In the last decade, the power of the consumer products supply chain shifted from the manufacturer to the retailer. It is now shifting to the shopper. This is changing the nature of trading relationships and offering new opportunities.
The opportunity from the shift in power is both enabled and enriched by new forms of technologies. The rise of digital technologies –mobility, social and e-commerce – is fueling a new, and powerful fire underneath the traditional consumer goods manufacturer to transform their supply chain processes. The opportunity is to build a customer-centric supply chain that can better serve the customer at the four moments of truth in the cycle of Digital Path to Purchase. These four moments are: putting the product on the list, the decision to put something in the cart, the check-out, and post-purchase satisfaction. Impacts of these shifts are many:
• Growth of e-commerce as a channel. Two years ago, the presence of Amazon as a major retailer for traditional CPG would have been laughable. Today, it is 2 percent of the channel and growing. More importantly, it offers the organization new demand insights to mine and use in Digital Path to Purchase initiatives.
• Pace of the supply chain increases. The metronome of the supply chain is increasing. Data latency is decreasing and the speed of data sharing and predictive analytics is increasing. Companies will find that much of their technology investments made in the last decade are legacy.
• Focus shifts from inside-out to outside-in. While technology investments of the last decade focused on delivering operational excellence within the functional silo, the focus of the new supply chain processes will map the flows from the market back; inspiring a redesign of supply chain processes.
• Digital marketing becomes digital business. The use of new forms of predictive analytics – text mining, market sensing, and patter recognition technologies – currently used in social business will be used to define listening posts to build customer-centric supply chains from the outside-in. Organizations will move from yelling their message to active listening using text mining technologies.
• Disintermediation is a new and viable option. While the e-commerce days of 2000 allowed the building of e-commerce sites by the manufacturer for direct selling, few were successful due to pressures from retail partners. With the shift to the shopper, disintermediation and direct selling through e-commerce, social and mobile channels are now a possibility.
• CPG manufacturers will help to redefine the role of the store. As Amazon attacks center store, consumer manufacturers will be asked to help retailers increase excitement within the store. As this becomes more pervasive, the manufacturer will have new opportunities to launch specialized promotions, new products and customized promotions. Supply chain flexibility is the key to deliver on these customized opportunities.
Companies are now on the third generation of supply chain technologies. There will be a move from the extended enterprise resource planning frameworks to new forms of best-of-breed providers. Supply chain leaders will have to re-skill to redefine processes, learn new terms, and shift their thinking from inside-out to outside-in.
Keywords: supply chain management, supply chain management IT, value chain, value chain IT, supply chain flexibility