In the era of omni-channel shopping, supply chain capability is a key differentiator with the power to determine the ultimate shopper’s experience.
Yet traditional supply chains can’t meet 21st century service expectations. Companies know this: 81% of senior supply chain executives say their supply chain is not fit for purpose for omni-channel1.
The digital world has shattered two fundamental assumptions of the traditional supply chain: unknown demand and limited capacity. Connected shoppers, devices and objects reveal real-time demand, while a web of connected carriers, contractors, service providers and suppliers make capacity almost infinite.
To succeed in these new conditions, companies need to evolve their supply chains into demand response networks (DRNs) that are built to motivate, sense, modify and respond to demand in real time and in an agile, efficient and sustainable way.
What shoppers expect today
- Anytime, anywhere shopping
- Seamless shopping across all channels and devices
- Personalized interactions and products
- Transparent, holistic information about the product, including price
- Free shipping and returns
The challenges of meeting consumer expectations
- Controlling the cost to serve. The cost of getting goods to omni-channel consumers on their terms is spiraling as demand increases, and many consumer goods manufacturers and retailers are experiencing continued margin erosion.
- Fulfilling dynamically. Companies are struggling to address questions of where best to store inventory and how to order fulfillment from any channel to any location in the network.
- Understanding big data. Connected consumers, shoppers, equipment and devices all generate petabytes of data, which many companies are unable to fully interpret or exploit.
From a linear chain to a dynamic network
A DRN can help meet these challenges. It is a dynamic web of processes, technologies and companies that all work toward a common objective: satisfying demand. The DRN is capable of delivering superior levels of service in a segmented and customized way that would be impossible for a single company.
DRNs are driven by algorithms that embed transparent business rules to optimize the network’s resources. In such a network, every node is connected and intelligent, allowing the business to read fluctuations in demand and decide how to modify and respond to them with unique market activities.
A properly formulated and well-executed demand response strategy offers superior levels of service, enables service innovation and captures more value for all members of the network. All this happens at a cost to serve that can be managed easily, boosting profitable growth.
A dynamic web of companies, technologies and business processes that are interconnected and working toward a common objective of sustainable demand fulfilment.
Evolving to a DRN: three essential tasks
Find out more on how we can help create a fit for future supply chain