Monitor trends – and keep supply chains agile

Customers vote with their feet. Fail to respond to market trends and you can bid farewell to any chance your business has of agility and innovation.

Research from Google Trends shows an impressive worldwide increase in the interest in veganism from 2004 to 2018. Top regions include Israel, Australia, Canada, Austria and New Zealand. There has been a 600% increase in people identifying as vegans in the US alone over the last three years.

Nestlé, the largest food company in the world, predicts plant-based foods will continue to grow and this trend is here to stay. And Walmart, the world’s largest retailer, has asked suppliers to offer more plant-based products.

Procurement and supply professionals must remain fleet of foot to trends such as this, and not only if you are a consumer-facing business. The recent protests in London on climate change by the so called Extinction Rebellion movement clearly demonstrate the power of consumer groups. Trends such as these have a knock-on effect on investors and other business stakeholders.

The vegan trend is impacting both food and non-food products, as well as production methods. Guinness has stopped using isinglass, which is made of fish bladders and a common filtration process used in beer and wine production. Other brands have also adapted their products to give them wider appeal as the production of paint, drug coatings, shampoo, carrier bags and even latex condoms can include or use substances that are derived from animals in their products.

It’s not always very clear either – many consumers would be surprised to find out that some of their shoes, handbags and other fashion items are made using animal glue. So more transparency and better labelling is also being called for.

With this in mind, it is paramount that our supply chains are able to flex and be agile enough to quickly respond to changes in the market; to not only make our products more ethical and sustainable to appeal to a wider market, but to drive innovative new products to new markets. Initiatives such as lean and supplier reduction programmes have caused supply chains to be very efficient, but less adaptable to change. Is it possible to be efficient, sustainable and agile? 

Successful agile supply chains tap into a wide network of suppliers that are flexible and responsive to changes in demand. They invest in sophisticated IT systems that can provide accurate real-time data on changes in supply and demand, and have internal processes that are flexible and reconfigurable. An agile supply chain relies on the involvement of suppliers when responding to changing demand, so close working relationships, co-locating and sharing of real-time data is critical.

Zara became a benchmark in the fashion industry, where demand is unpredictable and short time-to-market is crucial to gain competitive advantage, by using point-of-sale data to gauge market trends and understand what product lines were working. This is now common place in retail. 

Others have got it very wrong.  Kodak failed to adapt and respond to the digital camera trend, releasing its first digital cameras in 1991, over 10 years after they began to become popular. By this time, mobile phones had leapfrogged digital cameras, so it invested in the website Ofoto, to allow people to upload photos to print. Again, it failed to fully understand the market, assuming consumers still wanted to print their snaps. In 2012, the year it filed for bankruptcy, Facebook acquired the photo sharing social media site Instagram for $1bn.

The reputational, as well as financial risks for businesses who fail to respond to trends can be catastrophic. Customers will vote with their feet and when sales start to fall, then investors will quickly follow. Now is the time to not only invest in intelligent data, but to forge stronger more open relationships with suppliers. The supply chain is key to the success of an agile business that responds to an ever-changing environment, so strong links with suppliers will enable this.  Tom Peters once said “Innovation comes only from readily and seamlessly sharing information rather than hoarding it”. Invest in technology, understand your data and share it widely.

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