From Mind to Market: Reinventing the Retail Supply Chainby Roger D. Blackwell
"Anyone in business today who hopes to be in business tomorrow needs to understand the rules of the new marketplace," says Roger Blackwell, one of the most sought-after authorities on consumer behavior and marketing. The traditional approach to retailing, beginning at the point of manufacture and ending with the sale to the consumer, is out of date and unrealistic.
"Anyone in business today who hopes to be in business tomorrow needs to understand the rules of the new marketplace," says Roger Blackwell, one of the most sought-after authorities on consumer behavior and marketing. The traditional approach to retailing, beginning at the point of manufacture and ending with the sale to the consumer, is out of date and unrealistic. "In an ultracompetitive marketplace, manufacturers can no longer dictate what consumers will buy. The savvy consumer is more educated than ever as to what he or she wants and where to get it at the best price. Using this information to develop the products consumers are looking for is demand-chain management."
Featuring visionary companies like Wal-Mart, AT&T and Kinko's, whose leadership as demand-chain managers is helping them to create the marketplace of the 21st-century, Blackwell illustrates the cutting-edge concept of demand-chain management and its role in revolutionizing retailing in the new millennium.
- HarperCollins Publishers
- Publication date:
- Product dimensions:
- 6.12(w) x 9.25(h) x 0.93(d)
Read an Excerpt
"Ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen."
Shaking Up Supply Chains
Wal-Mart versus Kmart. Kodak versus Fuji. Motorola versus Texas Instruments. In the past, retailers fought wars against other retailers, while manufacturers and wholesalers likewise duked it out with their own kind. Each entity was strong enough to take on its own competitors. Whether these companies survived and flourished or languished and folded was largely a result of how they performed in relation to their peers.
In the new millennium, the rules of battle will be rewritten. No retailer, manufacturer, or wholesaler will be strong enough to win on its own. Great firms will fight the war for dominance in the marketplace not against individual competitors in their field but fortified by alliances with wholesalers, manufacturers, and suppliers all along the supply chain. In essence, competitive dominance will be achieved by an entire supply chain, with battles fought supply chain versus supply chain.
Traditional supply chains begin at the point of manufacture and end with the sale to Jane or Joe Q. Public. They encompass all of the organizations and functions necessary to complete the flow of goods to the market, as shown in Figure 1.1. The manufacturers--ironically, the firms most removed from the consumer market--have traditionally dictated what consumers could buy from retailers. The focus of the supply chain has been the product that manufacturers produce. Often as not, these products were derived not from demonstrated need or consumer preference butfrom the manufacturer's historic strengths, resources, and best instincts.
Stellar, visionary firms are already reconfiguring the battlefield with a stronger "stealth" weapon--a newfangled supply chain tailored for the coming age of compression in the business world. This new chain caters and responds to consumer desire, which stands at both the beginning and end point of the chain.
This is the demand chain, which gets its name from serving that ultimate master--the mother of all transactions in the world of business--that is, the consumer.
As Figure 1.2 shows, a demand chain represents a circular process that flows from the mind of the consumer to the market. Demand chains consist of nonlinear, boundary-spanning organizations.
Taking the Reins of the Demand Chain
Among today's cutting-edge demand chains, the players are the same as in the traditional supply chain, but the rules of the game have changed. The roles and responsibilities of each demand chain member are not based on historical strengths or traditional roles. Rather, responsibilities are assumed by the demand chain as a whole. The firm best able to complete a role does so--even if it means breaking the mold. Unlike traditional supply chains, the roles and responsibilities of players within the demand chain are fluid, dynamic, and customer-focused.
The best demand-chain players will use knowledge and innovative capability rather than size or position to gain a competitive edge. Companies jockeying for the position of demand chain leader must be able to:
*Assimilate knowledge about consumers and the market.
*Communicate that knowledge with other demand chain members and facilitate its implementation.
*Adopt and promote a marketing orientation throughout the organization and demand chain.
*Organize goals for the demand chain.
The movement toward the aforementioned changes is already well under way. Manufacturers dominated the supply chain for a century, from the end of the Civil War to the mid-1960s, when the great retailers began to emerge as major players. Over the last 30 years, supply chains have been undergoing a gradual metamorphosis, being increasingly controlled by players other than manufacturers. In today's market, the dominant retailer Wal-Mart, the brand distributor Nike, and Cardinal Health, the $8.9-billion drug wholesaler, are but a few examples. From their powerful berths in the world of commerce, these innovative firms are able to call the shots about product attributes, such as packaging and pricing; they've even extended their authority into the areas of advertising, transportation, and storage. In the cases of the three companies mentioned, the supply chains they command have achieved competitive superiority in such attributes as price, efficiency, speed to market, and accuracy of product delivery.
In the next century, companies will have to do not only what today's visionary companies are doing--by taking command of supply chains--but they'll have to evolve them into demand chains. Tapping the minds of consumers and understanding what they want to buy, how and why they buy, and how their lifestyles are changing represent the first step. Demand-chain leaders then use knowledge of consumer wants to develop products people will snap up. In a demand chain, products don't necessarily originate from manufacturers: They can be developed at any point and by any player in the chain.
Manco, the Westlake, Ohio, distributor of tapes, weather stripping, and mailing supplies, is an example of a company that started out as a wholesaler but stepped outside the traditional boundaries of that role and established itself as a mind-to-market leader. By implementing a number of rather unconventional strategies, Manco was able to both redefine and transcend its role as a wholesaler while establishing a dominant position in its demand chain. Among other things, it developed new products at the behest of its customers. At the same time, the company developed techniques to help its customers control their inventories, helping to cement long-term relationships.
And a Duck Shall Lead Them
With projected sales of $170 million in 1997, Manco is hardly a "big boy" in the world of commerce. Nevertheless, the company stands as one of America's exemplars in mind-to-market management. How could the company that distributes a humble product like duct tape--which neither manufactures nor retails the stuff--have so much to teach the rest of us?
Meet the Author
Roger D. Blackwell, a professor at Ohio State University, has appeared on CBS This Morning and is often cited in Business Week, USA Today, Forbes, and The Wall Street Journal. He lives in Columbus, OH.
and post it to your social network
Most Helpful Customer Reviews
See all customer reviews >