Business models are changing, driving the need for more digitalization

By Marko Kovacevic

Customers, whether B2B or B2C, are rapidly evolving as digital capabilities enable smarter and better-informed buying. The New Customer has expectations and demands that companies must meet if they are going to grow sales, reduce costs, and retain happy and loyal customers. The New Customer doesn’t mean getting a different company or person to buy what you sell. It means that the individuals and companies that you sell to have a new set of demands, expectations, and requirements.  With the rise of the New Customer, brands are supplementing and, in many cases, augmenting or even replacing their traditional wholesale channels with direct-to-customer (DTC) models.

Meeting the needs of the New Customer is blurring the lines between B2B and B2C because expectations of all customers are being shaped by digital capabilities. Businesses need to know more about their customer and how purchasing decisions are made. They want the ability to recognize customer changes in buying behavior and adjust quickly, as their customer pivots, to retain their loyalty. The need to better understand customers is making DTC an essential part of every corporate strategy. In turn, new business models are required to understand and support the demands and expectations of the New Customer. Implementing new business models requires redesigning of workflows to provide efficient operations with visibility, tracking and data to make decisions. New systems are required to support these business models and meet expectations of the New Customer. And those systems must link the customer to demand planning to manufacturing to supply chain with end-to-end visibility.

The need for optimized digital workflows that tightly link the customer to the fulfillment process is accelerating digital transformation of the supply chain and driving the need for dynamic supply chains that quickly adapt.

 

What are the key characteristics of dynamic supply chains:

1. Customer needs are dynamically recognized. Data is readily available with Artificial Intelligence (AI) and Machine Learning (ML) tools sensing when changes are needed and adapting to data driven trends.
2. Demand sensing is tightly linked to manufacturing and supply chain. Adjustments take place quickly and seamlessly.  No longer is the manufacturing process disrupted when customer needs change. The data driven, business model recognizes the change and adjusts to meet the customers changing needs.
3. Regionalization is preeminent. Manufacturing and supply chains need to adjust quickly as demand shifts. Smaller quantities are produced and delivered because lead times are greatly reduced and there is far more insight into demand quantity allowing for dynamic shifts in production. More goods are sold at full price with fewer markdowns. Successful supply chain leaders who rapidly adjusted the near-shore models have successfully kept their customer base engaged and happy. They pivoted fast to overcome the material shortages and demand uncertainties and balanced the last mile adjustments to fulfill the customer promise.
4. Demand and supply remain in balance with the ability to make quick adjustments in production based on direct data inputs and have goods delivered quickly and reliably.
5. Distribution is optimized and closer to the customer to meet demand and deliver to their expectations. Stock is visible across the entire distribution network and balanced to meet forecasts. Stock rebalancing happens quickly and seamlessly.
6. Risk management is integrated into the workflows. When regionalization goods get to the customer faster, geopolitical risk is reduced, and logistics becomes more predictable. Digitalization of the end-to-end supply chain provides transparency and with integrated risk management tools, risks can be predicted in advance and action taken to avoid potential issues.  Compliance can be monitored and reported with higher confidence and less effort and businesses can ensure goods are produced in an ethical and sustainable way using modern labor practices.

 

Direct connection to your customers is a must for today’s data driven supply chain. More and more companies are moving to DTC to retain and grow a happy and loyal customer base. DTC doesn’t need to be the exclusive route to market, but it provides the data needed to understand your market and adapt to those changes must faster than they can be identified through traditional routes to market.

Industry leaders have successfully kept their customer base engaged and happy while investing in supply chain transformation at breakneck speed. They are adapting their business models to exploit the capabilities provided by digital supply chains and continue to invest in new technologies that power new differentiating capabilities. The rewards are evident. Industry leaders can now pivot to overcome material shortages and demand uncertainties and balance last mile adjustments to fulfill the customer promise. Risk management is integrated into workflows instead of being an after-thought. Examples are abundant. Just look at the growth in Mexico and other Latin American countries as manufacturing spans borders with subassemblies moving back and forth in companies like Boeing, Samsung, LG, and Whirlpool. Manufacturing across the globe is regionalizing to better serve the customer.

Competitiveness and differentiation in today’s environment requires first-hand knowledge of your customer.  Decisions must be near real-time, and data driven and that requires direct knowledge of your customer. Those who aggressively invest in DTC business models and technology to support those models will likely outpace their competitors for some time to come.

