Consumer connectivity: Creating customer-centric supply chains

Understanding consumer connectivity

What is consumer connectivity?
It’s a supply chain’s ability to digitally sense, motivate, and serve consumers, giving them exactly what they want at any time and place.

Consumer connectivity is powered by three types of consumer data:

• Sentiment: What consumers say they will do. (“I would really like product X”; “I want this type of feature”; “I am looking for something in this price range”; “I like to shop in this channel”)

• Behavior: What consumers actually do. (Shopping behavior, impressions, brand interactions, return rate, purchase price)

• Social: How consumers react to and share their experiences. (Reviews and ratings, referrals, personal discussions, social media comments)

This data can be acquired from first-party sources, such as the consumer. It can also be obtained or purchased from another party.

Consumer data can help a company understand who its end customers are, what they value, how they act, and what they’re thinking and feeling after a purchase or recent interaction. At a strategic level, it can also provide powerful insights into the consumer forces that are shaping industries. Ultimately, consumer data can help create a sustainable competitive advantage that separates winners from losers.

Turning data into consumer supply chain innovation and business value

Increased consumer supply chain connectivity can change how a business is organized and how products are delivered to market. This has a broad impact on all key business drivers, including overall profitability.

Harnessing the power of connected consumer data enables a customer-centric supply chain to react more quickly to market shifts and can help leaders understand (and proactively address) consumer needs. The results? Increased loyalty, sales, and profits.

Consumer connectivity can also shift the entire supply chain paradigm. In the past, supply chains focused on cost or speed, despite the availability of broader business data. But now, thanks to the explosion in connected consumer data and the growing awareness of how data insights can drive value, companies are able to curate the right products, services, and experiences throughout their supply chains. This can help deliver organic revenue growth and enhanced operational efficiency.

For example, if a consumer is willing to pay more for a sustainably sourced product, a connected, customer-centric supply chain can satisfy that preference while building loyalty through satisfaction and at a higher price point. Improved consumer connectivity can also help an organization identify and understand shifts in consumer preferences to proactively assess the implications and capitalize on emerging opportunities.

As customer-centric supply chains start to collect, collate, and apply the three types of consumer data, they can form a more complete view of consumers. But even before that, supply chain managers can apply data analysis to make more strategic decisions around sourcing, distribution, or returns to improve opportunities across the entire supply chain.

Cost versus action—and the cost of inaction

Today, every customer-centric supply chain should be collecting data to understand how consumers behave and to measure business performance against expectations. Doing so allows a supply chain to:

• Further explore and hone demand signals that can inform both forecasts and logistics

• Understand changes in consumer behavior and changes in demand and consumption

• Explore opportunities for new or adjacent market offerings or partnerships, especially if consumers do something surprising or if spending was skewed in an unexpected direction

• Design, develop, and deliver new offers and also support internal or external business cases

A key challenge when pursuing consumer connectivity is the vast scope and volume of data now being generated, along with the rising costs of shifting to (and delivering against) new business and operating models. For example, digital health care models and direct-to-consumer shipping provide the opportunity for higher margins and fewer intermediaries, but they likely require new technology infrastructure and higher spending for fulfillment and returns.

As companies shift to digital-first and customer-centric supply chains, they will need to actively manage costs to maintain profitable growth. Another key challenge for organizations looking to harness the power of consumer data is building trust, reassuring consumers that their data is being used appropriately and securely.

Despite the additional challenges and investments associated with consumer connectivity, this isn’t the time to stay on the sidelines while competitors lean into capitalizing on insights from consumer data. As companies get better at targeting consumers and choosing what features to deliver, organizations will need to achieve a similar level of targeted product design, influence, fulfillment, and purchasing to stay competitive.

Integrating connected consumer data into your fulfillment model will help you deliver the right product to the right consumer at the right time. And with the right price, organizations can create a virtuous cycle of happy consumers, repeat purchases, and word-of-mouth referrals.