by Fronetics | Nov 12, 2019 | Blog, Strategy, Supply Chain
Organizations implementing sustainable supply chain practices face increased expenses associated with upfront investments. But new strategies are emerging to change that.
Highlights:
- 93% of supply chain organizations have implemented environmental initiatives. Still, more plan to do so in the next five years.
- Unlike some sustainability initiatives that require large upfront investment, other strategies synergize with business interests.
- A holistic vision is key to initiating sustainable practices.
Sustainability is on-trend in the business world. But, how do you view sustainable initiatives — a debilitating upfront investment or an exciting opportunity to enhance your company’s bottom line? Many small businesses find themselves in the former camp. However, new strategies are emerging that may change that.
What does sustainable practice mean?
A recent study conducted by Llamasoft and the Economist Intelligence Unit surveyed 250 senior executives from manufacturing and retail companies worldwide. The report showed that 93% of supply chain organizations have implemented environmental initiatives. Still, more plan to do so in the next five years.
Regulatory standards and consumer priorities are making it increasingly urgent for companies of all sizes to rethink their operations in terms of sustainability. A 2018 Nielsen study found that 81% of global consumers are convinced that companies have a responsibility to employ policies that prevent further harm to the planet. The U.S. has seen increased regulation related to environmental protection, including emissions standards and the recovery/reuse of packaging material. In the U.K., companies employing more than 500 people are required to report on their sustainability practices, and, according to Nielsen, 71% of Europeans place a high value on maintaining ethical and sustainable lifestyles.
Whether this means costs or benefits for your organization depends a great deal on what exactly you understand sustainability to mean. While it’s easy to associate sustainability with hard-to-achieve environmental goals, industry experts are starting to think a little more capaciously about how companies can participate in a sustainable supply chain. If we think about sustainability as “meeting the needs of today without compromising the ability of future generations to meet their own,” then organizations can find more flexible strategies for achieving sustainability that suit their needs and abilities.
Organizations implementing green initiatives face increased expenses associated with upfront investments. New equipment, more expensive sourcing costs, and the personnel required to oversee these changes make the early stages of investing in sustainable practices a daunting prospect for many companies. And the obstacles don’t end there. According to Llamasoft’s study, significant challenges facing sustainability initiatives include the difficulty of monitoring complex supply chains and the need for organizational structures that can implement new policies. Interestingly, 38% of executives surveyed cite the costs associated with these challenges as a deterrent to implementing further initiatives.
Yet 33% reported that their companies had initiated sustainability drives because of the benefits to their bottom line. What accounts for the difference?
Sustainable practices: the bottom line
As the survey indicates, sustainability and profitability are not actually mutually exclusive options. Unlike some sustainability initiatives that require large upfront investment, other strategies synergize with business interests.
Efforts aimed at increasing the efficiency and agility of supply chain organizations can yield sustainability benefits as a rewarding side-effect. Consolidating shipments, efficient route design, and multi-echelon inventory optimization serve both profitability and sustainability goals. Intelligent product design that allows for efficiency of shipping and storage also contributes to carbon footprint reduction. Just think of Costco’s switch from round to square pistachio jars that enhanced supply and storage capacities and reduced the emissions of its truck fleet at the same time! Additionally, periodically overhauling operations with sustainability in mind has proven to be a good tactic for efficiency, as well, leading to more precise inventory levels and more accurate predictive management.
Upfront costs can often be quickly recouped not only through improved efficiency, but also through the brand identity enhancement associated with companies that effectively publicize their sustainability practices. Integrating green initiatives into marketing and branding strategies offers an intangible advantage beyond measurable profits or benefits to the planet.
Many businesses are looking to brand themselves as leaders in sustainability. Many large organizations successfully do this by engaging with suppliers to encourage sustainable practices throughout the supply chain. In the past, large organizations used environmental criteria as a tie-breaker in awarding contracts to smaller supply companies. But, sustainable practices are increasingly becoming a requirement in order for supply chain companies to bid in the first place. In fact, 88% of executives surveyed by Llamasoft indicated that their organizations keep track of supplier sustainability ratings, often developing their own evaluations, such as:
- Supplier scorecards that allow companies to rate the practices of other businesses in their supply chain, facilitating comparison among potential suppliers
- Public targets, which some companies require suppliers to meet in order to retain their contracts (Hewlett Packard, for instance, has launched a campaign requiring 80% of their suppliers to set certain emissions reduction targets by 2025.)
