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The building of value networks that extend from the consumer through the extended network can only be redefined by challenging three paradigm shifts: moving from marketing-driven to market-driven processes, redefining processes from the outside-in versus the traditional inside-out and moving from vertical silo excellence to strong horizontal processes. The issue is that these changes challenge the basic tenants of supply chain excellence of the 1990s.
From Marketing-driven to Market-driven Go-to-Market Processes: Channel dynamics have changed. In the 1990s, it was all about marketing. Today, the consumer products companies have ceded power to the retailer and the retailer is now losing power to the consumer community. To capitalize on this market opportunity, CPG companies need to redefine their processes from the outside in at the three moments of truth: before purchase (at the kitchen table), in the store to drive a purchase to the cart, and for usage. As e-commerce, social and mobile technologies converge, channel opportunities are growing exponentially; however, these opportunities cannot be seized through traditional sales-driven or marketing-driven approaches. The focus will shift: the processes will be redefined from selling into the channel to selling through the channel, and the consumer products companies will embrace new channel opportunities to use e-commerce and social technologies to sell directly to the consumer.
Outside-in: From a Supply-driven to Market-driven Supply Chain Focus: Commodity prices will make or break profitability. Price escalation and volatility will increase the importance of end-to-end processes and supply chain excellence. To more effectively compete, these will become market driven: connecting buy- and sell-side market shifts and volatility in horizontal processes. As a result, the processes that are based on historical analysis - sales and operations planning, trade promotion management, price and retail programs, and assortment - will need to be redefined to evaluate buy- and sell-side market dynamics simultaneously. Planning will grow in importance.
Strong Horizontal Processes to Drive a More Intelligent Response. Today's supply chains are designed to drive an efficient, but not always an effective response. We are entering the era of big data supply chains where the use of new types of sensor data - location-based sensing, weather, temperature sensing, RFID, and machine sensing in combination with unstructured text analytics (channel and supplier data) in rules-based ontologies will enable a learning supply chain. Instead of fixed and inflexible rules based on historical information in order to cash and procure to pay, supply chains will be able to sense before responding and the latency of information will be greatly reduced. New forms of predictive analytics will evolve to sense shelf availability, product life and availability, supply chain disruptions and market opportunities.
As a result, the focus for IT and supply chain executives will change. We will see a new wave of best-of-breed providers and a shift in business thinking from a focus on vertical silo excellence - sell, deliver, plan, make and source - and a forced march to implement the extended enterprise resource planning technologies to building more agile platforms based on new forms of business intelligence.
Keywords: Marketing-driven, Market-driven, Go-to-Market Processes, E-commerce, Social and Mobile Technologies, Market-driven Supply Chain Focus, Horizontal Processes, Sensor Data, Location-based Sensing, Temperature Sensing, RFID, Machine Sensing, Unstructured Text Analytics, Predictive Analytics, Business Process Management, SC Planning & Optimization, Business Intelligence & Analytics, Technology, Business Strategy Alignment, Quality & Metrics, Global Supply Chain Management
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