As the world of commerce continues to become more complex, volatile and socially transparent the need for a strong linkage between the CMO and the Chief Supply Chain Officer (CSCO) grows. In our ongoing exploration to better understand this need within the emerging reality I call Matrix Commerce, last week I had an opportunity to connect with John Mesberg of IBM.
The below Q & A points capture John’s insights into the growing need for C-Level bonding between CMO and CSCO. I then wrap up with a few thoughts on some of the SCM factors CMOs may want to consider as they begin to build out this relationship facilitated by technology for enhanced brand protection and longevity.
Ashcroft: Why is it important now for the Chief Supply Chain Officer and Chief Marketing Officer to partner?
Mesberg: When it comes to both marketing and supply chain and we consider consumer demand and supply, both sides are simultaneously becoming more volatile. On the demand side, you have consumers who expect more. They expect products to be delivered more quickly than we ever envisioned in the past. Consumers expect products to be available in an hour at a local store. They expect to walk into a store and if the store doesn’t have what they want, they expect the store to fulfill that order to make the sale. So the level of expectation on the consumer side is changing. On the supply side, we’re now dealing with a global supply chain with significant commodity price fluctuations. There’s political unrest, supplier volatility, and managing the risk of those suppliers. Both the consumer and demand side are undergoing more volatility than we saw even ten years ago. When it comes to marketing, I tell my clients, CMOs and marketers are the ones responsible for making brand promises. CMOs are telling their customers what to expect of the brand, whether that’s fashion, service, etc. And to a degree, marketers are now telling the customer to not just expect a certain product, but to expect a certain experience. And ultimately, marketers are dependent on supply chain officers to fulfill that brand promise and deliver on the experience. These promises however, are becoming increasingly more difficult to fulfill due to the increase in customer expectations and the challenges faced on the supply chain side in order to deliver the product and that experience.
Ashcroft: What role does market volatility play in driving the CMO and CSCO to synchronize demand and supply?
Mesberg: The level of market volatility comes from a cascading set of activities, all stemming from the changing customer. Our Smarter Commerce strategy is fundamentally trying to re-orient our perspective and address the fact that our clients are seeing consumers in a new way. In the past, a lot of our clients managed their businesses by channel and yes, to some extent that is still happening today. Forget the channels – the channels are no longer important. What is important is the customer experience. The customer is expecting a range of activities – whether that be filling shelves at a store or fulfilling a customer order from a warehouse directly to the home. Each of these activities are ways to fulfill the clients experience expectations and this creates a tough environment and in fact, this creates a level of volatility we didn’t see before. On the supply side, we have to consider the global community. We’re seeing a different level of global competition and we’re seeing a different challenge in responding to global competition, which is a combination of both market and supply volatility. We’re seeing new competitors that we never saw before and we have to come up with a better way of responding to those new competitors.
Ashcroft: What are the latest technologies that are enabling the convergence of the marketing and supply chain functions?
Mesberg: We’re big believers of what we call the perfect order and we believe in the importance of fulfilling that order with a strong awareness of the various options you have to fulfill the order. So the capabilities of products like Sterling Order Management and the aggressive things we’re doing around optimization in that area through our use of CPLEX technologies are the well known technologies that our specialty retailers, office supply retailers and other customers are using to accomplish their goals.
I think some of the more interesting and intriguing technologies are what next gen is all about. We have to ask ourselves, is all this social stuff really meaningful to the supply chain? At IBM, we tend to believe that the answer to that question is yes. Obviously sentiment analysis when it comes to the ability to determine trend spotting is important, but I think that’s just the tip of the iceberg. With IBM Cognos Consumer Insight, we’ve been able to use Cognos to enable trend spotting that merchandisers and marketers can react to. And while this is intriguing, we actually think this technology will affect forecasting to the point where forecasting will be based on what people are saying right now. We believe we have some pretty powerful technologies to bring to bear, including SPSS obviously. The most interesting thing is real near term adjustments to inventory. Where should a product be positioned? Do I have stuff in the right DCs? Do I have the right stuff in the right DCs? How am I going to respond to something that is demonstrably hot in the blogosphere today – we have a lot to do in this area and have a lot of research going on in this space.
Ashcroft: Beyond systems integration, deployment and demand signals why is a strong relationship between the CMO and CSCO critical for organizations to protect the future of their brands?
Mesberg: I think this goes back to who’s making a brand promise and who’s fulfilling that brand promise. Brands are fragile things these days and companies don’t have the same control over their brand message as they used to. Brands are wrestling with this new world and they’re wrestling with this in a number of ways. In my opinion, I would say supply chain is low on the minds of CMO’s these days – but they better increase their scope of thinking when it comes to protecting their brand. If a CMO doesn’t think issues with their supply chain affect their brand, then they are kidding themselves. CMOs need to be proactive and make the effort to reach out to their Chief Supply Chain Officer to understand the challenges with their supply chain that can impact brand – and I believe the sharper CMOs are beginning to have that dialogue.
Thanks to John for connecting with me on the above Q & A, his insights are much appreciated and support my view on the growing need for CMO and CSCO alignment in support of Integrated Brand Management.
Supply Chain Factors with Direct Brand Linkages
In the above conversation we touched on a number of points where the interests and roles of the CMO and CSCO intersect to touch the brand. When it comes to overall brand experience and ultimately keeping the brand promise, the CMO must rely on the CSCO and his team to deliver on the below factors. Depending on your firm, some of these functions may be segregated under a Chief Procurement Officer or CPO, but my point of view is procurement for products is a key role within the supply chain function.
Quality: Think materials sourcing & manufacturing plants (internal/outsourced)
Cost: Again materials, production and logistics/distribution (owned/3PL)
Sustainability: Key as 70% of most company’s carbon footprint emanates from the supply chain
Corporate Social Responsibility (CSR): Ensure products manufactured with legal age & fair labor practices
Customer Service: Meet diverse client delivery needs/B2B compliance, perfect orders & reverse logistics
These factors are easy to list, but much more difficult to measure on a functionally integrated basis. In any case the time has come for the CMO and CSCO to break bread and work together to put in place the technology needed to measure and report on the above on an inline basis. These become key inputs for holistic Integrated Brand Management within an overall Enterprise Marketing Management technology approach.
Volatility, complexity and transparency continue to increase on both supply and demand sides of the business and tight management reporting with the ability to rapidly assess and react are key to success. Both the CMO and the CSCO can benefit from this new found relationship to advance and integrate the IT tools being brought to bear by the enterprise. Through the implementation of such critical business intelligence tools the CSCO will gain visibility and improved ability to sense and react. At the same time the CMO will develop a direct linkage to monitor the key levers of the business through this expanded relationship with the CSCO. Ultimately the goal is to deliver a solution with supply chain agility, flexibility and reliability for the CSCO, while at the same time giving the CMO the information he or she needs to protect and grow the brand.
Jeff Ashcroft
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