Understanding the many facets of D2C supply chain

In the recent years, Direct to Consumer (D2C) as a business model has gained quite a lot of traction because of the numerous benefits it offers. By putting themselves out in the open, without the presence of an intermediary, manufacturers & sellers are one step closer to their customers, and can build closer relationships along with increased brand loyalty. However, the said model also brings an added responsibility of fulfilling consumer demand and managing the associated logistics in a seamless manner, especially in a postpandemic world. Take this journey with us as Rajendra Nimmagadda, Lead – Supply Chain Projects – India, Herbalife Nutrition explains the niches of managing the supply chain of a D2C brand.

Q] What are the latest trends in D2C supply chains?

While there are a lot of trends that have potential to affect the way supply chains of future operate, I would like to mention a few which I believe are important.

  1. Focus on Sustainability: Supply Chains including manufacturing operations have tremendous opportunity and potential to opt for sustainable approaches. While a lot of companies are making the initial efforts towards sustainability by say revamping packaging to more sustainable alternatives and switching to electric vehicles for logistics, there definitely is more that can be done. The major areas supply chains can focus for improving sustainability are
    • Greenhouse Gas emissions management and solutions
    • Shifting to circular supply chains
  2. Risk management: The world is becoming increasingly uncertain and unpredictable as everyone would like to say, ‘we live in a VUCA world’. This calls for altogether a new approach to different things we do in managing supply chains. Some key areas that can be focused are diversification of suppliers, planning and placing inventory, managing warehouses & transportation in such a way that we can respond to unplanned disruptions, and in mitigating risks. We need to look at inventory planning and supply chain design from risk mitigation perspective and in being agile and meeting customer needs.
  3. Cyber security: D2C organizations need to be more vigilant and proactive not only with systems within their organizations but also with the supply chain partners that they deal with, with it comes to cyber security.

Q] How is technology transforming D2C supply chains?

Technology definitely plays a major role in effectiveness and efficiency of supply chains in meeting the organizational objectives. For instance, order fulfilment plays a major role in D2C supply chains. Many companies, which have started a D2C channel during COVID-19 and were accepting e-commerce orders to be shipped directly to customers, realized that they do not have robust order fulfillment processes and technology applications to achieve this.

Technology is needed in every aspect of supply chain right from demand forecasting and inventory planning and deployment, to warehouse management and transportation management. The latest offerings by technology service providers in each of these areas, which leverage AI and machine learning in decision making, and IOT service providers in automation are definitely transforming the way supply chains operate.

Q] Amid such high competition, how can one stand out from the crowd?

While at a strategy level, companies constantly work on having sustainable competitive advantage and work on business models and value propositions, the job of supply chain leaders and teams is to align with these strategic objectives and achieve them through best possible execution.

If a D2C company is focusing on being the best low cost or value for money alternative to the other expensive options that exist in the market for customers, the job of supply chain leader is to achieve this by right procurement strategies and being able to execute the entire supply chain operations within the permissible cost criteria in a tight margin scenario.

Similarly, if the company is focusing on being a sustainable alternative or say giving personalized options to customers these would translate into execution goals such as having sustainability focused more in operations or say building personalization into designing/ manufacturing/ packaging and other processes.

Customer centricity and giving the best overall experience to customers and having a clear customer value proposition can definitely allow one to stand out from the crowd. Supply chain leaders can achieve competitive advantage for the company through innovation in supply chain operating models as well as aid in execution and achieving strategic objectives of the company

This is an abridged version of the original interview published in the October 2022 issue of Logistics Insider magazine. Click here to read the complete interview.

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