The Consumer-Driven Supply Chain
The growth of ecommerce and the technologies that enable consumer access to ecommerce—such as smart phones, social media, and the internet—is transforming supply chains with the consumer as the center of gravity.
A recent report from Eyefortransport outlines how traditional back-office processes have become increasingly consumer-facing and how this has meant a wholesale change to supply chain strategy of putting the consumer—and not the product—first.
“A few years ago the results would have been vastly different,” the report noted, “but today it’s pretty clear that the industry is now structuring itself behind a consumer-driven model.”
According to the results of a survey, North American businesses are actually lagging behind the global trend. Only 60.8 percent of North American businesses reported their supply chain as consumer-centric, while 39.2 percent were product-driven. 68 percent of respondents outside of North America reported a consumer-driven supply chain.
“The biggest effect a consumer-driven supply chain has had on the industry has been closer collaboration between marketing and sales,” according to the report. “This process has also been aided by updates to the technology companies are using to manage their enterprise resources.”
Perhaps the biggest driver of consumer-centered supply chains is the growth of available relevant data. The data, and the analytics that make sense of them has provided businesses with “an unprecedented level of visibility over consumer behavior.”
Related to this phenomenon has been the increase in customization and personalization. Eft sees this to grow and to shift from being a differentiator to the norm.
The biggest challenge presented by consumer-driven supply chains, as reported by Eft research, have been increased costs, smaller margins, and increased lead-times. “There is a clear correlation between consumer-driven and this decrease in resource and time efficiency,” said the report.
As consumers shift their shopping behavior, retailers need to modify their traditional processes to create a consumer-centric supply chain, but it has to be on their dime or they will risk driving away price-sensitive consumers.
As the focus of the business-consumer relationship shifts from fixed environments such as stores to multichannel interactions, successful businesses have found it to their advantage to automate as many processes as possible.
“The level of what can be automated is increasing as robotics and AI increasingly become cost-beneficial to businesses,” the report noted. “However, what is additionally beneficial for businesses is for them to better understand what consumers are willing and wanting to control and allowing them to do this seamlessly.”
With the right systems in place, the report concluded, businesses can provide more power to consumers while creating efficiency and consumer satisfaction and cutting costs and complexity.
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