- Awards that allow companies to recognize suppliers that successfully initiate green policies
Sustainable practices for small companies
These benefits, however, are predominantly available to large global companies that have the capital, scale of operations, and leverage with trading partners to make sustainable practices practical. So, what can small businesses do to rate highly for sustainability — not to mention, gain the same branding advantages enjoyed by large organizations?
A holistic vision is key to initiating sustainable practices. Your company’s sustainability doesn’t ride solely on internal practices, such as the management of your fleet. It is just as important to consider how sustainable your suppliers are, for example.
From this perspective, selecting off-shore suppliers with lower per-unit costs can often incur longer-term disadvantages. Companies risk increasing their carbon footprint due to the greater shipping distance. Further, longer lead times necessitate holding more inventory, which equates to higher holding costs and storage facility energy emissions.
In short, the best way for any business — large or small — to practice sustainability is to optimize practices throughout the supply chain. Regulatory standards and consumer preferences are increasingly bending that way, and soon you’ll be in the minority if you’re not an active advocate for a sustainable supply chain.
This post originally appeared on EBN Online.
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by Fronetics | Nov 7, 2019 | Blog, Logistics, Marketing, Paid Advertising, Supply Chain
Strategically integrating paid advertising in the buyer’s journey can help influence purchases and repeat sales.
Highlights:
- We advocate a primarily inbound strategy, you can boost the reach of your posts by investing in paid digital advertising.
- Your goal is to continue to engage with prospects and educate buyers as to why your product/service is better than your competitors’.
- 60% of consumers believed customer reviews were either trustworthy or very trustworthy — meaning that businesses that can accumulate positive reviews had a good chance of helping a customer make a purchase decision.
Let’s face it: the internet has completely changed the way B2B buyers are researching and making purchases. It’s becoming more crucial than ever to customize content for a potential customer’s journey through your funnel to help convert leads to sales.
The internet has given buyers the ability to research products and services, as well as compare competitors, without ever leaving the house. To keep up, B2B marketers need to align digital marketing efforts with the buyer’s journey to create and distribute content at the right moment.
While we advocate a primarily inbound strategy, you can boost the reach of your posts, ads, and videos by investing in paid digital advertising. And increased reach isn’t the only benefit. New statistics show that PPC visitors are 50% more likely to purchase something than organic visitors.
The key is to create interesting and informative ads and serve it to potential buyers at the right point in their research. Let’s look at how to integrate paid advertising in the buyer’s journey.
3 stages of the buyer’s journey
To stand out from your competitors, marketers need to know what types of paid ads to create and where to distribute them throughout the buyer’s journey. According to Brandon Stauffer, the typical buyer’s journey breaks into three stages:
- Awareness:A buyer figures out they have a problem and begin researching more about that problem. They are looking for resources to validate or better explain what their problem is.
- Consideration:Now the buyer knows the details of their problem. They begin more research to find a solution to their problem.
- Decision:The buyer has done research into solutions and is now comparing those solutions to make a final decision.
Now that you have the three key stages of the buyer’s journey, digital marketers need to pair specific paid ad campaigns with the right stages.
How to use paid advertising in the buyer’s journey by stage
Awareness stage
This is the very top of the sales funnel. All ads at this stage should focus on educating and engaging with prospects. There are two trains of thought when it comes to the awareness stage of paid ad campaigns:
- Create a campaign for prospects who might not know about your brand, products, or services
- Create an ad campaign that focuses on brand awareness and keeping your company at the top of the mind for those prospects that have heard of your brand
For each of these options, creating ads that appeal to your buyer personas will help get them in front of your targeted audiences.
Recommendation: Google search ads, Facebook and Instagram ads, highly visual content including video
Consideration stage
The second stage, consideration, is just that … Buyers are aware of your brand and are considering your products and services. Your goal is to continue to engage with prospects and educate buyers as to why your product/service is better than your competitors’. Remember, this isn’t the time for a hard sale. You want to bring buyers to the table by demonstrating what you can do for them.
Recommendation: Google Display ads, remarketing through Facebook, Instagram, LinkedIn and Twitter
Decision stage
Your prospect is almost ready to commit to a “conversion” but may need that extra push. Ads in this phase should communicate an incentive to get them to complete the conversion.
