Distribution - Lean vs Flexible

If you can't get your product to your customers, what good is it? Chapter 12 addresses the distribution elements of an eMarketing strategy. As we have discussed in class, a good marketing plan addresses all of the points where a customer comes into contact with your business.

Distribution can easily be overlooked. Once all of the market research, planning, advertising, networking and tense negotiations are over, you just have to get the product to deliver it, right? Well, easier said than done. And if the distribution is not well executed, what are the chances our new customer becomes a repeat customer? Probably not good. And is it more profitable to maintain customers, or get new ones? Exactly. Solid brands are built with repeat customers.

The blog Enterra Insights perfectly sums up the tension that results in the necessity to serve customers' individual needs, yet maintain low operating margins in the article Flexible and Lean Supply Chains.

Lean vs. Flexible
Customers want options, businesses want efficiency. Businesses must develop strategies that provide the options that attract customers with the efficient supply chains that drive profitability. Just being 'lean' isn't enough, these strategies can get complicated. It is often necessary to employ different strategies in different segments of the business, depending on what drives the value for customers and company, alike. This is especially important in hyper-competitive electronic markets where margins are thin and consumer preferences can turn on a dime.

Lean strategies are very popular today in the business world. But is lean always the answer? The article uses the cell phone industry as an example. The market for cell phones is very competitive and inventory of old parts is nearly worthless. Cell phone manufacturers must run very efficient lean supply chains, up until the point of sale. Given that customer preferences in this industry are constantly changing, manufacturers don't want to miss out on a spike in demand if their product becomes wildly popular, if a customer can't get a particular phone, they usually don't go without one, they buy from the competition. Cell phone manufacturers work with network providers and retailers to manage this relatively high inventory level at the wholesalers and retailers who can get the product to market quickly.

eMarketing and Supply Chain
Many eCommerce companies have a very useful benefit when it comes to supply chain...the web. All a site like Facebook must do to deliver their product is provide adequate bandwidth. The music, film and TV industries are slowly realizing the benefits of electronic distribution. It is certainly cheaper than delivering boxes of cd's from a factory to a store using planes, trains and automobiles. But then internet distribution is wrought with security risks, digital media is easily replicated and shared through unauthorized channels.

Companies such as Amazon.com and Zappos.com currently thrive by shipping products directly to customers, they are also constantly re-evaluating their supply chain. Customer direct is expensive, many orders require multiple delivery attempts, and the price of fuel for those planes, trains and trucks is going nowhere but up. Customers might love the convenience of quick, direct delivery, but they hate the hassle of shipping it back. Traditional retailers such as Nordstrom and REI have developed ship to store systems where customers pick up their online purchase at the retail store, this allows easy exchanges and often results in the customer buying additional items during their visit.

The 'last mile' delivery problem is making for some surprising alliances, Amazon.com was reportedly exploring a pilot program to use 7-11 stores as pick-up hubs for orders, rather than rely on home delivery in densely populated areas.

Conclusion
So what does it all mean? Well, as marketers, we often see ourselves as the go-between for customers and our company, but the seeds of customer satisfaction are planted deep inside how a company works. If Motorolla can't accurately forecast the number of touchscreens it needs for the next popular smartphone and they come up short, Apple is right there waiting to sell iPhones to a bunch of unhappy could-ve-been-Motorolla customers. Our marketing strategies must deliver value throughout the supply chain to our company and our customers.

 The day has probably passed when you can breeze into a C-Suite meeting, rattle off a few sentences about Lean solutions and expect a promotion. Every company's supply chain is an intricate, some parts might be lean, others fat. Every company should have a plan to maximize the aspects of their supply chain that provide value to the customer and products to the company.

Any ideas for companies delivering products in unique ways?
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