Insight

Demand driven supply chain

A direct link to profitability.

A level of customer responsiveness you could only dream of :

Picture the following scene: you’re outdoors and you hear thunder, and, looking up to the sky, you see a large, gray rain cloud. You take out your smartphone and find a website selling umbrellas. Having selected your style and color, you press ‘order’, and a mere 5 minutes later, a drone is hovering above you, gently delivering the purchase into your arms — just as the first raindrops begin to fall.

Such a scenario may seem futuristic, but it’s actually closer than you think. Over the last 2 years, Google has been quietly building a fleet of drones to deliver merchandise bought online. Drones will soon be delivering everything from consumer goods in cities to vital medical supplies in remote areas, bringing unprecedented levels of efficiency and reliability, especially if deployed at scale. At the January 2016 Consumer Electronics Show in Las Vegas, Chinese drone-maker Ehang went one step further, unveiling a prototype for the first autonomous drone to carry humans.  

3–D printing (featured on page 25) is another recent technology that is turning supply chains inside out. By enabling mass customization, and shortening the distance between manufacturer and consumer, 3–D printing can further reduce already low manufacturing costs.

Data is a massive disrupter. KPMG’s partnership with motor racing specialist McLaren (discussed on page 22) takes the same technology that helps drivers make split-second decisions in races and applies it to the supply chain. These principles are already helping world-class companies anticipate and instantly adapt to changes in customer behavior, stock availability and transportation.

Technology may be the enabler, but it’s customers, and their rising expectations, that are the real stimulus behind a demand-driven supply chain 2.0. Having for some time focused on efficiency and cost, companies are starting to acknowledge that the supply chain has one over-riding priority: keeping customers happy and creating a better customer experience.

As this paper shows, there is increasing evidence of the link between customer experience and profitability. However, with growth back on the agenda, many supply chains lack the flexibility and agility to compete across a networked supply chain.

Information lies at the heart of an effective supply chain: to capture and analyze data that feeds decisions such as what to produce, in what quantity, how much to store and when to deliver. Clear, strong leadership allocates responsibility to appropriate individuals, to maintain awareness of the value that supply chain decisions bring to companies. 

There is growing evidence that companies adopting demand-driven supply chains enjoy increased sales, reduced operating expenses and improved working capital — by focusing on customer experience.

Every company is at its own stage in the journey towards a demand-driven supply chain 2.0. The examples in this paper show how some of the better practitioners are gaining essential competitive advantage, by recognizing the holistic, and technologically advanced, nature of tomorrow’s supply chains.