leveraging brand value ebook

8/3/2019 Leveraging Brand Value eBook

http://slidepdf.com/reader/full/leveraging-brand-value-ebook 1/23© Copyright Supply Chain Briefings 2011

Leveraging

the Brand vaLue

of SuppLy Chain

in the age of

M-CoMMerCe

B K CllSl C Bs

Design and Layout by John Devaney

Ascenders Design


http://slidepdf.com/reader/full/leveraging-brand-value-ebook 2/23

2

Leveraging the Brand Value

of Supply Chain in the Age of M-Commerce

Introduction ........................................................3

Chapter 1 ............................................................6

Chapter 2 ............................................................9

Chapter 3 ............................................................13

Chapter 4 ............................................................18

Table

of

Contents



3



Apple is the world’s most valuable brand according

to the 2011 Most Valuable Global Brands study

published by media research company Millward

Brown Optimor. The iconic consumer electronics

company increased the value o its brand by 84% this

year to $153.3 billion. That’s a lot o iPods.

What capabilities have enabled Apple to turn

its logo into a gold-plated asset? A sixth sense

or products that inspire consumers and a air

or creating superb technology must be on the

list. Another strong candidate is supply chain

management.

In order to deliver its products to a worldwide

customer base, Apple has to orchestrate a complex

international web o suppliers oten in situations

where demand outstrips supply. The phrase may not

eature in its marketing campaigns, but supply chain

management it as the core o Apple’s business model

(no pun intended).

The unction makes a signifcant contribution to

the $153.3 billion worth o brand equity that the

ntroduction



4



company has amassed. The C-Suite is well aware

o this; COO Tim Cook is in charge o supply

chain.

A number o enlightened enterprises have

reached similar conclusions. Amazon and

Walmart are two well known enterprises where

cutting edge supply chain practices have helped

to turn brands into household names.

Supply chain’s brand-building role is about get

even more important. The act that Amazon

passed Walmart in this year’s Most Valuable

Global Brands rankings oers a hint o these

changes. “Illustrating how dramatically shopping

has changed, Amazon, the online company

with no stores, surpassed Walmart as the most

valuable retail brand,” says Millward Brown

Optimor.

One o the changes Mobile commerce

(m-commerce) is transorming the way

consumers shop. The retail industry’s center



5



o gravity is shiting towards the use o mobile

devices to make purchases. In this world

companies have to ulfll orders without a hitch

and change strategic course switly to keep pace

with kaleidoscopic demand patterns. Laggards

risk serious damage to their market reputations;

a potentially atal blow in the ast-evolvinguniverse o digital commerce.



6



We Really Do Matter

It seems that most corporate unctions believe

that they have become more important over

recent years. A common argument is that the

unction has become a highly valued strategic

resource that straddles other disciplines. The

claims are understandable; it is human to want tobe a signifcant cog in the machine.

Supply chain is no exception, but in this case,

the rationale really does have merit. First, there

is increasing awareness that the unction’s long

established mission to deliver the right product,

to the right place, in the right quantity, at the

right time, and at the right price, is at the heart

o corporate strategy. Second, supply chain

is a natural bridging unction, since it covers

the sourcing o materials and components,

turning these inputs into products, delivering

the products to end customers, and end o lie

disposal.

Chapter

One



7



Moreover, the proession has changed

dramatically over the last decade or so, in linewith changes in the business environment. And

or the most part these changes have added

strategic responsibilities to supply chain’s more

traditional tactical roles. Here are some reasons

why.

glblz. As companies have expanded

globally so the supply chains that support this

growth have extended their reach in both

geographic and operational terms.

Mk ll. Flip-opping materials and

energy prices and fckle consumer tastes are

making it more difcult or companies to plan

ahead. They must be extremely agile to ride this

roller-coaster successully, and much o that

agility resides in the supply chain.

Js m mc. Synching supply

lines with customer demand is a great way to

cut costs, but it can also be a nerve-wracking

business model. One slip up and the company



8



can be awash with product or scraping the barrel

or supplies. Guess which unction plays a key role

in keeping the demand/supply gears meshed?

