Introduction – New Age of Demand Management
Gone are the days when the supply chain manager’s only systems concerns were about the optimization system algorithm (what kind of math the software had) and could it scale. Today, supply chain managers need to concern themselves with the end-to-end process — and therefore, the technology that supports it. And that includes: the type of integration software; the channel the data are coming through — mobile, web, Application-to-Application (A2A); and whether you are participating in a collaborative network, to name a few technical concerns. Why? Because all these factors impact the type and quality of information you are receiving. And they may be crucial to the actual process you are operating.
Demand Systems of the past were more about the products — forecasting the units — not the customer. But if we accept that the world we may be selling to lies outside the boundaries of our planning systems, then we need to think about new ways to engage that world. Figure 1 updates the traditional Demand Management model to include elements of the successful demand management model. Most enterprises have faintly glimpsed what is to be done here, and they know they have to begin the journey to a more inclusive model.
This is a big topic which we will cover over the next few issues, but let us begin.
Reading the Customer’s Mind
This topic is so enticing and yet really uncharted. How can new technology be deployed — from sensing, and magic mirrors to mobile technology in order to understand what customers are actually doing now? Traditional approaches, such as analyzing POS data or conducting focus groups, leave a lot to be desired. We explore this topic and some interesting new approaches in “Extra-Sensory Perception for Retailers and Manufacturers.”
Mobile and Social as New Demand-Shaping Tools
Two years into social couponing and the votes have been calculated: brand companies don’t like them, but consumers do. Brand companies who may not have planned for the Goupon effect lose money on an offering; however, many companies do admit they bring more and new shoppers into their realm. Consumers really like the deals. So what to do? Promotions are not going away, so the challenge is how to master them. It appears that companies who take their own path with promotions do fairly well.1
Today, demand shaping does not have to be conducted just pouring over the numbers, but can engage the consumer. Companies like H&M leverage the social network to bring shoppers to the store with special promotions to move excess merchandise. Merging the channel technologies from social and mobile allows retailers to close the loop and measure the effectiveness of various social strategies.
Of course, successful promotions take great orchestration amongst many technologies today. They take:
- Great promotional planning; ensured integration between procurement, manufacturing, logistics, advertising, channel partners and stores
- Precision pricing. You can read about pricing in this issue of the brief.
- Consumer engagement data: Did they get the promo? How receptive are they to it? Are queries and cursors hovering over the deal?
Running a successful promotion takes constant feedback across the supply chain.
Make the Data Real-time
One of the biggest challenges is getting information from the supply chain through point of sale soon enough to make different (value-creating) decisions. It requires demand and supply data at each stocking location (you can read about Omni channel strategies in this issue) to maintain adequate inventory to respond to demand. It takes both a rapid demand signal solution as well as great fulfillment (inventory locating/WMS-type systems) to ensure that demand is fulfilled.
Conclusion — You Own the Process, You Own the Technology
Supply chain professionals today need to think about the outcomes they are trying to achieve; then assess the appropriate demand management model and keep refining it. They need to become technology experts — and the key decision makers about the priorities and technologies that drive the supply chain.
We are going through a rapid shift: cloud, search, social and mobile. These are not just side notes or issues for other departments — but front and center — pivotal tools for the supply chain management. They will — they are — changing how we relate with our customers and how we collaborate with our trading partners. It is not too soon to begin the process of exploiting these technologies.
More to come —
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1 Witness the continued success of H&M (who we have written about before), or promotion crazy Macy’s who has increased their year-over-year sales and profits.– Return to article text above
To view other articles from this issue of the brief, click here.