And don’t forget: people trust people. Customer testimonials can be a powerful tool in the decision stage of the buyer’s journey. HubSpot research found that 60% of consumers believed customer reviews were either trustworthy or very trustworthy — meaning that businesses that can accumulate positive reviews had a good chance of helping a customer make a purchase decision.
Recommendation: Remarketing on Google and social platforms, create visual customer testimonials
Have you tried integrating paid advertising in the buyer’s journey?
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by Fronetics | Nov 5, 2019 | Blog, Content Marketing, Logistics, Marketing, Social Media, Supply Chain
LinkedIn has released a new guide to using video on its platform. Here’s what supply chain companies need to know to get the most out of video on LinkedIn.
Highlights:
- Effective B2B marketing videos start with an analysis of your prospects’ unique purchasing journey and needs.
- Videos for the awareness stage of the buyer’s journey should be concise and geared to forging an emotional connection.
- Bottom-of-the-funnel video types include product demonstrations, welcome videos, webinars, and FAQ sessions.
Visual content, particularly video, is the future of social media marketing. And video on LinkedIn is no exception. A recent report from Kleiner Perkins indicates that 62% of B2B marketers rate video as an effective content-marketing tactic. Not only that, but, according to internal data from LinkedIn, users are 20 times more likely to share a video on the platform than any other type of content.
Thanks to a recent guide published by the platform, leveraging video on LinkedIn for the supply chain has never been more attainable. The Tech Marketer’s Guide to B2B Video is an invaluable resource. Whether you’re relatively new to B2B video marketing, or a seasoned video creator, the guide contains useful nuggets of information, as well as examples of effective video on LinkedIn, for marketers at any stage.
We’ve pulled out key points for you.
6 steps to approaching video on LinkedIn
It’s worth pointing out that the six steps that LinkedIn identifies to building an effective video strategy are applicable elsewhere as well. Your strategy for video on LinkedIn should likely also apply to your strategy for video content across your digital assets.
1) Analyze your buyer’s journey
Consider the unique buyer’s journey for your company. What content do prospects want to see at each stage, and what actions do you want them to take?
2) Set your marketing strategy
What medium is optimal for delivering content at each stage? Which stages are particularly conducive to video content?
3) Establish metrics and KPIs
Choosing the right key performance indicators (KPIs) and metrics will allow you to determine how your content is performing.
4) Create video content
At the stages where video content is the best way to deliver, what type of video is most effective?
5) Target your content
Use your understanding of your target audiences, in combination with the targeting capabilities of LinkedIn, to ensure that your video is reaching the right people at the right times.
6) Optimize your campaign
Keep track of your data. Note what’s working. Adjust what isn’t performing.
Using video on LinkedIn throughout the buyer’s journey
Awareness
The first stage of the buyer’s journey, the awareness stage, is particularly opportune for video on LinkedIn. At this point, your goal is to tell a story, evoke a response, and introduce your brand and products.
Videos at this stage should be concise and geared to connecting with your audience, demonstrating an understanding of their challenges, and how your company is positioned to address those challenges.
LinkedIn’s guide points out a major advantage of video: its measurability. As opposed to text-based marketing, where your knowledge of audience behavior is limited to downloads and time on page, video on LinkedIn comes with richer data. You can tell, for example, when someone has watched your video and when they stopped. This means you can adjust your video length suit the preferences of your audience.
At the awareness stage, important video metrics include how many times your video was viewed, how much of the video was watched, and how many viewers responded to your call to action.
Consideration
Using video on LinkedIn for the second stage of the buyer’s journey, the consideration stage, is about introducing your products and their features, as well as giving a sense of what it’s like to work with your business. Ideal video formats at this stage include explainers, case studies, webinars, how-to videos, and virtual tours. Your foremost goal is to be authentic and to represent your business and the solutions it offers.
Key metrics at this stage are about engagement. Keep track of the number of interactions your videos get (comments, likes, clicks, shares, etc.), compared to the number of views. Also keep an eye on your estimated cost per view (eCPV) to track the efficacy of your video budget.
Decision
Because the decision phase of the buyer’s journey is all about personalization, video has traditionally been used less here. But that’s starting to change. Authentic, trust-building videos can be a powerful asset for the decision stage, reassuring your prospects that they’re making the right decision, using testimonials from existing customers. Welcome videos, FAQ sessions, and webinars are also effective in the decision phase, as well as full-length product demonstrations.