Ssbl. Customer demand has taken on

a green hue and companies must respond with

viable, genuine measures to make their business

models more environmentally sustainable. In many

enterprises supply chain accounts or a large

chunk o the carbon ootprint.

The relative importance o supply chain diers

rom company to company depending on the

type o business and corporate culture. But its

overall ranking in the league o unctions has

undoubtedly risen over recent years. The arrival

o m-commerce gives the discipline another shove

up the corporate ladder.

No Small Beer

upply chain might

t below the surace

many companies

ut it is no lightweight

hen it comes to its

mpact on economic

erormance. According

o the 2011 State

Logistics study

ublished by the

ouncil o Supply

hain Management

roessionals business

gistics costs in the

.S. were $1.2 trillion

2010, an increase o

114 billion over the

revious year. The 2010

otal represents 8.3%

the country’s Gross

omestic Product.

ogistics is part o the

roader supply chain

anagement feld.



9



Hidden Value

I supply chain is so inuential, how come it has a

relatively low profle?

In the corporate arena supply chain management

has its roots in warehousing and transportation,

disciplines that do not exactly have their names in

lights. It is only airly recently that the signifcance

o a well-run supply chain has started to turn

executive heads.

In the world at large there is little reason

why supply chain should be a amiliar concept.

Consumers want to make purchases when they

are good and ready; the rantic behind-the-scenes

activity that goes on to make sure that items are

on the shel is largely irrelevant to them.

Interestingly, a corner o this veil has been lited.

The UPS advertisement campaign led by the jingle

“We Love Logistics” brings this relatively obscure

term to mass audiences. Also, in the atermath o

Japan’s tsunami disaster in March 2011 the term

Chapter

Two



10



“supply chain” was coined by media outlets as

they attempted to explain how the disruptions to

businesses caused product shortages across the

globe.

Still, supply chain is relatively anonymous compared

to higher profle departments such as sales. But

it can make or break brands, and help to build

the resilience needed to survive the direst o

emergencies.

Supplier issues buried deep in multi-tiered supply

chains can surace in the orm o product quality

or saety problems that harm market reputations.

These dangers are more apparent when companies

outsource manuacturing to contractors and sub-

contractors located overseas that are difcult to

track.

Twenty-Twenty supply chain visibility has become

crucially important to companies that rely on

networks o suppliers that are scattered across the

globe.



11



More mundane disruptions such as late or ailed

product deliveries can be extremely corrosive overtime. Buyers soon become disenchanted with a

brand when the product is consistently unavailable.

Flawed demand planning can undermine a brand’s

standing. When there is excess product retailers

use discounting to sell surplus items. Relegating a

premium brand to the bargain basket does not do

much or its credibility.

Studies have shown that supply chain glitches

depress shareholder value. Consulting frm

PricewaterhouseCoopers LLC sponsored a study o

600 US public companies that suered disruptions

between 1998 and 2007. The analysis ound that

share prices dropped by an average o 9% below a

benchmark group during the two-day announcement

period (the day beore and the day that thedisruption was announced). Moreover, two-thirds

o aected companies still lagged their peers on

stock price perormance a year ater the incident,

according to PwC.



12



On the positive side is that brands built on a solid

oundation o operational excellence are able toweather the storm o adversity better than imsily

constructed market identities.

Toyota oers a shining example o this staying power.

The brand is synonymous with lean manuacturing

and cutting edge supply chain practices yet suered

the indignity o mass recalls in 2010. The amous

supply chain sputtered as quality issues put Toyota on

the deensive. Yet in the 2011 Most Valuable Global

Brands study the car company rebounded and took

top ranking in the car industry.

When you see the

epths to which

oyota had sunk, the

oncern that was being

xhibited in the US

bout saety problems.

nd when you compare

hat with the way the

rand perormed in

erms o sales at the

nd o the year, Toyota

a textbook example

brand resilience. In

he sense that, i you

vest in the brand over number o years,

ctually it does ensure

hat you’re able to

ithstand most things

hat happen to you in

he marketplace.”

hris Hunton, CEO Team

and Rover/WPP Account

eader, Young & Rubicam,

uoted in Millward Brown

ptimor’s 2011 Most

aluable Global Brands study.



