Sales and operations planning

Put the conscious consumer in focus in your Supply Chain design

Optilon Crew

Every business want’s to gain competitive advantages by putting the conscious consumer in focus in the Supply Chain design. What is a conscious consumer, which competitive advantages could be achieved and how can technology support? Learn more in this blogpost.

What describes a conscious consumer?

Being a conscious consumer in 2020 is linked to the way we live, the choices we make and the meaning we create. What we are looking for is to simplify our options and having smooth purchasing experiences. More specifically we could say, that conscious consumers are becoming wiser. This is forcing companies to constantly innovate, drive prices down and streamline their offerings.

At the same time conscious consumers are becoming more self-sufficient. They make use of apps and personalization services to create a product uniquely to them. Being able to look after yourself is seen as a luxury, that allows people to be more versatile and expand possibilities. Dictating, designing and personalizing your life allows you to be more flexible.

At the same time, conscious consumers demand immediacy, an “I want it now” attitude. Consumers are seeking frictionless experiences that mesh with their lifestyles, allowing them to dedicate more time to their professional or social lives.

Conscious Consumers want a plastic free world. Consumers will use their wallets to protest the irresponsible use of it and create a virtuous circle, where industry stand to gain by improving sustainability. Consumers are rejecting the mass-produced and generic and will favor products positioned as simplified, back to basics and better quality.

The conscious consumer’s impact on the future Supply Chain
The Conscious Consumer increasingly drives innovation from the heart of the supply network, rather than being on the receiving end of the supply chain. This means, that we are shifting towards consumer-led, data driven, highly complex supply networks.

These shifts demand mass product customization, more accurate supply chain planning and synchronization, and faster multichannel responsiveness that go far beyond the abilities of the typical workforce and infrastructure. It requires instant visibility, quick decision making and increased flexibility across the whole network.

Digitalization is an enabler
Digitalization can be an enabler for both enhanced visibility and transparency, cost reduction, enhanced customer focus and service. As well as the foundation for a more agile and dynamic operating model and performance improvements in the full value chain. In building the vision, where should a company start?

You could be inspired by a recent study which PA Consulting Group has conducted:

  • 74% say it is driven by the search for new ways to reduce costs
  • 59% want to advance their technologies, such as automation
  • 56% are seeing changes in consumer or customer behavior. They want sustainable products supplied with immediacy and personalization
  • 51% say it is due to new business models. Integrated Supply Chain systems are becoming the foundation for the new business models to function
  • 41% do it because of the fear of being left behind.

Digitization should bring value
According to the recent study done by PA Consulting Group, 30% of those who responded could not say what value digitalization would bring. 79% said, that they do not have the right mix of skills and capabilities. Half of the respondents said, that they have no clear vision for their digital Supply Chain.

This would mean that they have no way to align Supply Chain initiatives with the business strategic objectives, no formula to establish appropriate budgets for investments and no framework for establishing a dialogue around, how the future would look like.

How can digitization bring benefits to the company?
There are several ways in which digitization could bring benefits to the company:

  • Visibility and transparency
    In order to respond to the different disruptions in the market and act with agility, resilience and predictability it is important to reduce the operational silos and mitigate risks. Data from digital systems reduces errors by removing data collection and manual reporting processes. It creates a stronger foundation for taking the right decisions. At the same time, it increases collaboration and agility and reduces response time to a few hours.

  • Better customer service
    It is important to build a Supply Chain based on data, which helps you understand how customers buy and use their products and services. Understanding the customer could also mean opening up for new revenue streams, as well as responding to the immediacy and personalization which the customers are expecting nowadays. It would mean better delivery performance, customer focus and service.

  • Cost improvements
    As soon as you start improving on visibility you start building the baseline for reductions in inventory and improving the balance between supply and demand in the whole value chain. Money and time which can be freed up for growth in other areas of the business.

  • Streamlining operations for better performance
    AI and machine learning can help improve operations for better performance. It is about creating insights for improvements that are hard to do without. Read more about AI in supply chain here.

Create a knowledge funnel
As a leader you have to accept, that the shaping of a vision is an ongoing process of discovery, disruption, experimentation and learning. It is situational. It is not a fixed object it is invention in motion. As a leader you have to shape the vision, but you have to seek the broad involvement of a broad set of suppliers, employees, conscious consumers and other partners -which could provide an idea about how the future might look like. Even more, you uncover and partner with industry provocateurs and pioneers who anticipate what is next.

This will also help segment the complexities that exist within the Supply Chain and the marketplace you are operating in. It will help you understand the different consumers that exists within your Supply Chain and describe the patterns around them.

Organize the chaos
You can use the following framework to organize the chaos in the marketplace and describe the patterns of your consumers. For each category you can ask the following questions:

1. How will the trends within this industry affect our company and Supply Chain?
2. What opportunities and threats will these trends imply?
3. What actions could we take to anticipate and respond to these trends?
4. What characterizes our consumers?

Supporting categories:

  • Social: Changing lifestyles, social trends (urbanization, flexibility of where work is done, work-life balance, social mobility, globalization)

  • Technical: Increasing digitalization, the use of technology for efficiency, innovation, information and connection.

  • Economic: Global markets with new competitors, economic cycles, new business models.

  • Political: Political unrest, regulatory policies and shifts, increased nationalism or populism, global trade

  • Environmental: social responsibility, community reputation, effects of climate change, sustainability

  • Demographic: changing workforces, influence of millennials, unconscious biases and cognitive styles, aging employees

Design and visualize the future
Once you have organized your chaos it is time to design the future. Here it is important to visualize the interaction between the customer needs, the formulation of appropriate strategic responses and the successful execution of these strategies by shaping the necessary internal capabilities and corresponding leadership styles.

Use simulation and modelling Supply Chain technology to find opportunities. You should utilize data gathered from multiple sources, creating an authentic digital twin of your complete Supply Chain to visualize current and future Supply Chain models and find new opportunities.

Sources: Power Your Potential, The value of the smart Supply Chain

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