If you’re using lead-generation forms with your video on LinkedIn, keep track of which generate the most leads, as well as the quality of those leads. Otherwise, track click-through rates to gain insights into your estimated cost per click (eCPC).
Metrics for video on LinkedIn
LinkedIn offers a robust set of metrics for videos on its platforms:
- Views: At least one second of playback while the video is at least 50% on screen on desktop, or 300 milliseconds on mobile
- Views at 25%: The number of times your video was watched at 25% of its length, including watches that skipped to this point
- Views at 50%: The number of times your video was watched at 50% of its length, including watches that skipped to this point
- Views at 75%: The number of times your video was watched at 75% of its length, including watches that skipped to this point
- Completions: The number of times your video was watched at 97-100% of its length, including watches that skipped to this point
- Completion Rate: Completions divided by views as a percentage
- View Rate: Number of views divided by impressions, multiplied by 100
- eCPV: Estimated cost per view
- Full Screen Plays: Total number of clicks to view video in full screen
Do you use video on LinkedIn for your business? Let us know your experience in the comments.
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by Jennifer Hart Yim | Oct 29, 2019 | Blog, Logistics, Marketing, Social Media, Supply Chain
As other social networks face unprecedented controversy, LinkedIn is still the best professional social media tool. But too many Supply Chain professionals aren’t getting the most from it.
This guest post comes to us from Argentus Supply Chain Recruiting, a boutique recruitment firm specializing in Supply Chain Management and Procurement.
Awhile back, following Microsoft’s acquisition of LinkedIn, we wrote an article asking “Is LinkedIn in Trouble?” In that post, we identified a few shortcomings that we thought threatened to detract from its user promise as being premier social network for professionals. It was full of spam content that had no relevance to anyone, let alone people looking to network, and it had a somewhat faulty search functionality.
A few years on, and the network is still thriving. A recent article in the New York Times caught our attention, and has us revisiting where LinkedIn stands in today’s social media landscape – for job candidates, hiring managers, and people looking to network in general. Titled, “Why Aren’ Talking About LinkedIn?”, it examines some of the controversies around other social networks, and how LinkedIn has managed to steer clear.
Twitter has gained a reputation for trolling and harassment. Facebook, for its part, has gained a reputation for allowing its data to be compromised, threatening users’ privacy, and for allowing foreign actors to influence the U.S. election. Meanwhile, LinkedIn soldiers on. It’s not the savviest, smoothest social network experience – not that it ever has been – but it’s still one of the most useful.
We’re recruiters who are highly active on LinkedIn (check out our page there, if you haven’t.) From our perspective, the social network is still highly relevant to the career world, whether it’s researching prospects, finding candidates, looking for a job, or networking.
LinkedIn has taken efforts to modernize, and those efforts have reinforced the network’s core promise – helping people connect in a professional capacity, and share thought leadership – while avoiding the disinformation and harassment scandals that plague other social media platforms of similar size. As the Times puts it, “the site hasn’t proved especially useful for mainstreaming disinformation, for example, nor is it an obvious staging ground for organized harassment campaigns.”
Why has Linkedin avoided these issues? A few things set it apart from other social networks:
- Users communicate in a business-appropriate way. They realize that a future colleague, boss or hire could be reading what they post, so they’re less likely to post polarizing material.
- Similarly, LinkedIn isn’t political. Because it’s restricted to professional or professional-like communication, it’s managed to avoid some of the political filter bubbles common to other social networks. Political ads are banned on the platform.
- The majority (82%) of LinkedIn’s revenue comes from premium subscriptions, rather than advertising, which allows LinkedIn to rely less on mining user data for revenue. LinkedIn certainly holds a tremendous amount of its users’ data, but this might help explain why it’s had fewer data and privacy-related scandals than other social networks.
LinkedIn has been crisis free, and that’s allowed it to continue to chug along, owning the considerable niche that it’s owned since 2003. Other job sites and career apps have flourished – and floundered – in the meantime, but LinkedIn remains.
In 2019, the network has done a lot to address the biggest shortcomings we wrote about before. Spam posts are much reduced. The interface is lean and responsive, having worked out most of the kinks involved in its latest redesign. As the Times article describes, if you go on LinkedIn today, you see promotional content, but you also see a lot of people using the network for thoughtful professional communication. You see a lot of people who use its powerful content creation channels like LinkedIn Publisher and native video to boost their personal brand and generate career opportunities. It’s powerful not just when looking for a job: people use it to connect with possible suppliers, identify talent, learn best practices, network, and more.
