Consumer-driven supply chain networks: Building the supply chain of the future

With increased pressure from consumers and retailers, consumer products companies can no longer afford to operate linear, "one size fits all" supply chains. What steps must consumer products companies take to help ensure that their supply chains efficiently respond to rapidly changing retailer and consumer demands? What capabilities should they develop to achieve greater focus in their supply chains? In response to the strategic challenges that will emerge between today and 2010, industry competitors will need to radically change the nature of their supply chain operations to become truly consumer-driven.

The growth and financial strength of consumer products companies over the last century have been based on a single principle: branded goods are the consumer's first choice across virtually all product categories. However, today's environment is rapidly changing.

In many categories, consumers are concerned more with price and product quality than brand. For commodity products, retailers now often have greater mind-share among consumers than manufacturers. Vigorous expansion has produced a new breed of megaretailer that is asserting ownership of the consumer relationship, as well as placing increased demands on suppliers to deliver higher levels of service. More stringent growth objectives and regulatory requirements are compounding the pressures felt by the industry.

Consumer products companies must take bold steps across their value networks to address these challenges. Supply chain operations is one major area that every company should examine. The supply chain has a key role to play in fueling growth and profitability, yet in many cases it has not adequately evolved to meet the demands placed upon it by retailers and consumers.

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