Amazon has taught us that shipping speed can often mean the difference between winning and losing a sale, but that’s just the tip of the iceberg. The way you manage your supply chain, understand your products, and market this information can be a significant source of potential revenue, plus a way to keep reputation harm at bay.
It’s time to start thinking about the importance of supply chain management as more than sourcing your materials and moving products to distribution centers. It’s the counterweight to your marketing, determining the available supply, while marketing focuses efforts on generating the right demand to maximize returns.
Businesses can improve how well they utilize revenue and resources by focusing on where marketing and supply chain management meet, so let’s look at some of these opportunities around making promises to customers and then delivering on them.
Knowing What Offers You Can Make
Marketing works effectively when you’re able to deliver value and a compelling offer to customers. Supply chain management (SCM) plays a role here by showing what your sales and marketing teams can safely promise.
Your SCM tools should tell you what’s possible with your existing inventory, such as getting something out in two days, filling unusually large orders, or reducing costs to clear things off of shelves. You’ll want to look and see what’s likely to happen or be doable, what’s possible, and what’s too much to promise. It’s possible with today’s software.
Combining marketing and supply chain knowledge gives you a long view of this too.
The product and raw material knowledge in SCM tools show where things are and how they move, allowing you to adapt to trends that marketing uncovers. For example, if your marketing efforts are finding growing interest from customers in one location or multiple locations at different points in the year, it can guide SCM decisions for how you move your products or who you partner with to send them.
Your team might also discover that a warehouse in your supply chain has too much of Product A. Using SCM tools, you can determine how much it would cost to move that back to other distribution points, while marketing tools can determine how much to discount that product to sell it. Here, you can determine which option is most likely to save or generate the most revenue, giving you the smartest business decision.
Focusing On Customer Service
Supply chain management takes a lot of guesswork out of daily operations. The constant flow of data from reliable SCM tools ensures you know when things are scheduled to happen, what orders you can fill, potential problems in your chain, and much more.
Giving this data to your marketing teams may provide them with insight into how better to support and serve existing customers. It can show offers they will appreciate, trends that are occurring, or point to issues that it can address openly if you can’t solve them ahead of time.
Instead of marketing’s chief supply chain effort being offering two-day delivery, you can start addressing common customer issues. When something happens, you can proactively notify customers of potential delays and respond ahead of time with information, rebates, or gifts to prevent returns. Or if returns do occur, you can be ready to reposition those goods at the right moment.
Customer service has become an essential part of marketing, and supply chain knowledge ensures that your service teams can address questions and complaints.
Depending on how well your marketing and customer service teams are integrated, you can also run metrics to analyze how well customers believe you are solving problems and what resolutions work best. You might discover that proactive alerts are enough to keep people happy, or that you need to offer at least 20% off the next purchase to keep customers around.
It also might identify something as simple as the need to automatically refund customers who pay for faster shipping. That’s a terrific way to build trust and can win someone over who is upset but on the fence about whether to ask for a refund or not do business with you again.
Increased Flexibility To Deal With Slow-turning Inventory
One role marketing can play is helping you determine what to do with your inventory, especially things that are moving slow. This is a larger supply chain management element because of how complex today’s chains are, especially with outsourcing and partnerships.
Adapting your inventory to customer demands and available sales channels is a good place to think about your marketing and your outsourcing.
We have several clients who may ask us to carry out kitting projects and create new SKUs to help them move inventory. For example, let’s say our client Kellyco overestimates demand for their Rothco Shovel. That means they have too much in inventory of these units after the holidays and they need to sell it. They’ll ask Red Stag to kit 100 of these shovels with a relevant metal detector and offer the kit as a limited promotion in an email blast sent out to customers. – Jake Rheude, VP of Marketing at Red Stag Fulfillment
Marketing and internal data can determine what your slow inventory is, and then there are opportunities within your supply chain to utilize those products in diverse ways.
You can work backward here too. If you have a kit of conventional products that aren’t selling, but some items in the kit are performing well individually, you could have a partner break down the kit so you’re able to meet orders with existing inventory.
Many of today’s businesses operate multiple revenue lines, not just single products. If you’re supporting other companies and are linked in their supply chain, improved awareness through SCM can help you be a better partner. It’ll empower you to take care of relationships.
How well you work with other companies is part of marketing, whether you’re B2B or B2C.
For the B2B world, customers will look to your relationship with vendors and partners to see how you will treat that customer. Success here can become case studies and customer testimonials that marketing uses to land new customers.
In B2C (and growing in B2B as well), a common way we see this play out is in marketing around green initiatives. Companies need robust SCM to prove that they’re using green energy or doing other green practices, and this can then become part of your partner’s marketing.
Green goals are inherently shared goals, so being able to provide this information can be a significant value-add for your relationship building.
Easing Pressure Off Your Partners
While combining SCM and marketing is likely to initially focus on how to be a better partner through data sharing, it may also help you find ways to be less demanding of your partners. This covers both manufacturing partners as well as logistics companies who may do your fulfillment.
Here, we’re going back to the software that’s available to you.
In most operations, marketers are going to have access to a bigger technology stack. Traditionally, martech is better able to understand customers, predict demand, and adjust for trends that are outside of your business — from a warmer-than-average winter to what the latest influencers are doing on Instagram.
Marketing is often a good barometer and a better method of creating and managing demand. So, put it in full effect and let marketing drive some of your SCM. Then, share this information.
If your marketers are able to generate specific demand in channels that have regular cutoffs or restrictions, use that to manage the supply chain and product staging. If you’re getting signs that your sales season will be shorter or longer than normal, inform your partners. This might ensure that a manufacturer keeps its lines running longer because your business will help them keep a plant profitable.
You might tell a 3PL that you expect a few extra months of high sales, making them keep more shelf space open for you. This can be critically important when you’re breaking old seasonal trends. It’s also a nice thing for your partners to know because they can plan for your demand and be ready to scale with you.
If your business is large enough to have product families and lines, the planning can help partners and manufacturers understand the mix of orders you’ll place. Knowledge sharing can limit the chance of stockouts or backorders. On the other hand, partners can let you know if their own seasonality or other cycles could impact your efforts. That’ll help you avoid misspending marketing dollars and keep campaigns where they need to be.
It’s Bringing S&OP To Everyone
There’s an existing term that discusses how marketing and supply chain and sales interact: sales and operations planning (S&OP).
At a high level, S&OP is defined as the processes a company uses to balance supply and demand. Typically, there’s a lot of research and advanced tools that are involved with S&OP, which has made it feel like a barrier to small and mid-sized businesses, and especially to e-commerce startups.
The good news is that the data you need for quality S&OP lives in your supply chain and marketing systems right now. Add in the fact that most vendors and supply chain partners are willing to share data on production and orders, and you no longer need to be a giant with an even larger budget to get S&OP right.
We’re finishing with a discussion about this because marketing is one tool in the process that can be used to define and drive demand. It also helps balance demand and supply by adjusting promotions, discounts, and other offers relative to existing supply and demand. The level that you can perform at is much greater simply because you’re using tools that share information.
So, get started by adopting tools and integrating data with your SCM and marketing. Then, align that information with your goals. Put it all under a single dashboard so everyone is operating from the same positioning, and then you can work together to truly give customers what they want from your company.
It’s how marketing and supply chain management become two of the biggest factors in driving your revenue.