At the advent of a new year, it is a good idea to not only take stock of what has happened but also look ahead and consider how things will likely pan out. In a new, supply chain-focused blog series, we will do this by exploring the key supply chain trends we will see in 2023.

This final article in our series considers the importance of product customization and how supply chain digitalization best enables this trend.

Product customization

Brands used to develop new merchandise and launch them to the major markets looking for the next “winner” and then extending and expanding variants to suit local market preferences. However, brand is no longer the key driver. Unforeseen competition and developing trends and capabilities are changing the landscape.

Changing expectations have empowered the consumer to reject traditional patterns. As digital natives, millennials and Gen Z respond to marketing differently than previous generations. Online has shifted how consumers pick and interact with their favored brands with new innovations driving new ways for commerce channels to sell their products. Disruptor brands are recognizing this and transforming the retail panorama accordingly.

Possibly, the most evident transformation is the demand for product customization and configuration, a behavior creating profound instability in the consumer products world. It generated entirely new merchandise categories, increased pressure on Stock Keeping Units (SKUs) catalogs, and facilitated growth in many niche markets.

Modern consumers demand highly customized goods and are willing to pay a bonus for exclusive products. They wish for a more personal relationship with the brand. Therefore, the goods, packaging, and delivery must showcase excellence, exceptional quality, and high service levels.

The value of a brand is now extended into the quality and flexibility of the fulfillment, delivery, and return of a product.

Digitalization

Digitalization of the end-to-end value chain is modernizing how consumers discover and connect with brands and how businesses get to know and get involved with consumers. Today’s marketing principles and mass channels are breaking into a new understanding of modernity!

Consumers have shifted en masse to shopping via digital channels rather than bricks & mortar stores. Accordingly, they expect a personalized shopping experience and product assortment diligently curated for them. The blend of these trends creates tension in the supply chain. It sends a warning signal to an organization’s fulfillment capability, pushing them to produce and deliver a fresh, new, exciting alternative.

Demand from future brands and influencers today is responsiveness in the strategic, tactical, and execution capabilities. Businesses can embrace digitalization and its impact on their supply chains through:

• manufacturing innovation
• logistics and transportation reconfiguration
• product flexibility
• new capabilities in manufacturing innovation
• the company’s reorganization for long-term success.

They should combine competitive strengths with Industry 4.0, utilizing robotics and automation capabilities to redesign and reconfigure how they produce and fulfill while having maximum control over the consumer experience.

How is digitalization enhancing product customization?

Trends in consumer behavior have significantly shifted over the past decade, accelerating through the pandemic and resulting in increased expectations, a need for greater flexibility, and an increased product range. These trends are driven by consumers’ expectations of choice and omnichannel, shopping everywhere, anytime – demanding rapid adaptability and accurate deliveries.

Innovative supply chain executives are responding to providing this increased portfolio by dynamic fulfillment. This activity postpones, where it can, product configuration further down the supply chain to increase inventory flexibility and speed through agile, intelligent planning.

Leveraging the new capabilities of a data-enhanced world has pushed digitalization to the forefront of intelligent supply chains. These leveraged approaches increase:

• efficiency and business agility
• cost reduction
• customer experiences
• the number of new innovative products
• the quality of configurable services quality
• the time-to-market.

Expect to see these trends continue to improve collaboration between functions, prioritize sustainability, heighten company culture, and drive growth.

Check out the other blogs in this series:

• Supply chain trends 2023 #1: Automation and risk
• Supply chain trends 2023 #2: Visibility and adaptability