Supply Chain + Marketing = Successful Consumer Promotions
More consumer-facing companies are using promotions as a way to attract and retain customers, try new product concepts, and meet consumer demand.Examples include limited-time food offerings in restaurants, holiday-inspired product colors, and co-branded promotions at big box retailers and grocers.
These promotions give marketers, product developers, and salespeople an additional avenue to express creativity and drive sales. But what do promotions mean for supply chains?
Efficient supply chains are adaptive, flexible, and built on predictable supply and demand models. Variations happen and demand fluctuates, but promotions can take unpredictability to a whole new level. Promotions are less predictable by nature, and can involve new ingredients or components, limited production runs, limited shelf life, new suppliers, and even new distribution networks.
A good marriage between marketing and supply chain teams fosters proactive collaboration, effective planning, and flexibility, providing well-executed promotions that meet demand and goals, while managing the bottom line.
The old adage about functional silos and the need to break down the walls is nothing new. After all, to keep the bottom line where it should be, and maximize the financial return of promotions, the people responsible for the supply chain need to manage costs—from commodities to packaging to logistics.
A Seat at the Table
For promotions to run effectively, supply chain teams must be represented in the initial planning stages. The best run promotions occur when supply chain team members are present when marketers consider new promotion opportunities.
Supply chain team members can analyze costs, availability of ingredients, materials, and distribution requirements, all of which are vital to effective promotions. The sooner supply chain managers know what they will need, where they will need it, and when, the sooner they can begin planning.
Supply chain managers can provide marketing colleagues with information on availability, ingredient costs, distribution costs, and insight into what it will take to make the promotion a reality.
Enabling and executing this collaboration should not be a challenge for most organizations once groups understand the benefits. Promotions take months at minimum.Given the appropriate timeframe and collaboration, supply chain managers can ask the following questions, and begin identifying solutions:
- Does our existing supply chain have the materials we need?
- Do we need to find new suppliers?
- Can we distribute with our existing network?
- Are there geographical constraints?
- Are there special storage or transportation requirements?
- What is the shelf life of the product?
- Can we do this at a competitive price?
It is vital to have the right technology and partners in place to provide answers to those questions, and to have the necessary supply chain flexibility. Address questions early on and revisit throughout planning, and you'll greatly increase the chances of a smooth promotion.
While this may seem practical, it is important to look within your organization to identify how often collaboration and planning take place. By being involved upfront, supply chain managerscan help promotions achieve the executional and financial success that marketers strive for.