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Part - II

Tomorrow's Focus ­ The Consumer

The old marketing lesson of the four "P's" (Product, Price, Place, Promotion) has dissipated and Lauterborn's four "C's" (Consumer, Cost, Convenience, Communications) have triumphed. Companies must: focus on the consumer, not the product; understand the cost to satisfy the consumer, not the sticker price; learn how the consumer wants to buy ­ convenience, over determining the place of purchase; and concentrate on communications with the consumer, not just promotion.

When VICS developed the Quick Response supply chain initiative concept and related standards more than ten years ago, the consumer goods industry believed supply chain integration would be fairly advanced by now. The initial technological breakthrough, a label and communication information standard for individual product sales, paved the way for better communication among trading partners.

To satisfy a consumer-driven marketplace, companies must move beyond the singular mentality of intra-company optimization and focus on how inter-company business process synchronization can transform consumer demands into consumer satisfaction.

As with a single company, core competencies of each component of the virtual organization are evaluated objectively to eliminate inefficiencies. The virtual organization managers will continue to re-engineer best practices, while also:

• building replenishment programs based on consumers pulling the product through the supply chain from the manufacturer

• employing new forecasting methods that reflect total pipeline visibility

• investing collectively in technology and equipment to capitalize on market opportunities

Establishment of the virtual organization is challenged by participants' unwillingness to relinquish any degree of control, which is a symptom of the lack of trust among trading companies. As dependencies among companies increase, the tolerance for errors decreases. For example, a manufacturing facility that schedules materials to arrive in a Just-In-Time (JIT) environment may have to shut its assembly line down if weather conditions prevent the materials from arriving on time. On the other hand, the JIT environment normally enables the manufacturer to continuously deliver desired products at a lower cost to the consumer, so the advantages outweigh the challenges. Over time, the manufacturer is able to lower inventory capital costs, reduce raw material storage and be more responsive.

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* Alan J. Dabierre is the president and chief executive officer of Manhattan Associates, Inc., a world leading provider of consumer supply chain execution systems.