13



Riding the Electronic Storm

The anchor o a strong brand will help companies

to maintain competitiveness as they navigate the

explosive growth o m-commerce.

This digital revolution is transorming the retail

industry as consumers migrate to devices such

as smart phones to shop. A study released by

research frm Forrester Research in 2011 ound

that 48% o retailers have a mobile-optimized

website; 35% and 15% respectively have deployed

iPhone, Android and iPad applications.

As electronic shoppers grow in number companies

are trying to fgure out what mix o services

they should oer or maximum proftability. For

example, according to Forrester 21% o all mobile

trafc is coming rom tablets, “amazing considering

the iPad was launched barely a year ago,” says the

research frm. “Challenges or retailers includedierentiating the consumer experience on a

tablet versus a smart phone and fguring out

eatures and unctionality in dueling app/mobile

Web ecosystems,” Forrester observes.

Chapter

Three



14



Predicting the uture shape o the m-commerce

market is extremely difcult in this “new rontier”phase o its evolution. But one thing is clear: these

dynamic retailing channels will have a proound

eect on product branding.

Word o mouth has been shaping

consumer perceptions or as

long as commerce has existed,

but mobile connectivity, amplifed

by social media, provides a

megaphone or these inter-

personal communications. “A

dissatisfed customer can air

complaints to her social circle

in an instance – and when used

or the positive, word o mouth is a powerul

generator o goodwill and brand advocacy,” says

brand builder Interbrand in its Best Retail Brands

2011 study.

As well as ast-track communications, m-commerce

provides rapid availability o inormation on



15



products and buying opportunities. In this quick

fre buying environment, consumers have scantpatience or patchy service or deective items. And

they are looking or customized products that are

an extension o the personal “brand” they espouse

on social media sites.

In other words, these individuals have no time or

supply chains that ail to ulfll orders seamlessly

and deliver personalized product quickly.

“Retail supply chains are challenged by this shit to

improve supply chain execution to take, manage,

and ulfll omnichannel orders, without increasing

the cost o doing business. This is a tall order, when

customers have come to expect ree shipping and

an array o shopping, pick-up and delivery options,”

says retail market research frm IDC Retail Insights

in its 2011 Global Retail Supply Chain Predictions.

Moreover, service levels that are acceptable today

may not apply tomorrow. “It is time to rethink

and redesign retail supply networks, with an

understanding that the dial is moving… agility,



16



exibility and responsiveness are crucial,” IDC

continues.

Quick-response market reactions and the ability

to reconfgure distribution networks on the y

are an integral part o supply chain management.

By extension, error-prone supply chains are more

likely to cause brand-busting ailures in unorgiving

digital markets.

Supply chain also has a key role to play in helping

companies to project the right market identity

to mobile consumers. Individuality is a prized

attribute in the digital space, a quality supported

by supply chains designed to deliver tailored

products. Sustainability is another identifer

aorded a high priority in m-commerce circles,

and supply chain plays a central role in improving

environmental perormance. The unction is also

critical in providing the visibility into product

ows that companies need to avoid mistakes

in quality control and saety that can seriously

damage reputational health. This is becoming more



17



important in markets such as ood products where

tighter saety regulations are being introduced.

Some companies have used supply chain to

support specifc brand attributes. An example

is the campaign launched

by CSX that burnishes the

rail carrier’s environmental

credentials by touting its low

uel consumption. Another is

a campaign run by ood and

agricultural company Cargill that ocused on its

eorts to build supply chains in emerging markets.

As more consumers switch to virtual shopping

channels companies will need to pay more

attention to the role o supply chain in supporting

and maintaining their market identities.

When the parts or the

ne come precisely on

me that’s logistics,

continuous link that

always in synch that’s

gistics,

arbon ootprinteduced bottom line

ets a boost that’s

gistics,

With new ways to

ompete there’ll be

heers on Wall Street

hat’s logistics …

yrics rom the jingle that

atures in the UPS We Love

ogistics advertising

ampaign.



