Lecture 8

DTC e-commerce: How consumer brands can get it right

Consumer brands have been seeking to establish direct relations with end customers for a range of reasons: to generate deeper insights about consumer needs, to maintain control over their brand experience, and to differentiate their proposition to consumers. Increasingly, they also do it to drive sales
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In the era of lean and just-in-time management approaches, many companies adopted supply chain strategies with a primary focus on cost and efficiency. With a formula for an effective supply chain focused on how to achieve the lowest cost with the highest level of efficiency, production facilities and suppliers of goods and services might be located virtually anywhere, as long as they could deliver to their critical customers on time at the agreed price. Supply chains, along with business strategies more broadly, became increasingly global.

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Supply Chain Agility: Benefits and Strategy

The visuals of empty store shelves during the pandemic continue to serve as an important reminder: The ability to quickly adjust supply chains to shifting market dynamics can determine a business’s overall health and impact on lives worldwide. Whether it’s demand reduction (leading to the decrease in air travel during the pandemic); a bullwhip effect (the phenomenon by which a small increase in retail demand begets progressively larger demand disruptions up the supply chain, leading to the infamous toilet paper shortage); or a raw material shortage (leading to microchip scarcity), market deviations are unpredictable .
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Hub and spoke centralises goods distribution

Hub and spoke is a goods distribution method that concentrates logistics activity in a central facility that serves as an operations centre. This central node acts as a logistics hub, transporting products or orders to other warehouses for subsequent processing and shipment.

One of the main goals of the hub-and-spoke model is to optimize a company’s transportation flows and reduce its distribution costs.

Getting the Right Mix

After determining the nature of the company’s products (Functional or Innovative) and the supply chains priorities (Physically Efficient or Market Responsive), managers can use the Matching Supply Chains with the Products Matrix below to determine the ideal supply chain strategy.

This matrix aids managers with determining whether the process the company uses for supplying their products is well matched or not. If mismatched, the supply chain process may be causing serious supply issues and would require an overall review.

Inventory Optimisation is more crucial than ever
As any business leader can tell you, inventory optimisation is a particularly difficult component of supply chain management because it is vulnerable to so many factors, including social trends, natural events, politics, economics, and competition (to name just a few). When the pandemic arrived, it was the mother of all global supply chain disruptions and shone a bright and unwavering light on the volatility of old-school supply chain practices.
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