Yet so many professionals still aren’t getting the most out of Linkedin.
In Supply Chain and Procurement, which is our area of recruitment specialty, some of the best candidates have highly inactive profiles. They don’t go into detail about accomplishments (e.g. major projects, cost savings, business transformation). Some of these candidates still don’t treat LinkedIn as a vital tool to build their personal brand, and see it more as an “online resume” to be updated whenever they’re looking for a job. Their profiles are almost empty.
We still find those candidates for our clients. Boolean searches are a powerful tool, as is the tried and true method of talking to as many people as possible. But we often wonder: how many other great Supply Chain professionals are out there who don’t put in the small amount of time required to get on our radar by being more active about their personal branding?
Consider your daily time allotted to social media. How much of it goes to networks like Facebook and Twitter? Isn’t it worth it to take a small chunk of that time and post about career-related topics in a more mentally healthy environment, and boost your brand in the process?
Say you’re a specialist. A Strategic Sourcing professional with expertise in facilities and real estate Procurement, or a Supply Chain analyst who’s highly skilled with SAP and other Enterprise Resource Planning (ERP) applications. Those are requirements our clients – some of the top companies in the world – have all the time. By getting more active on LinkedIn, you’re owning your niche, and rising to the top when people search for people with your speciality. Recruiters, but also suppliers, and colleagues. And trust us, people are searching. Every day.
So what small steps can you take to treat LinkedIn more like a marketing tool, and less like a “set it and forget it” online resume?
- If you aren’t connected to many other Supply Chain professionals, expand your network. Most people are open to unsolicited connection requests if they’re not transactional. Reach out to connect with people at interesting organizations, and start conversations that aren’t about looking for a job.
- Share relevant content with your network, with your comments, and attempt to start discussions. LinkedIn has a new “Top News” feature – on the sidebar of the homepage – which can give you some current topics. Pick things that make you think, and share your thoughts. Publications like Supply Chain Dive, SCMDojo, and Procurious have lots of great thought-provoking professional content to look at as well.
- Think about publishing an article or two through LinkedIn Publisher. What big issues or changes are you facing in your Supply Chain practice? What are you most excited about? A longer-form article can help you organize your thoughts and show off expertise.
- Make sure that your profile has relevant accomplishments, and detailed keywords related to your niche (e.g. the categories you work on in Procurement).
- Be persistent, but not relentless. The LinkedIn algorithm – in our experience – tends to reward people who are more active. But don’t post all over the place indiscriminately – pick and choose topics about which you have something to say.
But this is just the tip of the iceberg. If you’re a Supply Chain or HR professional, how is LinkedIn is working for you in 2019, either in looking for jobs, or hiring? Let us know in the comments!
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by Jennifer Hart Yim | Oct 22, 2019 | Blog, Current Events, Logistics, Manufacturing & Distribution, Strategy, Supply Chain
Amazon has changed the way we do business. Supply chain companies need to get on board with Amazon’s e-commerce strategy or risk losing business.
It is no secret that Amazon has dominated the online retail industry. Amazon Prime has shifted consumer expectations so that waiting 5-7 business days for your online order is no longer acceptable. With people now ordering anything from couches to groceries online, companies need to get on board with this shift to e-commerce or risk missing out on many sales.
Consumers now more than ever want access to more inventory no matter if they are shopping online or in stores. Many companies report the struggle of trying to keep up with this retail giant, and current-day supply chains have certainly felt the impact.
Historically, supply chains have been set up to support a network of stores using the multichannel business model. This includes retailers managing their different channels almost as separate businesses. These channels are what businesses use to get their goods and services to their consumers. For example, many retailers use brick-and-mortar stores as well as e-commerce when it comes to selling.
So, what’s the problem with this? Well, the customer’s experience can vary depending on the shopping channel they choose. Retailers often keep their online and brick-and-mortar inventory separate, which can lead to a frustrating shopping experience for the customer.
I am sure at some point in your life you have had the experience of walking into a store looking to return an online order only to find out it must be returned to the company through the mail. Customers do not view a brand in silos, and the same selection of inventory is expected whether they are shopping online or in a physical store. Companies also run the risk of losing a sale if the exact item the consumer wants is unavailable or sold out. This is one area that allows Amazon to shine because they maintain one pool of inventory that is not separated by different channels of business.
