On the back of Black Friday, Cyber Monday and as we delve deeper into the holiday season, promotional campaigns will continue to flood marketing channels. Reuters identifies that online sales are expected to increase throughout this period by circa 5%, with discounting in 2023 surpassing that of 2022 across several product types. Throughout this e-com heavy season, the supply chain of direct to consumer (DTC) organisations is put under pressure with an increased demand for products by one time purchasers, while maintaining a level of service to subscribers.
The relationship in general between Supply Chain and Marketing can be a tough one to get right even in quiet sales periods. Marketing helps to drive demand for the product, SCM delivers that product. When we get it right, the relationship between these functions creates a dynamic synergy that drives success and customer satisfaction. These points may seem obvious – but then, why can it be difficult to align SCM and marketing?
In SMBs in particular, interdepartmental relationships that aren’t obviously related can often suffer from little cross-functional collaboration and information sharing. This is for a variety of reasons; different skillets and disciplines, the use of different platforms for carrying out day-to-day operations, different meeting cadences, etc. And ultimately, SMBs can often operate in a constant cycle of chaos that is symptomatic of scaling. When we throw in remote working and the barriers it can create for interdepartmental collaboration, it can further silo these teams. We’ve seen a few examples this year of misalignment between the two functions:
Product Availability and Inventory Management
Campaigns:
Additional lead capture discounts via pop ups, newsletter campaigns, bundle offers via paid channels, whatever your poison. These activities can create volatility in sales. Marketing campaigns, especially during peak seasons or promotional events, can significantly impact product demand. We have seen clients operationalise these campaigns with little thought on their relevance to the supply chain stakeholders. We have seen this result in core subscription (recurring revenue) products going out of stock, thus impacting upcoming shipments to active subscribers.
When this happens, it creates a reactive response where marketing and operations are scrambling to identify when these products will come back in stock – will a “your order is delayed” email suffice? Or is the product pipeline delayed too much where a product substitution is required? We often see customer service getting dragged into the crossfires here when the issue is not predicted – they can often be the first team to flag the issue.
In either case, it kicks into motion an immediate requirement for copy (typically with dynamic content – such as the affected product), design, a list/segment (perhaps done manually via an export from the subscription platform if an integration is not set up) and a process setup in the online store to action the change. In such a competitive marketplace with a lot of product saturation, it can take very little disruption to encourage a subscriber to cancel and go elsewhere.
Upsell/Crossell:
A different, automated marketing activity – same impact on supply chain. Setting up automated upsell/cross-sell/smart cart activities with tools such as Rebuy, One Click Upsell, Aftersell or custom builds will impact the supply chain, especially when discounting is involved. SCM teams are typically blind to the setup of these campaigns – what they are, how they are triggered. Keeping this setup noted in a shared document (g-sheet) or project management platform (e.g. click up) will allow access and visibility to these campaigns that can be discussed during weekly meetings.
How can this be solved?
Communication, communication, and communication.
Real-time collaboration between SCM and marketing ensures that the availability of products aligns with promotional efforts, providing a positive shopping experience to customers. Ensuring there are cross-functional team meetings where these campaigns are clearly outlined reduces the barrier to communication that can exist between these teams – giving a window of opportunity for SCM teams to flag potential inventory issues.
Creating specific channels in slack for supply chain updates can also prove beneficial, but such updates may get lost in the noise of instant messaging; it is recommended to pair such updates with another update (such as weekly on team meetings, a core document, etc.). Sometimes hopping on a 2-minute huddle can clear up what would have taken 20 messages.
Platform Access and Maintenance
E-commerce platforms, like Shopify, are equipped with vast amounts of customer data that can be used to forecast and prepare for seasonal fluctuations. Marketing teams then leverage this data in marketing automation platforms to segment audiences and deliver targeted campaigns based on preferences, past purchases, and browsing behaviour.
Encouraging marketing teams to delve into these platforms further when strategising can give the foresight and data needed to make informed decisions – why run a promotional campaign on a product that is running low on inventory and has X amount of upcoming subscription charges?
However, for this to be successful, it matters how inventory is set up within these platforms, to ensure the correct products connected to the website are linked with the right SKUs in the backend for the SCM team. Adhering to data hygiene practices throughout inventory setup is crucial as it feeds into other integrated platforms. For example, it can be a nightmare to select the correct products for upsell/cross sell campaigns when there are several to choose from.
Complimenting Each Other:
The efficiency of a supply chain is a marketing tool in itself. We’ll get this product to you quickly, and we’ll tell you about it in event-triggered transactional updates. On the flip side, better correlation between SCM and marketing on inventory levels can work in favour for the SCM team. Too much inventory? Let marketing know to run a campaign on that particular SKU. With better communication and platform management, this becomes a lot easier to action.
Conclusion
The relationship between Supply Chain Management (SCM) and Marketing is often overlooked or taken as a given. As we navigate the peak season and continue to monitor the surge in online sales, the requirement for interconnectedness between these functions becomes increasingly evident. The challenges faced, particularly in small and medium-sized businesses, highlight the necessity for seamless collaboration and communication.
However, there is accountability required by stakeholders on both teams to actively pursue this information, dedicate time to facilitating open communication, and a drive to set up and maintain shared platforms so that each side understands each other’s processes as much as possible.