18



New Models

What exactly is this new supply chain role? To

some extent it is a high-octane version o the

traditional one, in that the unction has to deliver

the right product at the time at warp speed to

meet the demands o digital buyers and maintain

brand value.

But m-commerce also takes supply chain into

new territory as a critical component o market

identity. The items purchased by electronic

shoppers are not simply inanimate objects that

have to be transported rom A to B; they are a

reection o each buyer’s preerences and spending

habits.

M-commerce is plugged into a vast store o

electronic inormation on the consumers that use

their mobile devices to connect with retailers.

Marketers are already knee-deep in this tide o

inormation, and are beginning to understand how

it can be sited or vital market intelligence.

Chapter

Four



19



It is possible to segment people into groups with

similar buying habits and demographic proflesby analyzing social media chatter,

or example. By tracking the

movements o these “tribes”

within a specifc area such as an

inner city, researchers can orecast

where they will shop and what

products they are likely to buy at

any given time. Tracking purchases

transacted via smartphones – a acility that a

growing number o retailers are oering – can help

companies to map buying behavior in near real-

time.

The ull ramifcations or managing supply chains

have yet to unold, but they will be transormative.

By analyzing inormation rom in-store mobile

devices and electronic sales transactions,

companies can build more accurate and timely

product demand orecasts, or instance. This

inormation, coupled with a deeper understanding

o buying populations, will enable companies to



20



align product design more closely with consumer

preerences and manage supply with greaterprecision.

Enterprises that master these emerging capabilities

will establish market-leading brands. But to

reach these heights they need to develop resh

approaches to the way products are marketed and

delivered to end customers.

A new type o relationship between marketing

and supply chain is sorely needed. The partnership

could be described as a collaboration, but this

overused term understates the degree o change

required. The digital retailing business is less

tolerant o traditional tur wars such as who has

ownership o sales data or the number o product

variants an operation can support. Companies

that stumble over inadequate service levels or ailto move quickly enough to capture new demand,

can do serious damage to their brands in markets

where there is little room or error.



21



Also, m-commerce solutions must span

national boundaries. A study by German marketresearch frm yStats.com analyzed m-commerce

developments in 42 nations. The Global Mobile

and M-Commerce Trends 2011 study shows that

90 million individuals in Great Britain, Germany,

France, Spain and Italy are expected to use mobile

internet by 2015. In Germany more than 20%

o all smart phone owners use their device on a

regular basis to search or product inormation.

M-commerce growth is trending upwards in Asia.

Supply chain has to be an active participant in this

expanding universe. The unction needs to become

intimately amiliar with the digital landscape, and

not be araid to develop non-traditional methods

and alliances. Better ways to manage inventory and

building more exibility into distribution networks

are just two o the items on the unction’s to-do

list.

A wider view o risk management is needed.

Supply chains are exposed to numerous risks rom



22



supplier ailures to natural disasters, and fnding

ways to mitigate and/or eliminate these disruptionsis a major supply chain activity. Brand-related

threats should be a part o this risk management

universe. How does a change in sourcing strategy

alter the organization’s risk profle in terms o the

standing o its brand, or example.

Companies would also beneft rom new insights

into the role o supply chain in an m-commerce

environment. Research is needed to shed more

light on the link between supply chain management

and brand equity. Which attributes and business

models are the most sensitive to supply chainactions, and how can companies incorporate brand

value into their supply chain strategies?

There is increasing awareness that the efciency

o an organization’s supply chain is an integral part

o its identity. The social commerce revolution

adds more weight to the importance o supply

chain as brand builder. Companies that realize

this and change accordingly will be better placed

to compete in highly challenging m-commerce

markets.

The true potential

or m-commerce is

o provide consumers

ith a valuable tool or

esearch, comparison

hopping and retailer

teraction. This will, I

elieve, not only meet

he needs o customersut also maximize

rowth across all

hannels,”

an-Chrisrophe Hermann,

ce President, Carreour,

ommenting on the Next

eneration Retail Europe

ummit 2011.



23



Published by Supply Chain Briefngs,

http://www.supplychainbriefngs.com

Design and layout by Ascenders Design,

http://www.ascenders.net

leveraging brand value ebook

Documents