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SAPforConsumerProducts

TheConsumerDrivenSupplyChainUnderstandsand
ActsonIntent
PostedbyMarkOsborninSAPforConsumerProductson09Aug201615:39:37
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Ivedescribedinpreviousblogshowthedigitaleconomyisaboutdeliveringexperiences
andoutcomeslikecomfort,joy,securityandcontroldirectlytoconsumers.But
experiencesandoutcomesarechallengingtraditionalmodelsbecausetheycantbe
manufactured,stockedordistributed.Rather,theyareorchestratedanddeliveredrightin
theindividualconsumer'smomentofneedwheneverandwhereverthatmightbe.
Deliveringjustformepersonalizedconsumerexperiencesdirectlyinmomentsof
opportunityrequirescompaniestomaketheshiftfrommakingbigbetsonestimatesof
futureaggregatedemandtoactingonindicationsofindividualintentioninthemoment.
DigitizingtheSupplyChain:Thenvs.Now
Fordecades,longleadtimesbetweenforecastandpurchasecombinedwithlimited(if
any)visibilitytoconsumersthemselvesfavoredamodelofeconomiesofscale.This
includedforecastinghowmanyunitswouldbesold,producingphysicalproducts,investing
inmarketingefforts,deliveringtheproductstoretailersandtrackinghowmanyofthose
productsweresoldfromstoreshelves.
Everythingwasdrivenbysequential,andlargelyinflexible,stepsinachain,allbasedon
assumptionsaboutfuturedemand.Breakingthechainatanypointintheprocesswould
createrisk,incurcost,delaydeliveryand,potentially,alienateconsumers.And,whats
more,thechainalmostalwaysendedatthestore.Beyondtheregister,CPcompanieshad
nodirectvisibilitytohoworhowfrequentlytheirproductswerebeingusedandconsumed.
Now,throughdirectandindirectinteractionsdirectlywithconsumers,thedigitaleconomy
isbasicallyflippingoldmodelsforforecasting,inventory,distributionandfulfillmenton
theirheads.CPcompaniesinteractionswithconsumersgivethemindicationsofintention,
whichcompaniescanusetoactoninmomentsofopportunity.
TheAmazonDashbuttonisagoodexample.Ivepreviouslytalkedabouthowthis
technologyprovidesanewopportunityforCPcompaniestomeetconsumersintheir
momentsofneed.Butitsalsomorethanthat.BuyingaDashbuttonisanindicationofa
consumersintentiontobuyaspecificbrandedproduct.But,itsalsoanindicationofthat
consumersintentiontobuythatproductagainandagainandagain.
And,astheydo,theCPcompanycannowmonitorpurchasefrequencyattheindividual
consumerleveltodetermineconsumptionpatterns.Theynolongerhavetoforecastwhen
thatconsumermightbuyagain.Theybegintoknow.Andalongtheway,theycanprovide
personalizedrecommendationsanddeliveryoptionsthat,fromtheconsumers
perspective,feelpersonallytailoredjustforthem.

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AnothergreatexampleisStitchFix,apopularsubscriptionserviceknownfordelivering
personalizedclothingandaccessoryselections.TheconsumertellsStitchFixkey
informationabouttheirintentions,suchasplannedusageoccasion(e.g.formalevent),
colorpreferencesandstylepreferences(e.g.classic).StitchFixthenusesthatinformation
todeliveroptionsdirectlytotheconsumershome.Theconsumerpickstheitem(s)they
wantandreturnstheonestheydont,providingquickfeedbackaboutwhattheydidand
didntlikeabouttheirchoices.
Fortheconsumer,theexperienceisinherentlyjustforme.ForStitchFix,everythingthe
companydoesisbasedontheconsumersdirectexpressionofintention.Themore
interactionstheyhave,themoretheylearnabouthowbesttorespondtoconsumersto
thepointwheretheyveessentiallyachieveda1:1correlationbetweenwhattheypredicta
consumerwillbuyandwhattheconsumeractuallybuys.
TheNewNormal
AmazonDashandStitchFixillustrateitsnolongeraboutguessinghowmuchdemandfor
aphysicalproductyoumightseeatsomefuturedate.Instead,itsaboutknowinghowto
respondwithexactlywhatsneeded,inthemomentitsneeded,basedonthecapacityto
senseandspotconsumersintentions.
Thisischangingthedefinitionofinventoryfromthestorageofphysicalgoodstonow
includeservicesandcontent,too.Itsalsochangingdistributionandfulfillmenttoinclude
deliveringcontentviadigitalmeans,engagingdirectlywithconsumerstodeliver
complementaryservices,extendingphysicalfulfillmentdirectlytoconsumersintheir
homes,andmore.
Arethesechangesoccurringinyourorganization?Ifso,whatareyoudoingdifferentlyto
betterunderstandconsumers,spottheirintentionsandmakejustformeexperiences
possible?Andhasthishadatransformativeeffectonhowyouoperate,suchasablurring
ofthelinesbetweenmarketingandthesupplychain?Letusknow.We'dlovetohear
fromyou!

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Products:sap_for_consumer_productsIndustries:consumer_productsTags:scm,consumer,supply_chain,cp,cpg,
consumer_goods,consumer_packaged_goods,digital_transformation

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