Until recently consumers were willing to wait as long as they had to, to get their hands on hyped-up products offered by the hottest brands. They had no choice. But the business landscape has changed dramatically in the last decade. Amazon Prime exploded on the scene in 2005. Since then, free and fast shipping has ceased to be a privilege and is now an expectation. More companies are investing in their own immediate fulfilment services to get products to customers faster because they know that brand reputation alone is no longer enough to drive sales.
But it’s not just a matter of up-levelling last-mile logistics. Creating real value for the customer — making products available at the right place and time — depends on being able to view and react to disruptions and variables all across the supply chain, in real time. That’s how today’s brands beat out the competition. But with the current mindset the vast majority of companies are operating their supply chains on, the needs of the customer are sometimes forgotten. We’ve pulled together a few reminders to help businesses keep their customers at the center of their supply chain operations.
1. Put yourself in your customer’s shoes
Wall Street Journal reporter Erica E. Phillips recently tweeted an anecdote about a supply chain consultant she had interviewed. To quote the consultant: “I have one fault: I don’t understand the consumer. Like, why do you need that T-shirt in one hour?”
It’s a mistake to dismiss the new “I-conomy” as a mere product of consumer impatience. Americans work more hours than citizens in any other industrialized nation. Along with that, more people are valuing quality of life pursuits like sports, travel, and family time. In this light, it’s hard to fault us for having higher expectations for product availability when we happen to find the time to make a purchase. It’s not just about wanting things “now.” To take a more nuanced approach, consumers are seeking accountability from brands. They don’t want to be left on the line wondering where on earth their item is. They want the convenience and predictability that comes with products being available — on the shelves or on their doorstep — when they want them. The “one-click-buy-now” mentality comes from a place of wanting to simplify and streamline the buying process. And that should be a goal not just for customers, but for businesses as well.
2. Think of better product availability as a way to drive product innovation and inventory planning — not another burdensome requirement
You might recognize this scenario: you’re flipping through product reviews on Amazon and a negative rating for an item you’d been coveting catches your eye. Some clicking around reveals that most of the poor feedback is not from people who didn’t like the listing, but from those who didn’t get it at all, received it late, or received it with missing parts. Sound familiar? Now re-envision the scenario — but instead of an e-shopper you’re a product lead reading reviews of your team’s latest offering, or an inventory manager planning orders for the year based on customer feedback.
Getting products to the right place at the right time isn’t just a prerequisite for keeping customers. It’s also vital for a healthy feedback loop. Consumer data in the form of feedback can’t drive future product development if consumers aren’t even getting the product. And supply chain planners shouldn’t be making million-dollar decisions on imperfect data caused by patchy product availability. Getting rid of defective inventory frees up resources not only to improve on your products faster, but also to drive faster production cycles. That way, if demand increases you can react fast to ramp up production. Product availability may be based on improving the customer’s experience, but ultimately it also results in gains for the rest of your operations.
3. Remember, it’s not all about e-commerce
E-commerce is on the rise, and companies are investing to make their last-mile logistics more dynamic, flexible, and faster than ever before. But the myth of the “retail apocalypse” at the hands of e-commerce is just that — a myth. The truth is that physical storefronts still play a vital role in industries from apparel, to tech, to food and more. Today’s consumers seek convenience, but this doesn’t mean they want to conduct all of their shopping through the click of a mouse. In the new “experience economy” people want to touch, photograph, and try things on for size — and still have the option of placing an order online that will arrive on their doorstep in a day. Businesses that can creatively mix experience and convenience, all while combining online and offline shopping experiences to offer flexibility, will profit the most. But this will require seamless logistics and informed planning to ensure that stock is in the right place at the right time to meet demand.
Companies that make assumptions about their customers will continue making blind demand forecasts based on outdated data, and making up for these blind spots by holding inventory. Some companies, due to sheer scale, might be able to “afford” this kind of inefficiency — setting up more distribution centers in more locations with more products to avoid stockouts. But is this really an ideal supply chain model? Digitizing to bridge sources of information is necessary for companies that want to cut excess from their operations in terms of time, inventory, and materials. But those who do so without weaving an understanding of the customer into every supply chain decision will still fail.
By Kalvin Fadakar - March 13, 2014
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