With budgets being watched more carefully than ever, putting a tighter rein on the demand chain for marketers is more important than ever.
“We keep coming back to this because we’re stepping over dollars to get to dimes — there’s money there,” says Liz Miller, vice president of programs and operations for the CMO Council. “We need to look at the entire process, from the strategic level to go-to-market.”
For marketers, effective demand chain management means the efficient and timely delivery of marketing and merchandising materials to various vendor, franchise, retail and brand office locations, as well as processing customer requests for sales literature and samples through web, call center and email channels in a timely manner.
Marketers must fill in the gaps in the demand chain, Miller says, noting that the demand chain often tends to fall apart right after the CMO signs off on the creative.
“There must be input from both the field and marketing folks,” says Miller. “We do a great job in developing demand generation and go-to-market strategies, but systems aren’t ready when the project is launched.”
According to a recent report by the CMO Council, “Competitive Gains in the Demand Chain,” many marketing executives admit that they have never assessed demand chain performance, nor given it high priority within the marketing operational mix. Twenty percent of more than 250 marketers audited by the CMO Council in the fourth quarter of 2010 admit their demand chain is underperforming or in need of improvement.
Marketers surveyed agree that demand chain provisioning is critical to business competitiveness and performance (38%), while an additional 31% believe it is important to sustaining sales and channel operations. Yet only 25% of respondents are ensuring that sales support materials and resources are delivered on-demand.
The Answer Isn’t Simple
But the answer isn’t simply making everything more digital. Many companies have blind spots that are making the process inefficient. For example, companies need to consider the sheer number of vendors they are using.
“They’re often not leveraging the economies of scale,” says Miller. “Everybody has ‘a guy’ they use. And people end up ordering 5,000 copies of something rather than 2,000 because the per-piece price is lower — but maybe they don’t need that many.”
But if you get vendors to bid on all your business, rather than just on individual pieces, you get the economy of scale. In printing, for example, that means having one firm handling all your paper printing needs — from letterhead to business cards to point-of-purchase materials to brochures — rather than just one type of collateral.
“Considering that printed promotional products still take up a lot of marketing budget, we need to look at the measurability of the marketing process,” Miller says. “You need to pay attention to this on a daily basis.”
While 56% of marketers are focused on campaign design, development and execution, only 16% are looking at production, warehousing, inventory management or delivery as critical elements in an effective demand chain. In addition, just 2% are looking to optimize the actual delivery, fulfillment or distribution of their critical marketing materials.
In quantitative interviews throughout the study, Miller says B-to-B marketers revealed that they held far more digital assets than their B-to-C counterparts. B-to-C had more consumables — for example, store samples and point-of-purchase materials. In B-to-B, there was more of a need for downloadable materials, and companies are looking at how to streamline that content.
Do the Follow-Up
“There needs to be a follow-up to manage those digital assets,” Miller notes. “You need to look at the entire organization cross-functionally, and at where and how those assets are used.”
The study, sponsored by Archway Marketing Services Inc., is part of ongoing research by the CMO Council’s Marketing Supply Chain Institute (www.marketingsupplychainstitute.org) into ways to improve frontline performance through better go-to-market process innovation, supply chain optimization and marketing ecosystem management. More than 260 marketing executives were interviewed for the study during the third quarter of 2010.
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