Posted by Ben Stiller on June 16, 2017
It’s hard to remember life before products showed up on your doorstep, in record time. We’ve become used to ordering whatever we need online and having it delivered within a day or two – perhaps a week at the most. Consumers now tend to expect this timeliness from all online retailers. They’ve also become more demanding in the colors, flavors and sizes they want, expecting customization as a matter of course.
This buying phenomenon has given rise to what we call, “craft everything, and now,” meaning consumers want what they want, in whatever variation they want, when they want it. They expect a smorgasbord of choices. And if something is important to them, consumers will often pay more to have the craft-like experience as long as it feels uniquely made, not mass produced.
Impact on distribution network
From the consumer perspective, this is all fine, but from the standpoint of the supply chain, it completely disrupts the way companies have historically marketed, sold and distributed their products. The disruption is particularly acute for the 800-lb. gorilla companies, who command a large percentage of market share.
Now contrast these companies with the smaller, cheetah-like ones, who embody the “craft everything and now” spirit and who choose to sell their products originally through online-only channels and boutique retailers. Their quirky initial distribution likely made them feel home spun and in no time at all they are garnering prime shelf space right next to its mainstay competition in all the big box stores.
The 800-lb. gorillas should re-architect their capabilities and re-think their supply chain and distribution channels to become more nimble. They can and should consider delivering a craft-like product assortment faster. Just keep in mind that the required shorter lead times could have a significant impact on the composition of their static networks.
More nimble technology and data analytics, please
In addition to remaining on the curve of evolving technology, smaller cheetah-like upstarts are able to take advantage of different opportunities. They are less tethered and anchored in mid-market processes and they are more likely to incorporate enterprise and data analytics that they can quickly launch to their advantage. While the cheetahs are analyzing and responding to data about their customers’ needs and desires – often in real time, the gorillas often struggle to move beyond business as usual, frequently operating in silos instead of sharing insights across the enterprise.
Today, companies must rethink their channels, consider alternative networks and weigh the pros and cons of cost vs. service level. A variety of products should be positioned at strategic warehouse locations to facilitate timely delivery and keep customers coming back for what they feel is a more custom experience. Omni-channel distribution remains the name of the game. The companies that can deliver transparency by staging their supply chain and customer data for all their departments to see and use can create greater value. New cognitive technologies can even help companies re-create once tedious processes to save people time.
It’s really all about managing the change, and companies can decide whether to focus on tried and true methods, or wholeheartedly embrace what feels like a craft-like experience on an accelerated timeframe. It just may be the combination that garners the most reward.