Prodware Blog: Customers as individuals – how mass customisation is shaping the supply chain and on the distribution landscape
The distribution industry and, broadly speaking, the supply chain landscape is becoming increasingly complex and demanding. Empowered and knowledgeable customers (both end users and retailers) that demand lower costs, quicker delivery and better services. Fierce competition, where each detail becomes a key brand differentiator and crucial to win (or lose) customers. The increasing importance of technology and the consequent need to adapt and invest.
All these factors are causing manufacturing and distribution companies to rethink and transform their organization and operations; with the help of technology, of course.
In this changing scenario, customer focus remains the biggest challenge and priority, especially for those involved in distribution. Recently, a new trend has gained ground: mass customisation has revolutionised the way customers buy, manufacturers produce, distributors deliver and retailers sell/buy, while creating value for all of them. According to 2010 Mckinsey Global Survey, investigating the forces shaping the global economy, executives expected that increased innovation, greater consumer knowledge plus increasing service and product customisation would be the most impactful factors in the market. After five years, their expectations have hit the mark.
Mass customisation is defined as "enabling a customer to decide the exact specification of a product or service at or after the time of purchase, and have that product or service supplied to them at a price close to that for an ordinary mass produced alternative". It is the alternative to mass production, an inevitable and natural change of direction. Mass customisation has arisen fromthe dynamics of the market, growing product variety and new opportunities that technology and e-commerce offers.
The impact of mass customisation on distributors and the supply chain
It is undeniable that customers are becoming involved in product design, contributing to so called collaborative customisation, in which there is an ongoing dialogue with customers to identify their needs.Product is no longer sold on the 'take it or leave it' basis but more on 'this is what you, the customer as an individual, want' approach. Consumers have become, prosumers: they are in control, now more than ever.
The supply chain is consequently extended, with customers placed no longer at the end of it but at the beginning, generating a real customer-focussed offering. Supply chains have changed enormously over the last 20 years: the traditional ‘silo’ concept, where individual companies were considered functional standalone entities where the supply chain model was linear (from supplier to buyer) without any buyer/customer intervention, has been replaced by the modern concept of integration. This ‘multi-directional’ communication and collaborative model is a circular process. Customers will, therefore, play a significant role in the value chain. Depending on different scenarios, customisation tasks and responsibilities are shared and varied across the supply chain.
Providing customised goods while ensuring the same quality, price, profit and delivery time is one of the biggest challenges in mass customisation; the supply chain needs to become more reactive and able to ensure constant availability of materials and quick response to altered orders. Specifically, distributors need to ensure product delivery on time and on budget, while adapting to ever-changing requirements and improving customer experience.
How can distributors balance the need for short delivery lead times, competitive pricing, and customised products and services?
Responsiveness is the solution. And responsiveness is driven by technology. Improved customer visibility, analysis and forecasting, integration and better communication within the supply chain, operation control and optimisation through customer interaction are all supported by dynamic business management solutions.
Savvy use of technology will help distributors to quickly understand and respond to customers' needs, engage with them, and, therefore, deliver an unforgettable customer experience.