especially if they are already in a dominant market position. So while digital is dramatically changing industries such as retail and healthcare, the disruption in the consumer product industry may not be as severe – not yet anyway. Instead, what consumer products businesses should focus on is how they can transform digitally to gain the capacity to build and grow “live brands.” This is preparation and not protectionism.
Create direct customer experiences: Secure the dominant market position
The digital age has fundamentally shifted customer and consumer expectations. Consumers increasingly value outcomes over products. To build ongoing engagement and loyalty, consumer products companies need to sense and engage consumers and customers in the moment, i.e. build “live brands” by seamlessly delivering highly personalized experiences – anytime, anywhere.
This ability to create direct customer experiences helps consumer products companies create a sharper competitive edge to secure dominant market positions. Leading consumer products companies know this well.
Red Bull sets a fine example in creating direct customer experiences to protect and strengthen its brand. Today, it has moved beyond a beverage company into a content media company spanning web, social, film, print, music, and TV – creating brand experiences of exhilaration and adventure. Red Bull collects data from every touch point that it has with the consumer, building an enhanced profile of every individual so that it can respond with products that consumers desire – whenever and how they want them.
Procter & Gamble recently launched an online, direct-to-consumer subscription business for its Tide Pods (its highest-priced laundry detergent). The service (currently only available in Atlanta), branded Tide On Demand, offers free shipping of Tide Pods at regular intervals. P&G has also been testing its delivery laundry service – Tide Spin – in Chicago. While the direct-to-consumer services may not form a bulk of its revenue, they allow P&G to quickly build a live understanding of its customers, their preferences and habits, and then hone in on these insights to create new offerings that customers want.
Build a real-time supply chain: Support lasting customer loyalty
As consumer products companies move towards sensing and engaging customers in the moment, they also need to ensure a fast and profitable response to dynamic demand.
This necessitates connecting customer insights that brand owners have collated and analyzed with supply chain insights to accelerate time to market. Ultimately, it is about transforming previously linear supply chains into customer-centric demand networks – where demand information is captured through new signals from various sources (such as retailers, wholesalers, sites like Amazon, directly from customers, or the Internet of Things) and fulfilled through the orchestration of a network of internal and external partners.
With that, consumer product companies can start getting answers to questions such as:
- What are my short-, mid-, and long-term views of expected demand across channels?
- How can I combine supply chain planning with strategic, financial, sales, and operational goals?
- How can I extend planning by collaborating with customers, partners, and suppliers?
- How can the company translate the plan into actionable targets for fulfillment systems?
All these should go full circle to help make manufacturing more responsive, optimizing capacity to help ensure availability of finished goods produced just-in-time to meet demand, thereby also lowering inventory costs.
Consumer products companies need to consider how they can create the digital future today. We invite you to learn more about digital transformation for the consumer products industry, where you will get access to valuable resources including whitepapers and customer case studies.