Consumer Expectations Are Driving the Need for Greater Responsiveness
We’re sure that if you asked a supply chain director how much he was influenced by the Duchess of Cambridge or Cheryl Fernandez-Versini, eyebrows would be raised ever so slightly. They do, however, provide a perfect example of how consumer expectations of immediate satisfaction impact a supply chain.
In March 2015, the Duchess of Cambridge wore an outfit, available from the online retailer ASOS. Within 30 minutes the outfit had sold out from the website, and ASOS issued a statement saying that it would be back in stock within a week.
This got us thinking, what had to happen in the supply chain to be able to make that promise with confidence? And what impact could that scenario have on revenue, once the initial enthusiasm had worn off and backorders cancelled?
In order to make that promise, we have to assume they had additional stock somewhere, just not as part of their usual distribution/availability processes. This is probably why the website registered as out of stock, and ASOS were able to promise orders would be back up and running within a week.
The risk here is that when a customer gets an out of stock/backorder notice, they then decide if they are prepared to wait. This puts them in the “cooling off” purchase period, which can increase the likelihood that the order could be cancelled once the excitement has died down. So ASOS could get a false positive in terms of eventual revenue increases from the spike in sales.
The biggest benefit of a fully responsive supply chain is that it can react quickly to unexpected events and short-term changes.
There are a few “ifs” involved in how a responsive supply chain might react to the above scenario, as there is information we don’t have. However if, for example, ASOS had additional stock of that particular outfit outside of its own distribution centre(s) (i.e. with supply chain partners, and/or internationally), orders could have been diverted immediately when local stocks ran out, to fulfilment further down the supply chain. This could have removed the need for backorders, and instead longer delivery times could have been promised.
If that happened, the consumer is oblivious to any “back order” scenario being played out across the supply chain, so is less likely to cancel their order. Each customer walks away feeling satisfied that their immediate demand is being met, and that they can soon look like the Duchess of Cambridge. The retailer can rely on the initial increase in sales figures, as they know the orders will be fulfilled, as they have diverted fulfilment across all stockists of that outfit across their supply chain. They can also see in real time how that fulfilment is playing out.
How B2B Integration Helps Supply Chains Become More Responsive
This level of responsiveness requires significant orchestration; real time status of documents and transactions for anyone in the supply chain, as well as seamless data exchanges so that events can be triggered without relying on an already stretched IT team.
This is only possible with very robust and modern B2B infrastructures, which support automation of complex business processes, as well as many protocols and standards, while reducing reliance on manual intervention and response times.
As B2B integration infrastructures become more flexible, supporting more communication standards and protocols, this in turn has meant that more business partners can be connected to the information flow. This leads to dramatic improvements in communication.
The more communication, the more potentially responsive the supply chain can be.
To learn more about the impact of B2B integration on supply chains, download our white paper "3 Ways B2B Integration Enables More Competitive Supply Chains."