Case Studies in Consumer Driven Suppy Chains

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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.

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Case Studies in Consumer Driven Suppy Chains

  1. 1. Consumer Driven Supply Chains Case Studies from Vertical Industries Steve Keifer Vice President Industry & Product Marketing 14 March 2009
  2. 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 Slide 2 Real Time Consumer Driven Supply Chains 14 March 2009
  3. 3. Real Time Consumer Driven Supply Chains Visibility to Consumer Demand Slide 3 Real Time Consumer Driven Supply Chains 14 March 2009
  4. 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 -2 -1 0 +1 +2 +3 +4 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 Slide 4 Real Time Consumer Driven Supply Chains 14 March 2009
  5. 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 Slide 5 Real Time Consumer Driven Supply Chains 14 March 2009
  6. 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? Slide 6 Real Time Consumer Driven Supply Chains 14 March 2009
  7. 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 Slide 7 Real Time Consumer Driven Supply Chains 14 March 2009
  8. 8. Real Time Consumer Driven Supply Chains Influencing Shopper Behavior Slide 8 Real Time Consumer Driven Supply Chains 14 March 2009
  9. 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 Slide 9 Real Time Consumer Driven Supply Chains 14 March 2009
  10. 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 Slide 10 Real Time Consumer Driven Supply Chains 14 March 2009
  11. 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 Slide 11 Real Time Consumer Driven Supply Chains 14 March 2009
  12. 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 Slide 12 Real Time Consumer Driven Supply Chains 14 March 2009
  13. 13. Real Time Consumer Driven Supply Chains Rapid Response to Change Slide 13 Real Time Consumer Driven Supply Chains 14 March 2009
  14. 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 Slide 14 Real Time Consumer Driven Supply Chains 14 March 2009
  15. 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 Slide 15 Real Time Consumer Driven Supply Chains 14 March 2009
  16. 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 Slide 16 Real Time Consumer Driven Supply Chains 14 March 2009
  17. 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 -3 -2 -1 0 +1 +2 +3 +4 +5 +6 • 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 -6 -5 -4 -3 -2 -1 0 +1 +2 +3 • Ability to scale up and down Slide 17 Real Time Consumer Driven Supply Chains 14 March 2009
  18. 18. Thank You Steve Keifer E-Mail: steve.keifer@gxs.com EDInomics Blog: http://blogs.gxs.com/keifers Slide 18 Real Time Consumer Driven Supply Chains 14 March 2009

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