A 2016 UPS survey found that, for the first time, shoppers revealed they bought more of their purchases online than in stores. It’s hard to tell what is the main driver behind this shift, but you can’t help but think of Amazon. It’s hard to comprehend how other companies not only compete but just even keep up with the trillion-dollar company with a revenue of $10.07 billion in 2018.
This is where the omnichannel business model comes into play. Omnichannel combines physical and online commerce to create a more seamless shopping experience for the consumer. While this business model is not a result of Amazon, it certainly puts companies in a better position to compete. The goal here is to provide the same customer experience throughout each channel while ensuring the product reaches the customer as fast as possible.
Characteristics of an omnichannel business model include:
- Buy online pick up in stores
- Stores shipping to other stores
- Dropshipping
- Order fulfillment from store
Nordstrom finding ways to differentiate from the competition
Online shopping provides many benefits to consumers, but it does not come without its own challenges. It is fairly common to buy a shirt online only to find out it is the wrong size. It can be a hassle to mail the item back, and consumers often opt out of this and chalk the purchase up to a loss. Nordstrom understands this pain point and took it upon themselves to offer a solution by creating service hubs called Nordstrom Local. The sole purpose of Nordstrom Local is to make the online shopping experience effortless. While these hubs do not contain designated inventory, they provide a handful of services to the customers.
They offer:
- Pickups
- Returns
- Stylist
- Dressing rooms
- Tailoring services
- Same-day delivery (if ordered before 2 p.m.)
- Espresso drinks, juices, wine & beer
As a consumer, what more could you ask for? The idea is that you order a variety of clothes online and have them delivered to Nordstrom Local. Here you can try on your purchases in their dressing rooms. If it doesn’t fit, no problem — they’ll mail it back for you. Need it hemmed? There’s a tailor on-site.
Nordstrom has held its own in the retail space. With 2018 revenue reaching $15.5 billion, it is hard to argue with their success. They must continue to innovate and find new ways to connect consumers to their product. Trying out this concept in Los Angeles has proven to be successful, and they are looking at opening up hubs in New York next.
Kohl’s joins forces with Amazon
Kohl’s, like many retail stores, welcomes any opportunity to increase foot traffic. Over 1,000 of their stores are now accepting returns from Amazon. Again, we see a pain point of online shopping removed for the consumer. You can bring your unwanted Amazon item to Kohl’s, and they will pack, label, and ship the item at no cost. The hope is that Amazon customers will flock to Kohl’s and hopefully buy some of their inventory on the way.
Their revenue has continued to rise over the past four years and reached 20 billion in 2018. This is a bold idea that can set Kohl’s apart from the competition by delivering a service that is unique to them. Amazon needs a way to keep its customers happy and Kohl’s needs to increase foot traffic, so it appears to be a win-win for all parties involved — including the consumer.
While Kohl’s new idea offers fewer services than Nordstrom’s, they are opening themselves up to a wider consumer market, and with this will likely come more sales. They have addressed the expected increase in expenses that will come with having to hire more employees and spending more on logistics, but the expected payoff is potentially massive.
Comparing strategies
It’s hard to tell which strategy will prove to be more profitable. The only thing that is for certain is that the shift toward e-commerce is not slowing down anytime soon, so companies need to look at how they connect consumers to their product. If the goal is to get your product to the consumer, then your supply chain needs to be tailored to this objective.
Amazon may have the upper hand now, but you never know what new idea could pop up in a few years. In the meantime, companies are faced with the harsh reality of ever-growing competition. Consumers are now hopping on their computers or mobile devices to choose from a plethora of inventory.
Amazon is not completely to blame when it comes to the evolution of consumer expectations, but they have certainly impacted them. Companies wanting to compete are left to make tough but critical decisions on what their next move will be.
This article was written by Emily Standish, an MBA student at the Peter T. Paul College of Business and Economics at the University of New Hampshire, specializing in Finance and Information Systems & Business Analytics. She graduated from Merrimack College in 2017 with a B.S. in Business Administration and Management with a concentration in Finance and currently works as a Corporate Financial Analyst.
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by Fronetics | Oct 15, 2019 | Blog, Content Marketing, Manufacturing & Distribution, Marketing, Supply Chain
The analog supply chain model is outmoded and inefficient. Here’s how digital transformation is reinventing manufacturing.
