Delivering exceptional customer experience should always be at the forefront of a brand’s mind. Departure from the business as usual conditions challenges the ability to achieve it.
Fast connectivity to the entire ecosystem of partners, including distribution, logistics, and supply partners, enables brand owners to employ different strategies to protect customer experience during times of change.
Which strategy they adopt depends on external circumstances such as external events impacting the balance between overall demand and available supply and internal preparedness, such as having the data, applications, processes, and governance in place to support the preferred course of action.
Strategy 1 – INSULATE
Firstly, brands should evaluate whether they can insulate their customers from any bad experience such as inability to fill orders, missed promised dates, issues with product quality, or failure to service products. This strategy helps brand owners positively answer questions such as:
- When demand through one channel exceeds available supply, how do you respond?
- When aggregated demand across all channels exceeds supply, how do you determine which orders to fulfill?
Adopting this strategy starts by building a complete picture of available inventory – not just what is available in the supply network but also in the channel network. Such a picture allows companies to use their channel as a downstream inventory buffer. What comes next is a complex tradeoff analysis that matches demand from channel partners with existing and projected inventory flows to understand what excess stock is available to repurpose. If extra stock exists, channel management tools can help orchestrate a buy-back of excess inventory.
Such an approach creates a win-win situation. It takes inventory liability off the books of partners, lowering the risk of obsolescence while at the same time securing goods to fill new orders from other channels – through direct sales to B2B customers, online shoppers, retailers or distributor networks – and capture new opportunities.
Implementing the approach may require additional mechanisms such as incentive program management to ensure that partners selling back stock are not penalized on rebate credits or commissions, or for orchestrating special buy-back incentives to sweeten the deal.
In a scenario where there is no excess stock, based on order impact analysis and in-transit visibility, the brand can instruct the re-routing of products allocated initially to different customers or partners who do not expect a delivery yet.
This action can bridge the immediate gap, but it is critical to commit to future replenishment before projected demand, often through identifying and engaging alternative sources. Otherwise, the strategy will simply shift the issue to a later time and a different supply chain participant. Lastly, the brand can use buy-back or redirected stock to fulfill prioritized open orders.
Strategy 2 – SHAPE
The second strategy that brands should evaluate is shape demand. That strategy is suitable for cases such as:
- Insufficient supply even after assessing the available inventory for finished products and parts across the entire ecosystem (all channels to market, multiple supply tiers, multiple logistics partners).
- Product gaps that could leave customers less than happy.
Brands must bring together visibility into real-time channel forecasts, demand, and inventory data, AI-enabled promotions analytics, and channel incentives management software to adopt this strategy. In so doing, they simulate, lift and orchestrate the execution of marketing and incentives programs designed to shape behavior.
Two critical activities bring this strategy to life. First, using advanced software, the brand will assess the complex tradeoffs and allocate the original product, part replacements and alternative products to maximize corporate goals. Second, the brand chooses the types of incentive programs to shape demand – marketing incentives, partner incentives, salesperson incentives, in-store promotions, advertisements, etc. Once the analysis is complete and programs are in place, the brand can execute the strategy across channels and fulfill orders.
For example, if customers ordered a specific 1TB drive personal computer (PC) model and there is an insufficient supply of disk drives with that capacity, a mix of customer promotions and partner incentives can alter end customers preferences. The brand can suggest a replacement part such as the same PC model but with a 2TB drive instead of 1TB, or it can promote an alternative product altogether, such as a better laptop for the same price.
Strategy 3 – COLLABORATE
Ongoing day-to-day collaboration, constant attention to the customer experience, and integration across channels are all essential factors. However, during emergencies, collaboration with customers may be the only suitable strategy. Brands should evaluate it to optimize omnichannel performance when:
- They have the data and relationship of trust with the client that enables them to take immediate, data-driven decisions on the spot.
- Neither insulate nor shape strategies are feasible or sufficient.
To adopt this strategy, the brand can consider partial delivery or staggered just-in-time deliveries while planning with the client for their respective forecast horizon. Or, with the right level of visibility over the transport and demand, the in-transit goods can be re-routed between customers.
For example, customer A needs the product in two weeks, and customer B had a demand spiking immediately – leaving customer B out of stock. In this scenario, the brand could shift the product shipment to fulfill unexpected demand (depending on the goods location, mode of transport, etc.).
Rerouting goods in transit as part of a collaboration strategy resembles redirecting products when the brand tries to shield its customers from disruption. The only difference is that with an insulate approach, the timing and nature of the orders mean customers are unaware of any redirection taking place, as it would not impact them.
In contrast, collaboratively managing an emergency by rerouting products means customers are actively involved, so the brand understands the expectations and how and when their products are needed. There is constant communication with the customers and regular updates to keep them in the loop about their orders and deliveries