5 Keys for Creating an Effective Demand Chain
Consumer packaged goods (CPG) companies, retailers and their business partners often tout the ways they put customers at the center of their strategies. But while many companies do a good job of understanding their customers, many fail to maximize demand because they don't adequately coordinate across marketing, sales and innovation functions.
The demand chain is a concept that integrates the activities and stakeholders that drive consumer interest in a company's products and brands. Often, however, there's fragmentation both inside of a company as well as among its external partners. Creating successful customer interaction, efficiency and growth requires a center of gravity with all of the demand functions pulling in the same direction.
In order to better understand the consumer and truly drive breakthrough innovation, companies should embrace new operating models rather than simply making minor improvements to their existing supply chains. Marginal innovations, while productive, will not always spur sustainable growth. A truly effective demand chain is one that embraces innovation that closely aligns it with the supply chain, weaving best practices into the fabric of the company and its products. Successful companies will create and commercialize breakthrough innovations to fuel growth over time and sustain a competitive advantage, as they deliver a 25 percent or more improvement in cost, performance and customer value.
Since the demand chain touches every customer-serving function, it's also important for companies to redefine their core business while looking internally to find the right people and talent that can forge links to all business units. CPG companies and retailers should consider shifting their focus from product development to combined product and service innovation, as this may help complement product offerings, thus enhancing consumer value.
With these building blocks in place, creating an effective demand chain requires companies to focus efforts on five key areas: