Visibility and adaptability: the keys to predicting and managing demand in your supply chains

Apr 05, 2018

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Tom Woodham

by Tom Woodham Digital Supply Chain Leader

Email +44 (0)7709 441851

Cast your mind back. Remember when people used to wander around shops getting ideas for what to buy? They’d spot something they liked, but find it wasn’t available in their size. Then four weeks later – when they’d missed that big evening out – they’d go back and find it was now in stock!

How things have changed. These days, we are bombarded with offers via multiple channels; can shop 24x7 wherever we happen to be; and have things delivered at the place and time of our choosing. And if one business can’t or won’t meet these demands, we’ll find someone else who will.

Companies across the Retail & Consumer (R&C) sector have no choice but to respond to these rising expectations. And this brings two key implications. One is that they must be able to react very quickly to an “ask”. The other is that at the moment when they interact with the consumer, they have to know with certainty when, where and how they can deliver the item.

It’s a fine balance. Underpromise – “We can’t deliver until next Thursday” – and they may lose the business. Overpromise – and fail to deliver when they say they will – and they’ll have a furious customer sniping at them on social media.

That’s why companies now need certainty about fulfilment before the transaction takes place. The only way they can get this is through visibility along their entire supply chain. But to be truly agile, companies also need something else: the ability to predict where and when future demand will arise, and from whom.

This is another area that’s changed dramatically. Making predictions on back-of-the-envelope calculations – “We sold 500 in the same month last year, so let’s say 520 this time” – will no longer do.

That’s why the traditional inputs to companies’ forecasting models are expanding to include an ever-wider range of data points, from what’s trending on social media to what brands celebrities are wearing. As the diversity of data points grows, machine learning is helping to improve accuracy still further.

Indeed, predictive modelling is an increasingly vital capability in R&C. To help map out the possibilities, PwC is working with Cranfield School of Management on joint research in this area. So watch this space.

Anyway, returning to my theme: if a company can bring together all the right elements – visibility along the supply chain, an understanding of consumer needs, and reliable forecasting – what can it achieve? A few years ago, the answer was all about speed of fulfilment. Today it’s more complicated than that.

True, some consumers still want products delivered as fast as possible. But now people’s needs tend to be much more diverse: choice of location, delivery to a friend at a specific time on their birthday, and so on. An agile supply chain can accommodate these needs. It can also react in-flight – such as enabling consumers to get in touch at 10am to move a delivery from 2pm to 4pm that afternoon.

It’s all a far cry from the uni-directional, one-speed supply chain of the past. So, what should companies be doing to embed this agility into their supply chains?

Two things. First, ensure you can see where any item is at any given time – not just from a control centre, but from the consumer’s device, putting control back in their hands. Second, focus on whatever is important to the customer, rather than deciding yourself. If it’s speed, give it to them. If it’s something else, give them that instead.

When it comes to winning and retaining today’s consumers, your supply chain is a powerful competitive weapon. Digital technologies mean you can now start using it as one.

 

Tom Woodham

by Tom Woodham Digital Supply Chain Leader

Email +44 (0)7709 441851