Brands in every category are feeling the pain of soaring costs. Not only is the cost of digital advertising and customer acquisition rising due to privacy changes, but inflation and supply chain pressures are also upping the cost of product manufacturing and transportation. Consider this: Shipping rates for major east-west trade routes are 80% higher than they were a year ago.
There isn’t much brands can do to change these external factors. But they can do something internally: Improve the collaboration between their marketing and supply chain departments.
While these two units might seem like an unlikely pair, an improved union between them could be the key to not just surviving but thriving during a time of supply chain upheaval that shows no signs of slowing.
Don’t silo marketing and logistics
When marketing is disconnected from supply chain and logistics, misalignment and mistakes that increase costs to you and your customers are likely to occur.
The ability to promote expedited shipping options is a major boon, but if marketers lack access to data showing what inventory is available, where it is located and which products are anticipated to sell out when, they may mistakenly advertise items that are not in stock. This impacts the consumer experience, damages the brand trust marketers worked hard to build and contributes to wasted ad spend.
When DTC dog food brand Sundays for Dogs found itself running low on inventory ahead of the 2021 holiday season due to supply chain bottlenecks, the brand’s marketing and logistics teams quickly strategized solutions that would enable them to keep campaigns active.
“With demand far outpacing our supply, we knew we’d need to adjust our marketing to avoid a stockout,” said Kelsey Chabolla, Sundays for Dogs’ director of logistics and supply chain. “We decided to prioritize our subscription offering instead of single-sales transactions so we could maintain satisfaction with our existing subscribers and keep sales volume steady until inventory was replenished.”
If marketers do allocate media budgets to promote products delayed by sluggish supply chains, they may be forced to offer unplanned discounts, or shift strategies to advertise products that arrived late or were not part of the original campaign.
Lower inventory can also lead to lower digital media performance. The reflex to shut down a campaign early to account for out-of-stock items can actually hurt future campaign and brand marketing metrics.
Pave the way for excellence
The rapid shift to ecommerce spurred by the pandemic has created an unprecedented opportunity for many brands, and the availability of integrated software and systems that offer inventory, supply chain, and operations data means they can better tie media to business objectives and drive overall revenue.
Chabolla regularly shares SKU-level fulfillment data with her marketing team to plan for future releases. The groups analyze which products are most popular within certain customer segments and regions and develop tailored marketing campaigns based on their findings.
A closer working relationship between marketing and supply chain teams can lower costs, boost customer loyalty, cut delivery times and product defects, and more quickly resolve customer issues.
Here are some key areas marketers must understand to make this collaboration successful:
Fulfillment network: This includes where items are stored and fulfilled, often across multiple, distributed locations, and how that translates to shipping distance and timelines. Better insights into tracking product orders and shipment data help marketers more properly plan their promotional calendars.
Forecasting accuracy: By better understanding forecasting and tracking costs, marketers can increase the profitability of their campaigns based on fluctuating pricing and costs to procure materials. This can translate to adjusting pricing decisions for future promotions.
Merchandising and SKU data: Understanding SKU data, especially in cases where your brand might be trying to scale back its portfolio, helps marketers ramp up or down promotion for certain items depending on their performance and priority.
The 3 As: Audience planning, activation and analytics are areas in which strategies might need to evolve with input from supply chain. Understanding where and how your key customer segments are shopping is critical for promoting the right products to the right people at the right time.
The new rules of engagement
Here are some tips for bringing your marketing and supply chain teams closer together.
Establish joint KPIs: Marketing and supply chain teams must focus on business initiatives instead of their own individual KPIs. They canperform planning and goal-setting sessions with leaders from both departments to iron out joint objectives they can each play a role in fulfilling.
Create closed-loop communication: Implement processes that promote communication and knowledge-sharing between marketing and supply chain. For instance, marketing can communicate in advance their promotional calendar, seasonality trends and the channels through which products are sold. Supply chain teams can then help educate on the logistics required to meet various delivery options and provide feedback on how the supply chain-related costs of a promotion affect the bottom line.
Share all the data: Supply chain teams should provide their metrics to marketing to help determine which promotions worked best via which channels. This helps marketing adjust their campaign planning and communications based on popular and less popular items. The two groups can also work together to identify loyal, repeat customers who might warrant quicker shipments even if it comes at a higher cost, or if they’re willing to pay for expedited shipping. The same is true in the reverse, where less loyal customers might necessitate more cost-effective logistics.
Successful brands are already increasing collaboration between marketing and supply chain to drive success. Doing the same will help your band stay agile so you can continue to grow revenue and customer delight even amidst a dynamic economic landscape.
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Ben Eachus is CEO and co-founder of Flowspace, the software powering ecommerce fulfillment for brands. Ben was an early employee at The Honest Company, where he led supply chain operations, and he founded Flowspace to help brands meet their customers’ post-purchase expectations in the real world.
