Research firm Gartner has identified three key enablers of demand-driven retail – the role of the supply chain, span of control and metrics maturity – following a survey conducted across six retail segments in Asia-Pacific, North America, and Western Europe.
Defined as "a system of technologies and processes that captures consumer behavior at each point of interaction," demand-driven retailing merges the business domains of demand, supply and product to fulfill customer expectations, improve operational performance and facilitates a timely, profitable response across a network of suppliers, employees and sales channels.
"Demand-driven retailers balance operations and innovation excellence, while delivering an exceptional and profitable customer experience," said Mike Griswold, research vice president at Gartner. "Retailers progressing along this journey realize a need for three key foundational elements that provide the platform for other demand-driven initiatives."
Griswold explained the importance of the three key enablers outlined as:
Enabler 1: The role of the supply chain
Supply chains foster alignment with business strategy. Garner said organizations typically see their supply chain as: cost of doing business, one of several sources of competitive differentiation or primary source of competitive differentiation.
Those who see the supply chain as a source of differentiation tend to view their supply chain as more mature and playing a more strategic role within the company.
Enabler 2: Span of control
Although the role of the supply chain may differ by retailer, leaders share one common trait — they define their supply chains more inclusively than their peers. Many retailers use a narrow span of control (such as distribution center [DC] operations, transportation and procurement) to define their supply chains. More-mature retail supply chains, however, broaden the span of control to include forecasting, replenishment, new product launch and sourcing responsibilities.
Enabler 3: End-to-end supply chain metrics
Many retailers today measure aspects of their supply chains, but see a need for a more-comprehensive measurement program. Supply chain leaders understand successful performance measurement takes two things: determining the right set of metrics and understanding how to use those metrics to optimize performance across the value network. The key is to focus on the few critical metrics that really matter.
"However, with shopper tastes and preferences constantly in flux, many organizations turn to more complex promotional strategies and launching new items as a way to meet these changing preferences," said Griswold. "With promotional activity and complexity increasing, the demand signal for many retailers is anything but stable."