3 ways to transform mid-market supply chains
3 ways to transform mid-market supply chains
Insight

3 ways to transform mid-market supply chains

Time to get up-close and personal with your customers through new supply chains, greater speed to market and new platforms.

 

The digital age is here for mid-market companies as consumer demands disrupt the traditional supply chain. In today’s competitive marketplace, consumers know what they want and when they want it, and the buying phase is only one part contributing to their overall satisfaction. Brands must deliver seamless fulfillment, returns, and in some areas, service experiences. 

To help middle market companies win the customer of the future, KPMG, in collaboration with Bloomberg Media Studios, analyzed how innovation and increased competition is changing supply chains and offers practical steps for a company’s successful evolution.

 

 

Method #1: Generate new business models

Customer-centric business models create new opportunities through supply chain transformation. Direct-to-consumer sales, subscription-based selling, and customized products change the way a company’s fulfillment network operates. Digital platforms allow for more predictability concerning supply chains, as companies can locate manufacturing and distribution centers close to consumers to reduce shipping costs.

 

 


Supply chains: Traditional vs Consumer-centric

 

However, this set-up actually can increase shipping costs as companies ship small packages to consumers instead of a large shipments to retail locations, which are cut off from distribution in a direct-to-consumer business model. Careful planning is needed when shifting distribution to achieve profit, and the pursuit is a marathon, not a sprint.

“Spending on technology upgrades, distribution centers, automation and better last-mile avenues may take time to generate returns.”
Bloomberg Intelligence

 


Method #2: You have a need for speed—to market

A company’s “speed to market” is an increasing concern in the C-Suite, according to Bloomberg, who analyzed the earning call transcripts of 6,900 companies.

 

Success for mid-market companies will depend upon their ability to deliver goods and services faster than ever before. Though companies may start by distributing goods from factories and warehouses, a more customer-centric business model delivers a multi-dimensional experience with different supply chains1.

 

1 Bloomberg Intelligence

“Tomorrow, in order to really delight the customer, middle market companies will need to direct the customer to the center” of the supply chain
Ammon Matsuda, Managing Director of Data & Analytics at KPMG

For example, a concert-goer buys a ticket, makes dinner reservations for after the show and scores the artist’s album—all from the same website. This supply chain improves inventory turn and customer satisfaction through increased speed to market.

Method #3: If you build a digital platform, consumers may come

Uber, Lyft and Airbnb and similar housing apps, allow companies to sell other people’s items with the benefit of not having to maintain the underlying assets. Through continuous advancements in artificial intelligence, these companies will be able to utilize dynamic pricing algorithms to deploy their workforce and cost structures to accelerate growth.

Middle markets do not want to be left behind, and they don’t need to be with the right solutions. After all, share services are expected to grow 68 percent over a four-year period, ending in 2019.

 

 

Supply chain checklist

KPMG has five steps for mid-market companies to help them innovate their supply chains and take advantage of speed-to-market opportunities.

  1. Develop technical capabilities: Make sure you are digitally ready for supply chain changes, making good use of predictive models, mobile solutions or even blockchain technology.
  2. See the supply chain; be the supply chain: See not just your capabilities but also the capabilities of your suppliers. This will help you visualize how to realistically transform your supply chain.
  3. Guesstimate: Not sure what’s happening upstream or downstream in your supply chain? Aggregate data to get a sense and make educated guesses.
  4. Know your customers: What they want, where they want it, and how they want it. Segmentation is vital, even if a customer is a segment of one, in order to deliver to customer expectations.
  5. Explore ROI measurement: With many supply chain changes without proven results at this time, your head of finance may need to be flexible when attaching ROI to costs.

Step into the digital transformation with KPMG

KPMG understands the mid-market struggles with digital disruption, and we can help you not just survive but thrive through supply chain transformation. With the knowledge and expertise you need, KPMG can help you see your business’ targets and organize your mid-market company to achieve them.