Blog November 13, 2023 |

The Hidden Link: How a CDP Can Improve Supply Chain Operations

In today's fast-paced landscape, staying competitive and efficient is paramount. Supply chain operations are the backbone of any successful retail and consumer goods (CG) business, and optimizing them can make a significant impact on relevance, profitability and customer satisfaction.

Yet challenges and disruptions due to warehouse capacity issues, global conflicts, labor shortages, an inflation-ridden economy, and rising consumer demand continue to plague many supply chain operations. The resulting delays can lead to empty shelves in retail stores, lost sales, and worst of all, a damaged reputation.

These trends highlight the need for a proactive approach to supply chain management that emphasizes agility, collaboration, and data-driven decision making. Harnessing the power of first-party data through a customer data platform (CDP) can be the secret weapon that retail and CG companies need to enhance their supply chain operations and gain a competitive edge in the market.

Optimizing Performance with Unified, Actionable First-Party Data

A CDP is primarily recognized as a tool for marketing and personalization efforts. By collecting and consolidating first-party data from various disparate systems and sources into unified customer profiles, it enables companies to gain a holistic view of each customer. Marketing, customer experience, and other growth-focused teams can then access and use this data to improve the way they understand and interact with consumers.

But a CDP’s potential impact on supply chain operations is often overlooked. Just like a CDP links customer-facing systems, it can also act as a bridge to critical data sources within the supply chain, including product management and order management systems. By connecting these different parts of the business, a CDP can provide a holistic perspective on how products and services are not only sold, but also the journey they take through the supply chain. This comprehensive view allows companies to better understand customer behaviors, preferences, and buying patterns, and use those insights to improve supply chain operations in a number of ways:

  1. Demand Forecasting: Demand forecasting is the process of predicting how much of a product or service consumers will want during a defined period. It’s critical for maintaining optimal inventory levels but relies on a combination of different types of information and data sources, including seasonality, historical buying patterns, customer intent, and propensity to buy. By analyzing first-party data, such as historical sales, customer preferences, and buying patterns, a CDP can offer forward-looking insights into customer behavior and demand patterns. Retail and CG companies can use these predictions to anticipate demand for specific products, determine when demand spikes are likely to occur (e.g., during holidays or seasonal events), and adjust their inventory and marketing strategies accordingly.

  2. Inventory Management: Efficient inventory management is crucial to reducing carrying costs and ensuring products are readily available. A CDP can help monitor inventory levels across ecommerce and brick-and-mortar stores in real-time and automatically trigger reorder points based on historical sales data. For instance, a consumer electronics company can use a CDP to track the demand for specific products and automate restocking when inventory reaches a predefined threshold. This not only reduces operational costs but also enhances the customer experience by minimizing backorders and out-of-stock situations.

  3. Efficient Supply Chain Logistics: A well-optimized supply chain relies on efficient logistics. By analyzing first-party data collected through online and in-store purchases, a CDP can help retail and CG companies identify trends, such as preferred delivery times or locations, and make more informed decisions about shipping carriers, routes, and delivery windows. Additionally, a CDP can integrate with third-party systems to capture and analyze external factors such as market trends, weather conditions, and transportation delays. With access to this information, retail and CG companies can make proactive adjustments to distribution and delivery plans and ensure faster and more reliable deliveries for customers.

  4. Returns and Reverse Logistics: Returns are an integral part of retail, and handling them efficiently is crucial for customer satisfaction and cost management. By centralizing and analyzing customer data, a CDP can help retail and CG companies to identify trends in returns and the reasons behind them, and then use that information to make more informed decisions. For instance, retail and CG companies can identify high-return-rate customers and provide helpful content and recommendations to guide them in selecting alternative products that better align with their needs and preferences.

  5. Enhanced Customer Service: First-party data can also be harnessed to improve customer service. For instance, using a CDP, retail and consumer goods companies can inform customers about low inventory levels on their site dynamically, driving conversions while fostering a sense of transparency between brand and consumer. Additionally, customer service representatives can access real-time information, including past interactions and purchase history, that they can use to anticipate customer needs, provide more personalized and efficient assistance, and resolve issues promptly and effectively. The customer pain points and preferences collected during these interactions can then be used to inform product enhancements that boost overall performance and customer satisfaction.

To illustrate the tangible benefits of a CDP in supply chain management, consider the case of a European bicycle manufacturer and retailer. This company sells most of its bikes through a network of dealers and bike shops across Europe. Historically, these dealers didn’t know a lot about the bicycle manufacturer's customers or who was in-market to buy a bike in their area, resulting in an understocking of bikes in their showrooms relative to market demand.

Leveraging the data it was capturing in BlueConic, the company was able to gain new insights about market demand in each dealer’s region. Armed with this data, it was able to demonstrate greater demand for its bikes and convince dealers to add more bikes to their showrooms at a given time because they would sell quickly. As a result, dealers that were carrying 2-3 bikes at a time increased their inventory to 7-8 bikes.

Additionally, conventional wisdom across the bike manufacturer and local dealers was that medium frame bikes were the most popular – leading many dealers to stock more medium frame bikes than small or large frame bikes. However, analyzing the unified data in BlueConic profiles revealed that there was actually greater demand for small frame bikes than medium frames. This insight led to testing more small bike inventory at dealer locations. Now, those dealers are selling more small bikes. 

As retail and CG companies face ever-increasing challenges and competition, those who harness the power of first-party data through a CDP will be well-positioned to thrive in the dynamic world of supply chain management. By investing in data-driven strategies, retail and CG companies can create a resilient and customer-centric supply chain that sets them apart in the marketplace.

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