Key Issues Facing the Supply Chain Industry to Be Discussed at the Gartner Supply Chain Executive Conference 2014, May 20-22 in Phoenix and September 10-11 in London
Revenue growth for the consumer products (CP) industry continues to be challenging as CP supply chain leaders saw a decline in revenue growth over the last two years according to Gartner, Inc. The need to find revenue growth is driving CP organizations to rethink how they deliver value within their trading networks.
“Consumer products companies continue to face an uncertain global economy, with an expectation that demand volatility will continue to increase and revenue growth will continue to be challenging,” said Steve Steutermann, research vice president at Gartner. “In this scenario, increasing revenue growth means finding new markets, increasing market share and improving on-shelf availability (OSA) of products sold. Supply chain leaders that can measure OSA and collaborate with retailers to improve shelf availability and manage inventories have an advantage versus those CP manufacturers that cannot use customer data to improve OSA.”
Effectively using customer data requires making an investment in a demand signal repository (DSR) to harmonize and cleanse retailer data so that it is usable for data analytics. Data analytics using retailer consumption and inventory data today are examples of using “structured” data. While the term “downstream data” is most often connected to consumption and inventory data, unstructured data, like loyalty data, social sentiment, consumer perception attitudinal data, is starting to be used for targeting consumers, shaping demand and improving new product launch effectiveness.
The next-generation data analytics solutions will integrate both structured and unstructured data for real-time decision making and become more prescriptive rather than today’s pattern-based technologies that address what’s happening or has happened. Prescriptive analytics will address and model what can happen under a set of conditions. For example, being able to predict which stores in a retailer’s chain will have an out-of-stock based on a promotional event in the future is a significant leap from where the industry is at today.
“It is important that organizations mature their downstream data capabilities to collaborate with customers. It will be the most mature and capable manufacturers that will benefit the most from the next generation of data analytics,” said Mr. Steutermann.
Manufacturers and retailers alike are placing focus on direct-to-consumer initiatives as a means to find revenue growth. For manufacturers, this means designing supply networks to fulfill direct-to consumer demand, reaching the digital-mobile consumer and making transactions seamless, while personalizing the experience for the consumer. To support these initiatives, CP manufacturers will need to improve their demand management capabilities, their ability to respond to variable demand, and their order management and route-to-market capabilities in a cost structure that does not erode margins.
According to Gartner, continued demand volatility is increasing pressure to fulfill demand and causing companies to leverage integrated end-to-end network approaches.
In Gartner’s 2014 Trends in Manufacturing survey of 258 companies, 87 percent of respondents cited demand volatility as a medium to very large impediment to supply chain planning (SCP), outranking all other leading impediments cited, including demand and supply visibility, systems to convert data into insights and lack of talent.
“Critical to a consumer product company’s future success is the ability to use customer data to improve the demand forecast, lower inventories, reduce cost and improve service. Supply chain leaders that are “downstream data capable” and can demonstrate their use of customer data to produce joint business outcomes are the same companies that are best positioned to collaborate with customers and benefit from collaborative platforms of engagement,” said Mr. Steutermann. “Collaborative platforms are initiatives that manufacturers and retailers work on together to achieve joint outcomes, including on-shelf availability improvements, shrink and waste reduction programs, inventory management and cost reduction initiatives.”
Providing suppliers visibility to demand and collaborating with them to orchestrate demand fulfillment play an increasingly important role in order management and perfect order performance with retailers. The CP industry should continue to mature and transform its supplier management capabilities from supplier segmentation initiatives and risk management to capabilities that include supplier collaboration to fulfill demand as well as scorecard supplier performance for continuous improvement.
Supply chain leaders are increasingly asked to deliver against business objectives requiring both improved capability and increased efficiency. In the 2014 Trends in Manufacturing survey, it was found that 55 percent of CP companies are currently in the process of a redesign of their networks, and 23 percent plan a redesign in the next 24 months. The three most cited reasons for transformation are cost reduction, improved agility and market acceptance of new products.
“The slow-growth global economy is placing greater pressure on supply chain executives. Increasingly, the supply chain is asked to find cost savings that can be reinvested for growth, and be a product and service “differentiator” to compete and win in categories the organization does business in,” said Mr. Steutermann. “There is a growing realization that to meet these objectives requires more than a step-level change in supply chain capabilities and is the primary driver in the significant level of transformation we are witnessing in CP.”
Transformation requires leadership, a strategic vision, a road map of priorities and the ability to execute against the organization’s strategy. “Achieving top-tier status across every measure may simply mean adding unnecessary cost and complexity. What’s important is to invest in people, process and technology improvements that are valued by customers,” said Mr. Steutermann. “Leaders make conscious trade-offs, with an understanding that it may be appropriate to have benchmarks that are at par with industry averages while, at the same time, having other measures that reflect best-in-class outcomes.”
More detailed analysis is available in the report “Consumer Products Industry Supply Chain Outlook, 2014.” The report is available on Gartner’s website http://www.gartner.com/doc/2673915.
Additional details on the future direction of the supply chain industry at the Gartner Supply Chain Executive Conference 2014 taking place May 20 – 22 in Phoenix, Arizona. For more information about the conference, please visit http://www.gartner.com/technology/summits/na/supply-chain/. Media can register to attend by contacting firstname.lastname@example.org.
The Gartner Supply Chain Executive Conference will also be held September 10-11 in London. For additional information about this conference, please visit http://www.gartner.com/technology/summits/emea/supply-chain/. Media can register to attend by contacting email@example.com.
Additional information from the events will be shared on Twitter at http://twitter.com/Gartner_inc and using #GartnerSCC.
About Gartner Supply Chain Executive Conference Series
The Gartner Supply Chain Executive Conference is the world’s most important gathering of supply chain leaders and takes place in Phoenix, Arizona and London, UK. The event features analysts specializing in all supply chain disciplines and offers an unrivaled resource for chief supply chain officers and their supply chain leadership teams when it comes to advice and expertise, and a platform for the informed and provocative debate that is essential to raising the bar on supply chain performance. For more information on both conference locations, visit gartner.com/events/supplychain
Find orginal article at http://www.gartner.com/newsroom/id/2679915