Marko Kovacevic is Managing Director of the Digital Supply Chain Institute, a member-led research institute focused on the evolution of enterprise supply chains in the digital economy and the creation and practical application of supply chain management best practices.

An edited version of this article appeared in Supply Chain Brain.

On January 25^th, the Digital Supply Chain Institute (DSCI) completed an executive education program for new member Dragon Maritime Group. The program, Leading the Digital Supply Chain, is designed to provide practical leadership development to advance the technologies, organizational models, and strategies required for a company to transform its back-office operations into a customer-facing digital supply chain.

While many supply chain learning programs are focused on skill building, the DSCI program helps develop future transformational leaders. The executive education program is based on innovative global supply chain leadership learning experiences created and led by DSCI’s team of facilitators. Executive sponsors of the DSCI program see improved strategic alignment for digital supply chain transformation as well as increased motivation for leading change. DSCI has conducted this program for Transworld, Dragon Maritime and is currently conducting the program with Cosco Greece.

Twenty employees of Dragon Maritime Group completed the six-week online program that concluded with an in-person event hosted by Dragon Maritime in Belgrade, Serbia.

Writing on LinkedIn about her experience as a participant, Meliha Mujezinović, representative office manager for Dragon Maritime, noted: “The program has enabled us to take a step forward on our journey towards a digital supply chain model. With the ever-evolving landscape of global supply chains, digitalization is becoming more and more important. By leveraging the expertise of the Digital Supply Chain Institute, we have attained a better understanding of the digital supply chain model and the implications for our business.”

“Our company choose DSCI as an essential partner in the digital transformation of the transportation and logistics industry,” stated Meliha. “Implementing concrete, customer centric digital solutions like internal and external online platforms that enhance the customer journey is one example of digital transformation that we have recognized as having huge development potential.”

DSCI and Dragon Maritime both look forward to continuing their partnership. Mujezinović stated, “we chose a strong partner, who will work together with us to innovate and stay a step ahead in our business.”

FINBOOT JOINS DIGITAL SUPPLY CHAIN INSTITUTE

 

CARDIFF, WALES FEBRUARY 21, 2023 – Blockchain tech firm Finboot today announces it has joined the Digital Supply Chain Institute (DSCI) to work with its members on new solutions to overcome supply chain challenges.  DSCI, based in the U.S., is a member-led research institute focused on the evolution of enterprise supply chains in the digital economy.

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New York — The Digital Supply Chain Institute (DSCI) is pleased to welcome Grey Market Labs as a new member. The Arlington, Va.-based company will work with DSCI members to address data privacy and cybersecurity issues to help enable the secure flow of information among supply chain participants.

Grey Market Labs, formed in 2018, helps organizations build and manage secure environments.

Co-founder and CEO, Kristopher Schroeder, said his organization joined DSCI because its members are exploring areas that align with the mission of Grey Market Labs. “Everybody is part of a supply chain and a Constellation of Value,” he said.

Institute membership provides Grey Market Labs access to DSCI-led forums where members openly discuss marketplace challenges. “From the first executive session I attended, it was a small group of executives committed to legitimately solving problems for this space by having a very open discussion,” said Schroeder. “It’s very rare that you get into such an open forum.”

“We are very pleased to have Grey Market Labs join the DSCI Family. The cybersecurity aspect of supply chain resilience is more important than ever for companies and their value chain networks,” said Marko Kovacevic, DSCI Managing Director. “Grey Market Labs brings value in this area. Having members share their knowledge, use cases, and contribute to research and case studies for real problem-solving is imperative for DSCI as a member-led organization. We welcome Gray Market Labs and look forward to an engaging relationship.”

Grey Market Labs’ Schroeder said he is excited to work with DSCI members to help build platforms where supply chain participants can “share information safely and securely while maintaining control of that information.”

DSCI is a non-profit, member-led research institute focused on the creation and application of supply chain management best practices in the digital economy. Grey Market Labs joins the global DSCI membership, including Under Armour, Colgate Palmolive, Dell, Anastasia, Craft, Streamline Media Group, Lanaco, Panama Transshipment Group, Azarc, Transworld Group, TubeIQ, DP World, BT Group, and Dragon Maritime.