Part 1 in the 3-part “From Old to New with the Digital Supply Chain” series
Regardless of industry, geography, or size, companies in today’s global economy have one thing in common: To win the order, sign the contract, or make the deal, they all strive to delight, understand, and get closer to their customers.
The result is tremendous competition – and the companies that are winning are those that have pursued fundamental transformation. The lesson is clear: To put your own company on top, you need to transform not only how you interact with your customers, but also how you align your supply chain and other business processes to deliver the outcomes your customers desire.
Here are just some of the shifts leading companies are making to their supply chains and business processes to be more centered around the customer.
From sales forecasting to demand sensing (and demand shaping)
To understand your customers, knowing what they have bought in the past is only part of the equation. Why? Because things change – constantly. New trends, evolving tastes, different circumstances – all can impact what customers want. The goal, then, is to move beyond traditional sales forecasting and develop the capability to actually sense demand in the here and now.
This takes information – the kind gathered from structured and unstructured data across a variety of sources. You need to know what your customers are talking about – which requires social media monitoring and sentiment analysis. You need to know what customers are buying – which requires point-of-sale data. You need to understand broader trends – which requires syndicated market research, like that available from Nielsen and other third-party data providers. And because it’s a volatile world, you’ll also want to bring in data on current events and weather conditions. From political coups and regional economic conditions to hurricanes and heat waves, you’ll want to be prepared for how anything impacts demand and your ability to respond.
With all this data at your disposal, you can also add machine learning to identify patterns in real time and get a sense of what’s coming. This helps you move from sensing demand to predicting it. And with a better sense of what’s coming, you can not only prepare better but you can also put yourself in a position to actually shape demand with messaging and campaigns targeted to demographic groups or even individuals.
From taking customer orders to delivering a customer experience
Once you understand demand, it’s typically up to sales and marketing to “make the promise.” But once the customer places the order, delivering on that promise falls to the supply chain.
Increasingly, however, customers expect much more than simple order fulfillment. Today, customers expect faster delivery timeframes and complete experiences that make doing business with you a pleasure.
For many organizations, timely delivery starts with multi-echelon inventory optimization (MEIO) as a way to plan more effectively across distribution centers in a network. Add in demand-driven MRP (DDMRP) with advanced analytics, and you can develop better profiles of buffer stock positions. This helps reduce stock-outs and enables you forward position inventory for faster delivery.
All of this, of course, is table stakes. Leading-edge companies are going a step further with new approaches to logistics that speed delivery even more. Logistics teams, for example, can use Internet of Things (IoT) technology to optimize routes for delivery trucks on the road – or to control robotic units that move goods throughout the warehouse.
Perhaps the most forward-looking possibility is drone delivery. Yes, safety is a concern, but already, Amazon has been granted a patent that may help improve safety conditions with a drone that responds to human gestures.
From outcome-based transactions to sustainable processes
Many customers today evaluate you based on outcomes such as ease, convenience, and speed of delivery, many today also emphasize social responsibility. Increasingly, customers want products that are ethically sourced, sustainably produced, and delivered in a way that minimizes the carbon footprint.
In this regard, blockchain technology is emerging as a new go-to technology to help ensure socially responsible business processes. As a distributed encrypted ledger that ensures the validity of transactions and is virtually impossible to hack, blockchain builds trust directly into transactions without third-party intermediaries such as banks.
The fair-trade coffee beans you buy? How do you know they’re actually sourced from farmers in the rainforests of South America? With blockchain, you have the transparency to show the chain of custody from source to customer. Blockchain is also being touted as a way to minimize or eliminate fraud in cap-and-trade approaches to reducing carbon emissions.
At the same time, it’s important to remember that being sustainable is not only good for the environment – often it’s good for the bottom line. If you can reduce the carbon footprint of logistics process by, say, optimizing inventory or route planning to minimize miles driven, you can also speed delivery and reduce costs.
Cheered on by the customers they serve, many companies today are striving for zero waste, zero impact, or even net-positive impacts on the environment. In the end, this requires a focus on a circular economy where the optimization of assets, equipment, and inventory is critical. Companies with flexible supply chains capable of rising to the occasion are those that will put themselves in a position to succeed.
Join an interactive session featuring Jeff Hojlo, Program Director, Product Innovation Strategies at IDC and Hans Thalbauer, Senior Vice President, Digital Supply Chain & Industry 4.0 at SAP to get inspired about how best-in-class companies are reinventing their supply chain. Register here.