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Digital Opportunities in the Consumer-Products Supply Chain

By Mark Osborn, Vice President Digital Strategy and Business Planning for Consumer Products with SAP

Mark Osborn, Vice President Digital Strategy and Business Planning for Consumer Products with SAP

By implementing digital solutions, CP companies can understand and act on consumer needs in real time

Consumers today are online and connected as never before, changing how they live, communicate with friends and family, monitor data about their eating habits and fitness routines, and even manage the lights or smart appliances in their homes.

"Today’s digital consumers have access to product information at their fingertips, allowing them to make smarter purchasing decisions anytime, anywhere"

Consumers’ purchasing habits are also dramatically changing due to this connected world. Today’s digital consumers have access to product information at their fingertips, allowing them to make smarter purchasing decisions anytime, anywhere. As a result, the modern consumer no longer thinks in terms of loyalty to specific brands. Instead, consumers value personalized experiences that extend well beyond the purchase of a product – including purchase consideration, evaluation, consumption, use and more.

The implications for consumer-products (CP) companies are enormous. Now, companies must understand and anticipate where consumers will be at any given point in time and how to respond to consumer demand in moments of need. On top of that, the definition of demand is changing from product purchase and use to include associated information, offers and services.

As a result, many CP companies are challenging themselves to transform their supply-chain strategies in order to successfully reach consumers at the point of demand – whenever and wherever that may be.

Obtaining Better Insights

The average U.S. consumer spends more than five hours per day consuming digital media on mobile devices, usually on a smart phone, creating significant opportunities for CP companies to engage with consumers in real time. This is also allowing brands to leverage digital engagement to gain unprecedented insights into what consumers want and how to reach them.

By monitoring these real-time engagements over time, CP companies can begin to refine their understanding of consumer demand patterns and apply that understanding to align internal operations more closely to anticipated consumer demand across channels. This includes supply-chain processes, such as demand forecasting, capacity planning and inventory management.

Under Armour is one example of a company taking advantage of digital opportunities by tapping into the power of real-time consumer insights.

In 2015, the company acquired the MyFitnessPal app to connect supply-chain processes to its consumers. With more than 140 million users registered to the app, Under Armour helps consumers track various aspects of their health and wellness routines, including exercise, calories burned, sleep patterns, and food and calories consumption. By observing consumers’ health and wellness routines in realtime, Under Armour can build increasingly refined consumer profiles designed to assist consumers directly in moments of need by providing personalized information, specifically tailored to that consumer’s individual goals and objectives.

In so doing, Under Armour is transforming its brand from a company that makes apparel to help athletes stay cool and dry to a company that creates technology to support athletes in achieving their health and wellness goals. By engaging with consumers continuously throughout the day, the company can identify new opportunities, predict potential demand and organize their operations to deliver to consumers directly in moments of need.

The Amazon Dash button is another example of how CP companies are working to reach and engage consumers directly in moments of need. This concept enables consumers to re-order a wide variety of products with the simple touch of a button by connecting the branded Dash button to the Amazon marketplace via the Internet. 

Many CP companies are already working with Amazon to use this connected device to bridge the gap between loyalty and convenience. While it’s a great example of meeting consumers in moments of need, it also provides CP companies with a level of visibility and insight that was previously impossible through traditional retail channels. Now, CP companies can identify the individual consumer who is purchasing the product and monitor purchase, use and consumption over time. This information can be managed to provide personalized recommendations and offers to consumers, as well as accurately predict future demand.

Digitizing Supply Networks

CP companies can use technology to not only learn more about consumers, but also better monitor and manage nearly every aspect of their demand and supply networks.

The personalized, real-time consumer engagements that companies, such as Under Armour, are providing create new opportunities to transform manufacturing and supply-chain operations.

Real-time visibility into consumer behavior, response, consumption and use is creating unprecedented opportunity for CP companies to dramatically improve demand forecasting, optimize production planning and capacity, and minimize inventory carrying costs. It’s also empowering CP companies to explore new and different models for production, inventory management, supplier collaboration, distribution, and hyper-local merchandising and pricing that enable them to be closer and more responsive to consumer demand.

Leveraging digital technology to connect consumer engagement and demand directly with supply-chain processes – from raw materials procurement and product manufacturing to transportation and logistics networks – can give CP companies real-time operational visibility to manage the complexity of omnichannel demand and fulfillment.

Delivering an Experience

Because today’s consumers can get what they want, when and where they want it, traditional drivers of consumer response, such as price and value, are giving way to sophisticated consumer engagements that deliver “just for me” personalized experiences and outcomes. Leveraging a deeper understanding of the new digital consumer, and transforming supply-chain operations with digital technologies to improve visibility, collaboration, reach and engagement throughout the entire supply network will help to enable opportunities for CP companies. This transformation will enable brands to compete effectively, and profitably, for the minds and hearts of consumers today. 

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