DCM Rising

Aberdeen: Demand chain management solutions taking hold with selling organizations

Boston  September 12, 2002  Suppliers, manufacturers, service providers and distributors that have realized efficiencies in their supply chains, but that have struggled to gain similar returns from classic customer relationship management (CRM) solutions, are increasingly embracing demand chain management (DCM) technologies to cut costs and optimize sales processes, according to a new report by technology consultancy Aberdeen Group.

"The more widespread adoption of Internet technologies, combined with the challenging sales environment stemming from the lingering global recession, has caused selling organizations to heighten their focus on the demand side of the value chain," said Kent Allen, Aberdeen's research director for sell-side and demand chain management technologies and the author of the report "What Works: Sell Side/Demand Chain Best Practices - Empowering the Multichannel Buyer."

"Leading companies in numerous vertical sectors are now deploying sell-side applications that automate processes throughout the demand chain," Allen continued. "In doing so, they are speeding up cycle times, eliminating redundant activities, extending market reach and, most importantly, enabling buyers of all shapes and sizes with more choices and with greater input into, and control over, relevant business processes."

The sell-side e-commerce space has traditionally included an evolving set of applications that help suppliers, manufacturers, service providers, distributors and a variety of resellers leverage the Internet as an effective channel through which to reach and educate customers about a company and the value of its products and services. Demand chain management technologies not only guide the online selling process from interest to order but also commit to the fulfillment of orders as well as the management of post-sale processes.

In terms of adoption of Internet technologies among both large and small companies, Aberdeen found that today, for example, 86 percent of Staples Contract's new B2B customers conduct a percentage of their commerce activities online, and the company expects the online channel to drive 70 percent of all orders by the end of 2002.

Similarly, Aberdeen found that WayToBe, a small company that provides apparel and merchandise to companies like McDonald's, has decreased development efforts associated with both print and electronic catalogs by 30 percent to 35 percent, and that this streamlined process for catalog circulation has boosted revenue by conservative estimates of 10 percent.

In terms of benefits realized through the use of order management solutions, Aberdeen found that Day-Brite Capri Omega, for example, has reduced its order to ship process flow from 24 hours to less than an hour through the use of DCM solutions. And Staples Contract has generated a 30-35 percent reduction in the return of goods bought online for a total dollar savings in the eight-digit range.

"What these detailed, business process-specific case studies reveal is that IT suppliers of sell-side solutions are collectively shaking off the recent 'sophomore slump' that followed what one could consider a flashy, somewhat over hyped rookie season," Allen said. "Even in light of the continued sluggishness of technology buying, our practice expects to see accelerated adoption among end user organizations of customer-facing, Web-based technologies that sit between supply chain management and classic CRM suite applications and automate demand-driven business processes."

A free version of the report "What Works: Sell-Side/Demand Chain Best Practices" is available on the Aberdeen Web site.