CSD: Preparing for the Demand Revolution
Through a special arrangement, presented here for discussion is a summary of an article from Convenience Store Decisions magazine.
At the 2011 Sweets & Snacks Expo, Rick Kash of The Cambridge Group and author of How Companies Win, spoke on the changing landscape that operators and manufacturers must navigate as we enter what he called a "demand revolution."
Mr. Kash noted we’ve seen three great business revolutions–two industrial revolutions followed by a technology revolution. Today, he noted, we’re in a demand revolution. To compete, companies need to focus on demand first, supply second.
The demand revolution started with the introduction of Google, which put all information at our fingertips instantly, and grew with the release of GPS, which can in seconds tell us how to get us from one side of the country to the next, and soared with social media, which connects us instantly. Customers want, what they want, and they want it now without the confines of time and place. And answering that need are Tivo, Skype, Smart Phones and YouTube, making the confines and limitations of time and place less relevant and less necessary.
"In the demand revolution, consumer demand will be formed, shaped, influenced, and satisfied in entirely new ways…Facebook…Twitter…Groupon…Social media is a technology, not a channel of communication…it changes countries, it changes companies, and if you understand it, it will propel careers and brands," Mr. Kash noted.
He pointed to how 12 people in Egypt used social networking to start a revolution to overthrow a 30-year dictatorship in a powerful country of 80 million people in just 23 days, that then snowballed across the Middle East inspiring revolutions in neighboring countries. All signs, the way the world works is changing fast.
"Demand revolution is more than a business and a human revolution, it is a geographic revolution, a gender revolution and a technology revolution," Mr. Kash noted. Developing nations are growing and delving into new technologies. The role of women is changing with more women joining the workforce in various countries. U.S. college enrollment is now made up of 60 percent women.
In the demand revolution, business models, competition and strategies are all going to change and will impact all brands big and small. A demand chain, Mr. Kash noted, will take its place alongside the supply chain to be the new business model for the 21st Century. And collaborative networks between manufacturers, retailers, consumers and media will evolve and become vital to business.
Discussion Questions: How has the relationship between supply and demand and changed with the advent of the internet and other digital technologies? What are the particular challenges of “demand chain” planning?
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6 Comments on "CSD: Preparing for the Demand Revolution"
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Mr. Kash noted, “Social media is a technology, not a channel of communication…” Social media is both. As evidenced by his further statement on the Egyptian example. The way to look at social media is to think of it as nothing less than the next internet. Whether in the form of Facebook, twitter or whatever else will come in the future, “virtual” communication is here to stay.
Therefore, if virtual communication will be with us in the future, then it only follows that consumers, through this communication, will create both virtual and real demand. Technologies exist today (and I promise not to do a sales pitch here) that can help anticipate, measure and respond to this new demand phenomenon. Demand signal repositories are only part of the solution. Deep digital/social analytics are being utilized to ensure supply meets demand.
I think there’s something here.
For millennia, the retail model was to display merchandise and hope that people bought it. Location was everything. That’s no longer the case!…and it doesn’t bode well for retailers who can’t adapt to the newly demanding customer.
Decisions based on demand is no longer rocket science and has been made possible in the retail arena by a number of factors, among the most important of these has been the modernization of retail computer infrastructure, reduction in computing power costs, and improvement of advanced demand management applications. Today retailers can utilize computer applications to crunch a variety of input to determine how much of a product a consumer base will likely purchase, the sizes needed, the optimum price, amounts to allocate to each store, replenish amounts, etc.
Effective retailers, manufacturers, distributors, have been utilizing computer applications that leverage their understanding of demand for some time to more effectively make inventory decisions and to better serve their customers.