I delivered this presentation at the SCM Logistics conference in Singapore during October 2008. It was the first of a three-part series on Consumer Driven Supply Chains.
1. Consumer Driven Supply Chains
Case Studies from Vertical Industries
Steve Keifer
Vice President
Industry & Product Marketing
14 March 2009
2. Sharing Information across Multiple Tiers
Key Capability for Success in Real-Time Consumer Driven Supply Chains
Consumers
Key Data to Share
Requests for Quote Logistics
Point of Sale Work in Progress
Retailer
Forecast Price
Inventory Promotions
Distributor
Brand Owner
Gaining Visibility to Consumer
Demand Patterns
Influence Consumer Demand with
Manufacturer
Marketing and Promotions
Rapidly Respond to Changing
Demand Patterns
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Real Time Consumer Driven Supply Chains 14 March 2009
3. Real Time Consumer Driven Supply Chains
Visibility to Consumer Demand
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Real Time Consumer Driven Supply Chains 14 March 2009
4. Case Studies from Entertainment Sector
Movies (DVD), Music (CD) and Video Games
More SKUs
Typical DVD Sales by Week
– Screen Formats - Widescreen
– HD Formats - HD-DVD & standard
– Box Sets & Gift Packs
– Unique Retailer Requirements for
customized packaging
Out of Stocks Impacts
– Potential $5 US profit/DVD
– 20% of OOS result in lost sale
Week Week Week Week Week Week Week
– $2 US per expedited shipment
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Dynamic Market
Majority of sales occur in – 80% of Sales in first 2 weeks after
new product introduction
window with little to no
– Digital Downloads and Online
historical demand patterns
Services are cannibalizing physical
product Sales
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Real Time Consumer Driven Supply Chains 14 March 2009
5. Store Replenishment Process for DVDs
Vendor Managed Inventory Model based upon POS Analysis
Retail DVD Entertainment
3rd Party
Store Duplicator Brand
Logistics
Physical Flow of Goods
Information Flow of Data
Capture of Data Inventory Replenishment
Store POS Cleansing Calculation Recommendation
Improved Shelf Space Fewer Out of Stock for New Titles
Expanded Category Captain Role Higher Margin Sales
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Real Time Consumer Driven Supply Chains 14 March 2009
6. Looking Forward for Demand Planning
Historical View Forward Looking
Product
Point of Market Demo/Psycho Sales Search
Configurators
Sale Basket Graphics Interactions Engines
Loyalty Retailer Retailer Promotion Gift
Online
Card Promotion Pricing Registration Registry
Wish List
More data points than ever are being collected about
consumer behavior and future purchase intentions.
How can we leverage this information to be more
responsive to consumer demand?
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Real Time Consumer Driven Supply Chains 14 March 2009
7. Case Studies from the Auto Industry
Monitoring Pre-Sale Consumer Behavior for Demand Planning
Auto OEM
Retail Dealership
– Walkups
– Used sales contracts
– New sales contracts
– Phone calls
Tier 1 Supplier
– Visits
– Page Views
Tier 2 Supplier
– Configurations
– RFQs
Web Interactions
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Real Time Consumer Driven Supply Chains 14 March 2009
8. Real Time Consumer Driven Supply Chains
Influencing Shopper Behavior
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Real Time Consumer Driven Supply Chains 14 March 2009
9. Influencing Consumer Demand Patterns
Web 2.0 Enables New Levels of Direct Interaction with Consumer
Traditional Mechanisms Web 2.0 Techniques
Consumer Consumer
Retailer Trade Media Advertising
Designed Generated Video
Promotions Print, TV, Radio
Products Contests
Blogs & Online
New Product Financing Free Online
Consumer
Introductions Incentives Only Content
Forums
Television &
Contest & Manufacturer Reality
Movie Product
Sweepstakes Rebate Television
Placement
Price Incentives will always be a leading technique for
influencing consumer behavior
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Real Time Consumer Driven Supply Chains 14 March 2009
10. Case Studies in the Beverage Sector
Three Tier Distribution Model for Fast Moving Consumer Goods
Multiple Retail Chains Distribution
Complexities
