A hot topic for technology companies is the consumer-driven supply chain, also known as the demand-driven supply chain. Instead of thinking first about the technology product (what does the company want to sell?), corporate strategists are now reversing their thinking (what does the customer want to buy, what is their perception of product value, ease of use and customer experience?). Four out of five* of the most important customer satisfaction criteria are related to the supply chain: fast delivery, flexible delivery, product variety and availability, and easy return or exchange.

It’s clear that supply chains and logistics processes play a crucial role in providing customers with a quick, responsive service and easier interactions with technology vendors. To make smarter decisions, companies are enhancing visibility on goods movement and inventory levels using, for example, IoT sensors in the supply chain. They are also improving forecasting and planning using point-of-sale data and predictive analytics. However, because buying behaviors are changing and customers can always change their minds, even more flexibility and agility must be created in the supply chain.

Rethink assumptions

As a first step, it is important to rethink long-held assumptions. For example, one company we work with was reluctant to consider adding an express delivery option to its website, concerned that customers might not see the added value. But when this company took our advice, business grew rapidly with a particular demographic. The company discovered their 18 to 25-year old customers want to receive purchases as fast as possible and are prepared to make the cost trade-off. This has proved true not just for expensive items but across the entire product portfolio.

Another very interesting thing happened. The company’s online baskets are filling up more rapidly. Knowing they will be paying an express delivery premium anyway, these younger customers decide to buy more. They like the idea of getting everything promptly in one go. Higher basket values are now driving new ecommerce revenues for our customer.

Build brand loyalty

A further important step in creating supply chain flexibility is to build brand loyalty. With a significant shift in service level expectations, it’s now all about options. In today’s and tomorrow’s omni-channel environment, technology companies are providing customers with the widest possible range of purchasing choice. But when, for example, customers are sourcing technology products online, websites typically present competitive products alongside each other. This makes it easy for customers to switch away from their original product choice to select a comparable alternative from a different technology vendor. The best defense is to build brand loyalty, reducing the risk of losing business this way.

Each company must ensure buyers associate their brand with good things: fast, flexible delivery, sufficient product variety and availability, easy returns and exchange. Innovative technology products must be supported by an innovative supply chain. By getting the supply chain and logistics processes right – consistently and across all geographies – technology companies protect and enhance the brand.

Expectations of high service levels in the B2C environment have transferred to B2B. Business customers are consumers too; they anticipate an equivalent reduction in the lead time from order to delivery, as well as easier interactions with technology vendors. Companies must fulfill tougher B2B demands to secure repeat business.

Collaborate more: Logistics & ecommerce

As ecommerce channel sales and logistics build more mutually dependent elements, another inevitable development with consumer-driven supply chains is greater collaboration between these two corporate functions.

In many technology companies today, the link between logistics and ecommerce is weak. For example, the ecommerce team may be testing out some new approaches or processes, but the logistics team may know absolutely nothing about this. By increasing collaboration between these two functions, technology companies can achieve more powerful logistics going forward. While consumers may be driving the technology supply chain, logistics and ecommerce should be co-designing it.

I would be very interested to know your views about the consumer-driven supply chain in today’s technology industry. We will be discussing these issues in depth at our next global conference in April. Meanwhile, please feel welcome to share your thoughts and comments below.

* DHL Market Study: The fifth criterion, unrelated to the supply chain, is online search functionality.

Published: February 2018

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