Will IoT Shatter Ideas Of Supply And Demand?
Digitization, social media marketing, and other influences are driving major changes in how consumer products (CP) companies connect with their customers and end consumers. Both groups have increasingly high expectations of brands, forcing CP companies to work ever harder to keep up with these demands while increasing share. The Internet of Things (IoT) provides the means to make needed changes and reach or exceed customers’ and consumers’ expectations.
How can IoT technology help consumer products companies better meet demand?
IoT in the consumer products industry
A recent IDC white paper, The IoT Imperative for Consumer Industries, explains that companies in the consumer products industry must make more and better use of consumer engagement models. Doing so will increase and improve the ways they interact with consumers. In addition, IoT will enable currently lagging companies to move ahead, primarily by enabling new engagement models. A great example is the “connected model,” in which IoT can help companies understand and predict consumer demand and use better models to meet the demand.
In an article for Supply & Demand Chain Executive, Guy Courtin notes that simpler versions of IoT, such as barcodes, have long been in use. But now that the concept has advanced, Courtin explains, IoT “can provide data that enables us to better monitor… usage and understand and anticipate demand at a much higher level.” With access to better technology, today’s companies can gain deep insight from, and act upon, large volumes of supply chain data.
Changing to connected supply and demand
In the interplay between supply and demand, supply is increasingly being determined by consumer demand. Forward-looking CP companies are finding ways to create and customize products on demand rather than predetermining a specific supply. An article in Material Handling & Logistics takes this idea one step further with “mass customization,” in which companies are able to produce high volumes of personalized products. For example, consumers could choose personalized options such as different sizes, colors, or styles. The company would create the product based on the customized order.
Customization has long been possible but IoT can expand it to a mass scale, which would cut down on waste and improve customer satisfaction. To perform mass customization, different parts of the production process that are normally independent need to be connected. IoT gives the means for connecting them. It can also help CP companies track and understand the changes in demand patterns and turn the information into custom products.
Demand data feeds, which give real-time streams of data, are another emerging approach to forecasting demand. With the addition of IoT technology, these data feeds can pull in consumer demand signals to provide a real-time source of accurate and actionable insight. They can also provide inventory monitoring to keep up with what products are needed when. This approach works through IoT devices added to different parts of the supply chain, such as factories and vehicles, as well as to the products themselves. The sensors send live data for CP companies to use.
Capabilities from using IoT for supply and demand
By now it’s clear that IoT can provide information that goes far beyond the typical point-of-sale data. CP companies can monitor usage patterns to help predict demand. They can learn not just what products a given consumer buys but how the product is actually used. This information provides the means to more deeply connect with consumers. Courtin offered a scenario of an IoT-enabled electric toothbrush helping a toothpaste company know how much of the product the consumer is using. This company can respond to demand by sending the consumer more toothpaste before the tube is finished.
Even beyond what we’ve discussed, IoT will enable new ways of creating the supply chain. For example, CP companies may seek to incorporate customer and consumer inputs and feedback directly in the design process. Or, the use of new technologies such as 3D printing could enable virtual production.
In conclusion, emerging IoT-based business models show great promise of helping consumer products companies supply the products that fit actual consumer demands. Some of these concepts are already in use, while others are rapidly approaching on the horizon. What’s clear is that CP companies will need to build IoT into their strategies and approaches as they progress to meet a changing marketplace.
Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value by reading Accelerating Digital Transformation in Consumer Products. Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?