The business world does not like uncertainty, however, in today’s highly competitive environment, the ultra-connected world allows consumers to use sophisticated approaches for customised purchase creating unpredictable demand patterns, in both B2C and B2B scenarios. The unpredictable demand patterns are an outcome of highly demanding consumer who can access virtually countless purchase options.
At the same time, when the consumer can access, compare and contrast multiple products and services and choose the best option, businesses are forced to reinvent themselves. Organizations need to rethink supply chains and collaboration strategy with supply chain partners to provide cos effective solution to the customer needs. Most of the firms operate based on a customer-centric approach, which with highly fluctuating demand can be extremely challenging and costly. Nonetheless, it is needless to say that keeping current and winning new customers is of utmost importance for a successful business. However, the same key element of business strategic objective keeps one question open; how to achieve a competitive edge to attract new customers and over-satisfy existing?
It is not a new idea to refer back to Porter’s Competitive Strategy, which frames potential business positioning in the market through either cost leadership, focus or differentiation. Following Porter’s successful popularisation of Competitive Strategy theory, there have been many modifications of his approach to strategy. As a result, one of the main themes adopted by the most organisation across the business world is the differentiation, in a wide range of forms, including extensions to cost and focus elements as well.
Nevertheless, Porter’s framework with all its good, brings limitations and will not provide direction on how to achieve a competitive edge in the environment in which everyone try to be focused, different or cost leaders. Therefore, some of the hugely successful organisations seek alternative, the strategic move which can create sustainable competitive advantage – the view is that unpredictability could be the answer; the mastering of Golden Circle; the concept of reinforcing reasons of businesses activities derived from consumer needs as the prime determinant of strategic direction.
However, it is not enough to become unpredictable; doing just that can cost the trust of business’s partners and investors. It has to be done in a certain way, which will not undermine the current business strategic position and would not exhaust resources. The key to success is supply chain capability which might be already developed or is starting to emerge in the organization. The capability of responsiveness to the demand signals which can come at any time in any form requires business flexibility and agility. The environment in which time to market is critical, providing excitement through redesigned cost-effective products and services which serve more than basic requirements is “must have” feature. That is the main reason why most businesses need to achieve efficient readiness for unexpected demand, the unexpected volume and complex product or service structure. The unpredictability, in other words, is the new constant. The crucial part of a business which needs to stand up to the challenge is supply chain. The supply chain needs to acquire the innovative capability of quick resources deployment in almost unknown configuration to allow business efficiently respond to the demand signals. The innovative flexibility and agility come as two central aspects of the ability to react promptly to changing market requirements – to some extent it can be referred to as leagile supply chain; the combination of lean principles and the agile response of the system; however with the distinction of innovation competency as its central focus.
Therefore, if the business can respond to challenging, continually changing demand signals, fluid supply chain network configuration, including vertical integration and dense data interchange, is most likely already established and ready for strategic response deployment as and when required – the supply chain capability of crucial importance for executing unpredictability strategy.
In the same way as responding to fluctuating and chaotic demand, the supply chain capability built to create agility and innovative flexibility can support strategic unpredictability of an organisation. The strategic unpredictability refers loosely to as disruption; it is an alteration to status quo of the services or product in a given market. What is more important, due to existing supply chain capability, the disruptive change can be repeated providing benefits of competitive edge in the long term as the innovative flexibility and agility is embedded in the supply chain and strategic organisational capabilities. Therefore, the digitalisation, vertical integration and analytics are fundamental for successful operations of such fluid supply chain.
The depth and breadth of market intelligence are crucially important for the successful deployment of unpredictability strategy underpinned by innovative flexibility and agility of the supply chain. To state the obvious, the market intelligence is the integral element without which disruption is impossible to take place. The rapid technology development and associated cost reduction of technological solutions allow a business to access analytical tools required to uncover hidden market trends and venues for profit increase. The abundance of data for operations reconfiguration and marketing is existing at business fingertips; supply chain data, social media, market reports, online sources – all of the information is available, but the value of it is most likely hidden.
Therefore, analytical tools need to be deployed; wide range of analytics, including big data along with AI applications, become critical tools for business management, not only on the operational level, where applied with robotics to increase efficiency and productivity but also on a strategic level, providing information where future market trends and potential sweet spots are most likely to appear.
Data and analytics come with its challenges; those can be addressed through clear vision and realistic expectations of data analytics and deployed tools. The organisations need to be clear as to what it wants to achieve and how the use of analytics will benefit their operations. Regardless of business aim, the use of analytics to the extent which will drive constant business reconfiguration requires mind-set change and needs to be inspired by the leadership and culture of the organisation. It is a journey from being a knowing organisation (relying on expertise) to learning organisation (continually learning and changing). Therefore as any change, it can be, and in most of the cases is challenging.
In summary, adopting new technologies to supply chain as a whole and the analytics of market intelligence and clear and consistent internal data provides the potential to uncover an opportunity for disruptive innovation. As a result, the unpredictability strategy can be a cost-effective approach to market differentiation in the long term. However, unpredictability can only be proved profitable when supply chain capabilities already provide innovative flexibility and agility in response to current highly fluctuating and changing demand.