Too many supply chains remain driven by product rather than demand.
In essence, the mission for any supply chain leader remains what it always was: to get the right product in front of the right consumer at the right time and for the right price. It’s just that, in a world where shoppers can buy in-store, on a website, via their smartphone or, with the advent of the connected consumer, by pressing a button at home, ensuring that they won’t run out of their favourite brands, that task has become exponentially more complicated. Even the delivery options are less straightforward: the consumer may want to collect it, receive it at home, at work, or have it sent to a locker (the preferred option in Germany).
Robots in warehouses may be the most visible evidence of the new technologies that are transforming the consumer goods industry’s supply chain, but, at present, the most significant driver of change is the smartphone. Manufacturers and retailers in the consumer goods industry need to embrace this while planning for another even more revolutionary technology: artificial intelligence. Erich Gampenrieder, KPMG’s Global Head of Operations Advisory, says: “In future, every party in the supply chain will rely on artificial intelligence (AI) because the network of AI systems will design the supply chain and automatically select the most effective chain.”
AI could help companies cope with the changes wrought by the smartphone – and the apps that empower it – which has facilitated the Millennial consumer’s innate desire for instant gratification. Expectations for delivery or in-store collection have shrunk from three business days to next day, same day, and now, sometimes, within the hour. The 2017 Top of Mind survey shows the impact such demands are already having on the industry: 73 percent of companies give customers the option to buy online and collect; 68 percent offer free delivery and 63 percent deliver the same day.
The premium on customer experience – which Millennials and Generation Z consumers increasingly expect to be personalised – is a direct challenge to the traditional supply chain which was originally designed to deliver a lot of product efficiently at low risk and low cost. The quest to reduce costs – coupled with the opening up of many new countries to the global economy – led to the creation of complex supply chains that span the globe.
While cost will always remain a focus, Gampenrieder says the choice manufacturers and retailers have to offer consumers is a compelling reason for organisations to explore – and adopt – a new model of supply that links different networks to the appropriate customer segment. “Companies are making customer service and brand loyalty a priority but many of them aren’t recognising the part supply chains can play in that. No matter how good your product or pre-sales service is, you need the product to be delivered in a way that at least meets the consumer’s expectations to ensure their loyalty,” he says.
The delivery experience – and the returns process – can win or lose customers.
More on supply chain on page 37 of the 2017 Top of Mind Survey (PDF 1.3MB).