– Three tier distribution
model using regional
wholesalers
– Retail chains serviced
by different distributors
in each region
Regional Promotions Challenges
Distributors
– Less than 50% uptake
on price incentives
offered less than 30
days out
– 30-60% of account
team’s time is spent
reporting and
communicating price
Other Brand Brand Owner Other Brand
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Real Time Consumer Driven Supply Chains 14 March 2009
11. Price and Promotion Communication
Case Studies in the Beverage Sector
1 6
Brand Owner
Headquarters
5
Brand Owner
Field Marketing
Brand Owner
3 2 4 Field Sales
7
Wholesaler/ 8
Distributor
10
9 Retailer
Optional Process
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Real Time Consumer Driven Supply Chains 14 March 2009
12. Price Synchronization Process
Case Studies in the Beverage Sector
Process & Technology
Multiple Retail Chains
Changes
– Centralized pricing
function
– Standardization of
processes across
regions
– Automated process for
Centralized Price &
Regional Regional
Promotions Synchronization synchronizing pricing
Distributor Distributor
and promotions
calendar
Benefits
– Sales uplift from higher
execution of promotions
– Expanded shelf space –
retailers find easier to do
business with
– Sales team focus on
Other Brand Brand Owner Other Brand selling
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Real Time Consumer Driven Supply Chains 14 March 2009
13. Real Time Consumer Driven Supply Chains
Rapid Response to Change
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Real Time Consumer Driven Supply Chains 14 March 2009
14. Challenges of Long Distance Sourcing
Finished Ocean Warehouse Retail
Product Transport Finished Product Store
Manufacturing
Finished Product Inventory – Inflexible to Demand Changes
Consumers are Variations in Long Distance
seeking greater features (color, supply chains
customization & size), but also due challenge
personalization to languages, forecasting and
of products regulations, channel demand response
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Real Time Consumer Driven Supply Chains 14 March 2009
15. Late Stage Configuration & Postponement
Kits
Thousands of permutations of
mobile phones can be Late stage product
configuration on
configured from a few hundred various SKUs
standardized parts. based upon
consumer demand
Manufacturer Inventory Retailer
Generic version of Generic version of
product assemble product stored
centrally in low-cost closer to point of
manufacturing center consumption Local country
documentation and
retailer specific
Documentation & packaging
Packaging
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Real Time Consumer Driven Supply Chains 14 March 2009
16. Enables Faster Response to Demand
Finished Goods assembled at Source
Finished Ocean Warehouse Retail
Product Transport Finished Product Store
Manufacturing
Finished Product Inventory – Inflexible to Demand Changes
Postponement Model
Generic Ocean Late Stage Retail
Product + Kit Transport Configuration Store
Manufacturing
Generic, Configurable Inventory – Flexible to Demand Changes
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Real Time Consumer Driven Supply Chains 14 March 2009
17. Case Studies from Consumer Software
Postponement enables Flexible, Rapid Response to Consumer Demand
Supply Chain Challenges
Operating
System Software • Multiple SKUs – Home/Business;
Mac/Windows; Upgrade/Full
• Packaging, warranty and
documentation vary by country
• Frequent changes to product
(source code) for new releases
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• Demand spikes for new titles;
holiday season; tax due dates
• Immediate product obsolescence
Tax Preparation with new title release
Software
Benefits from Postponement
• Fewer out of stocks - rapid
response to consumer demand
• Reduced product obsolescence
and excess waste
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• Ability to scale up and down
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Real Time Consumer Driven Supply Chains 14 March 2009
18. Thank You
Steve Keifer
E-Mail: steve.keifer@gxs.com
EDInomics Blog: http://blogs.gxs.com/keifers
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Real Time Consumer Driven Supply Chains 14 March 2009