There are countless stories these days about the challenges in supply chains. This article takes a specific focus on manufacturers, staying away from the general topic of today’s hardships in distribution channels.
Manufacturers have traditionally been a key link in the long chain of supply. Somewhere between raw materials and finished products is where the manufacturer exists, transforming the materials into products that can be resold via distributors and wholesalers.
The supply chain was linear and relatively predictable, but that is changing. With the introduction of broad internet connectivity, web-based services, large e-commerce platforms and increasingly innovative and competitive new logistics players, the supply chain is becoming a web of connectivity and communication, with linear approaches — and predictability — out the window.
In today’s economy, customers demand more direct and personal approaches — and producers are forced to find ways to accommodate. With giant e-commerce platforms like Amazon, along with more direct-to-consumer channels, manufacturers are quickly becoming direct-to-consumer suppliers. Acting as drop shippers for the seller, the manufacturer is not shipping bulk/volume to distributors anymore. Instead, retailers are having smaller shipments sent directly to the consumer.
Many retail stores have now become more of a fulfillment location than the place where the customer buys. This is causing important changes in logistics approaches because the size of shipments is becoming smaller, while the number of deliveries – and delivery locations – is increasing.
Customers can go to a brand’s website and buy direct, driving increased focus on building brand value and improving the overall customer experience. With the demand from consumers for flexibility in how and where to buy, retailers are shifting their approaches to bring e-commerce into brick-and-mortar stores. This is where on-line and off-line sales channels are coming together,
While this converged channel model requires businesses to make new investments in e-commerce and digital solutions, it also delivers several potential benefits to the business, including the ability to better manage growing customer expectations, better compete in the digital marketplace, and address disruptions in the supply chain by having alternative options — something that is coming very handy in today’s challenging supply-chain environment (and you thought we would stay away from that topic!)
Delivering goods has always been an operational challenge, with success often measured in performance and cost. Today’s marketplace requires more agility and flexibility, which means the role of supply-chain managers is more strategic than ever. Simple logistics now has a direct impact on the customer’s decision to buy.
Mendelson Consulting specializes in the consulting and implementation of supply-chain integrations, EDI and inventory management solutions for manufacturers, distributors, and retailers. Our specialists help implement the solutions you need to meet the needs of the rapidly changing business and market.