Skip to content
Search AI Powered

Latest Stories

techwatch

From demand signals to demand shaping

An emerging class of software can assess buyer interest and then formulate offers designed to sway purchasing behavior.

Although companies are just starting to use software to decipher demand signals and use the information to adjust inventories in their supply chains, pioneers are looking ahead to the next phase: shaping demand. And that could have major implications for logistics and distribution managers.

Demand, of course, determines inventory and production needs. But only a few companies have started to put aside forecasts and drive replenishment based on actual demand—point-of-sale purchases or orders. Algorithms in sophisticated software take data on those actual "buys" and then recalculate stocking levels at distribution centers, triggering orders from suppliers further up the pipeline.


In the above scenario, companies are merely reacting to consumer demand; they are not prompting the buyer to make a purchase. They are not shaping demand.

But an emerging class of software has the intelligence to assess buyer interest and then formulate offers designed to sway purchasing behavior. Vendors that offer this type of software include Avercast, DemandPoint, and ToolsGroup.

Shaping demand is not an entirely new idea. Companies have engaged in store promotions, purchase incentives, and marketing campaigns for some time now. In fact, one consumer company has been doing this online for a number of years—Amazon.com. When you order a spy novel online from Amazon, the digital merchant will suggest other titles in that genre. By appealing to your tastes in literature, the online store tries to get you to make additional purchases.

While Amazon has done "online demand shaping" in the consumer space, traditional business providers are now starting to eye this practice as well. At the Council of Supply Chain Management Professionals' European conference this past June, Stephen Garbett described how his company, RS Components, was taking steps to do demand shaping online. Based in the United Kingdom, RS is one of the world's largest distributors of electronics and industrial products and components. "We want to understand what the customer is looking for and then manage the customer expectations," said Garbett.

For instance, if a customer was looking for a specific product that RS Components didn't have in stock, he or she could be prompted to buy a related item. Or RS Components could use online promotions to encourage a buyer to take a certain product today at a special price. Or as stocks of a particular product began to run low, the online site could even raise the price on the remaining items.

Although demand shaping would be used to boost revenue and profits, it could also be used to boost supply chain efficiency. For example, a company could offer specials—say, free shipping for orders placed during the morning—in order to better manage its own work flow. If a company had an underutilized warehouse workforce in the morning, it could use special offers to drum up more orders to keep its staff busy.

For distribution managers, this ability to orchestrate demand could be a game changer. It would enable them to marshal their own resources to better utilize warehouse and transportation capacity, leading to higher efficiency and lower costs while still meeting customers' expectations. Demand shaping could become another tool for distribution managers looking for cutting-edge ways to optimize their operations.

The Latest

More Stories

drone flying through warehouse

Robotic revolution

Robots are revolutionizing factories, warehouses, and distribution centers (DCs) around the world, thanks largely to heavy investments in the technology between 2019 and 2021. And although investment has slowed since then, the long-term outlook calls for steady growth over the next four years. According to data from research and consulting firm Interact Analysis, revenues from shipments of industrial robots are forecast to grow nearly 4% per year, on average, between 2024 and 2028 (see Exhibit 1).

market forecast for industrial robots - revenues graphEXHIBIT 1: Market forecast for industrial robots - revenuesInteract Analysis

Keep ReadingShow less

Featured

Freight Science dashboard screen
Freight Science

High-tech solution helps truckload carrier drive change

The trucking industry faces a range of challenges these days, particularly when it comes to load planning—a resource-intensive task that often results in suboptimal decisions, unnecessary empty miles, late deliveries, and inefficient asset utilization. What’s more, delays in decision-making due to a lack of real-time insights can hinder operational efficiency, making cost management a constant struggle.

Truckload carrier Paper Transport Inc. (PTI) experienced this firsthand when the company sought to expand its over the-road (OTR), intermodal, and brokerage offerings to include dedicated fleet services for high-volume shippers—adding a layer of complexity to the business. The additional personnel required for such a move would be extremely costly, leading PTI to investigate technology solutions that could help close the gap.

Keep ReadingShow less
indigo software screenshot WMS

Aptean adds British WMS vendor in latest acquisition

The Georgia-based enterprise software vendor Aptean today said it had acquired Indigo Software Ltd., a British provider of purpose-built warehouse management and logistics software solutions.

Terms of the deal were not disclosed, but Aptean said the move will add new capabilities to its warehouse management and supply chain management offerings for manufacturers, wholesalers, distributors, retailers, and 3PLs. Aptean currently provides enterprise resource planning (ERP), transportation management systems (TMS), and product lifecycle management (PLM) platforms.

Keep ReadingShow less
DHL graphic on online shopping marketplaces

DHL report shows seven factors about American online shoppers

Online merchants should consider seven key factors about American consumers in order to optimize their sales and operations this holiday season, according to a report from DHL eCommerce.

First, many of the most powerful sales platforms are marketplaces. With nearly universal appeal, 99% of U.S. shoppers buy from marketplaces, ranked in popularity from Amazon (92%) to Walmart (68%), eBay (47%), Temu (32%), Etsy (28%), and Shein (21%).

Keep ReadingShow less
schneider app screenshot for owner operators

Schneider seeks more business with owner-operators

Transportation and logistics service provider Schneider National Inc. is reaching out to owner-operators, encouraging them to do more business with the Wisconsin company using an updated digital platform.

Schneider says its FreightPower platform now offers owner-operators significantly more access to Schneider’s range of freight options. That can help drivers to generate revenue and strengthen their business through: increased access to freight, high drop and hook rates of over 95% of loads, and a trip planning feature that calculates road miles.

Keep ReadingShow less