Consumer-driven supply is a new mindset in supply network design and operation. It's about making the supply network a commercial competitive advantage by investing to deliver what it takes to win with consumers. This is in contrast to previous thinking which had the supply network exclusively regarded as a cost centre, where savings were driven by simplification and automation.
This is an important change in a context where supply networks are becoming recognised as the key contributor to company performance and competitiveness - but, at the same time, are under more pressure than ever before. Consumers and customers are more demanding, there's more complexity, increased costs of raw materials and fuel, and more inventory.
Consumer-driven supply starts as a strategic business choice which demands that commercial and supply functions work more closely together to jointly create (not transfer) value with customers. This requires collaboration, aligned measures and a much more multi-functional organisation structure throughout the supply network.
Overall, the focus is on improving fast and accurate information flow up the network and fast and efficient product flow down it. Specifically, this means reducing end-to-end supply network time, driving out non-value-added complexity and inventory, and providing differentiated service and product solutions.
Companies that have already adopted this approach have better service, less inventory, shorter cash-to-cash cycle times and faster time to market - all of which means higher revenue (+10%), and better profit margins (+7%) than their competitors.
