Moving from the supply chain to the “demand chain” to meet customer needs

Manufacturers and retailers face a major challenge to put the customer at the heart of their supply chain. This is nothing less than a paradigm shift—one that requires organizations to undergo an end-to-end transformation based on a new business vision focused on two key concepts: service and digitization.

“The customer is always right.” These five words summarize the challenge businesses face to adopt a customer-centric approach, rethink the organization, and transform the supply chain to support this paradigm shift.

How can such a transformation be achieved? It requires moving from supply chain thinking to a “demand chain” approach where the customer, not the company, initiates the flows and sets the tempo. Consequently, supply chain management will no longer only be about adapting to production and operational constraints, but rather will be driven by consumer demand.

Initiated over 20 years ago, this inverted “demand chain” approach has become key to ensuring greater agility in an increasingly complex supply chain. It also provides a boon for businesses as it reinforces opportunities to serve the customer well beyond just the product, to provide enhanced commerce or personalized, relevant and enriched offerings.

Mastering and using technology as a lever of transformation

Here’s where new technologies play a significant role in this transformation. First, technology must be thought about and approached from a fresh perspective. For too long, it has been relegated to being just a simple means to an end. Now, it must become a transformative lever to help companies reinvent themselves and define their strategic, commercial and logistical objectives.

E-commerce and m-commerce, for example, generate a continuous surge of flows and volume across multiple sales channels. Faced with new consumption habits and increased customer demands, process automation and shorter order processing times have become key levers of transformation.

To keep pace, the supply chain must become more connected, collaborative, flexible, agile and intelligent. In fact, the 2019 CGI Client Global Insights for the manufacturing industry reveal that “agile supply chain” is one of the top planned innovation investments among executives we interviewed, and rises significantly in mentions over the next three years.

Connected with the Internet of Things (IoT), sensors on equipment or products will improve offers and services by providing better insights into their usage, anticipating and preventing breakdowns or better tracking logistical flows in real time.

Collaboration using cloud solutions that are balanced based on risk and value can facilitate the work between internal departments and external partners and vendors. Flexible and agile processes, planning solutions, logistics or “make-to-order” production flows allow enterprises to move beyond the dated “make-to-stock” push method. In addition, successfully crafted artificial intelligence supported by data advancements will drive the real-time global performance of end-to-end supply chains, improving their predictive, simulation and decision-making capabilities.

Breaking down the silo mentality to establish the supply chain “digital continuum”

All of these technologies are mature and operable today. Yet, transformation remains complex as it requires both a redesign of the enterprise architecture and considerable organizational and operational changes to establish the digital continuum that will place the customer at the heart of the supply chain. To create this continuum and establish a global visibility platform and/or supply chain control tower, it is critical to go beyond vertical thinking and break down the silo mentality that compartmentalizes companies’ responses to different stages of their customers’ purchases.

This dual transformation—both technological and organizational—is imperative to enable companies to anticipate the future and succeed in a booming consumer goods market, increasingly driven by a service economy. This transformation is underway and should be a cause for celebration.

Learn how CGI helps clients worldwide transform their supply chains and ecosystems through advanced digital technologies including through the work of our global supply chain center of excellence in Lyon, France.