Highlights:
- Manufacturers are increasingly adopting artificial intelligence and machine learning technologies.
- The traditional analog supply chain model is unable to compete with digital disruptors in a volatile market.
- Digital transformation empowers manufacturers to create sought-after personalized experiences for buyers.
Digital transformation isn’t just the latest buzzword in supply chain circles. It’s an ongoing trend that’s revolutionizing manufacturing and supply chain efficiency. According to a recent report from Accenture, 78% of CFOs are spearheading initiatives to improve efficiency through adoption of digital technology.
Digital transformation empowers manufacturers to meet the evolving demands of a customer base with rising expectations for customer service. The digital technologies that are emerging today offer analytics that are vital for forecasting and understanding how to shift the balance of supply and demand.
3 ways that the analog supply chain model is outdated
Supply chain management expert Frank Meerkamp writes, “The traditional supply chain is a tapestry built on an outdated analog network – yet it exists in a digital world.” The difficult truth is that in today’s climate of rapidly shifting market demands and an increasingly interconnected world, manufacturers must embrace digital transformation or be left behind.
Before we look at how digital transformation can benefit manufacturers, let’s take a moment to examine the challenges presented by an outdated analog supply chain.
1) Market volatility
Today’s markets move at a breakneck pace. Thanks to a constantly shifting geopolitical landscape, changing regulations and sanctions, and the unpredictability of cost and supply, manufacturers face market volatility, uncertainty, and a high level of risk. The analog supply chain model leaves companies without the agility to respond and pivot quickly and to operate efficiently on a global or regional scale.
2) Competition from digital disruptors
Perhaps the most powerful example of the way in which digital disruptors are challenging legacy leaders is the Amazon effect. Amazon has effectively situated itself as an innovator and easily has outpaced rivals in multiple sectors. Companies that continue to embrace an analog supply chain model simply cannot compete with those that have fully embraced digital transformation.
3) Rising customer expectations
While it can be tempting for B2B companies to bury their heads in the sand, believing that digital marketing is purely a B2C necessity, the reality is that supply chain companies must embrace digital marketing as part of their digital transformation. Buyers expect hyper-personalized experiences, as well as customized products, and the kind of execution that’s impossible for manufactures to deliver within the analog supply chain framework.
4 ways digital transformation addresses today’s challenges for manufacturers
As the complexity of the supply chain increases, embracing digital transformation is the clearest path to success for manufacturers. While companies that cling to an outdated analogue model struggle with eroding margins and an inability to compete, those that establish “a data-driven supply chain,” writes Meerkamp, “can gain advantages in increased forecasting accuracy, identifying and resolving issues in real time, creating new segmentations, and delivering on consumer requirements with speed, specificity, and scale.”
In short, digital transformation uses data to drive visibility and agility for manufacturers, allowing them to operate efficiently and profitably.
1) Establishing visibility and centralized control
The AI and machine-learning technologies available today enable manufacturers to meet the challenges presented by an increasingly complex supply chain. Massive sets of data can be captured and processed, providing invaluable real-time visibility. Not only that, but manufacturers can leverage this visibility to centralize data and decision-making.
2) Creating new performance engines
Thanks to the ability of AI technologies to process enormous quantities of data, digital transformation enables “powerful resolution engines, based on real-time root-cause analyses, to automate the execution of supply chain functions, and optimize transactions to meet strategic objectives,” says Meerkamp. These technologies facilitate the forecasting and immediate decision-making necessary for manufacturers to operate efficiently.
3) Facilitating agility
Today’s marketplace moves faster than ever, and market forces are constantly shifting. Agility has never been more important for companies to compete. Intelligent technologies allow supply chain companies to establish a management model that is collaborative, data-driven, and platform-based. Digital transformation enables the sharing of qualitative information as well as real-time data and implications. This in turns enables agile management, ready to meet the shifting demands of the marketplace.
4) Developing personalization and flexibility
One of the biggest challenges manufacturers face today is the increasing buyer expectations of personalized experiences. AI technology enables the creation of segmentation strategies, addressing buyers’ personalized needs based on various factors, including channel, location, and service level. Real-time visibility into market data also leads to greater insight into buyers’ needs and how to meet them.
Organizations that embrace digital transformation are empowered to create personalized experiences for their customers and operate with the agility, visibility, and centralization necessary to compete in today’s marketplace.
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