How Manufacturers Are Meeting Volatile Consumer Demands

Fluctuating consumer demands have been on the rise since the pandemic.

End users (consumers) are spoiled for choice, making them more demanding with retailers.

That, in turn, puts pressure on manufacturers to over-deliver.

Brands that outsource their manufacturing can dictate terms to their suppliers.

Manufacturers need to provide value and agility or risk replacement by a competitor who plays by the retailer’s rules.

Below are a few things manufacturers can improve to meet their customer demands.

Implement demand forecasting technology

Manufacturers today are ending up with more unwanted goods that are sold at a loss.

Demand forecasting technology can bring costs down and reduce labor costs, which is one of the ways manufacturers can keep up with demands without slowing down.

Brands are now turning to manufacturers who have implemented tech to avoid waste and profit loss.

Material requirements planning (MRP) software can help you keep track of customer demand and ensure that you always have the necessary materials on hand to meet their needs.

MRP systems are designed to help businesses streamline their operations and make better use of their resources. As seen at https://www3.technologyevaluation.com/publications/material-requirements-planning-benefits-59037, it also allows firms to better forecast future demand, which can help you avoid stockouts and other production issues.

Use just-in-time manufacturing

Just-in-time manufacturing (JIT) is a production strategy in which items are created to meet demand, not created in surplus or in advance of need.

This eliminates the need for inventory and overproduction waste. Worried about waste and environmental damage, read this to improve your manufacturing practices.

Demand forecasting tech should help with JIT manufacturing

Increase the variety of production processes

Do you have a plan to change your production process if your customer requires you to change raw materials or components, for example?

If the answer is no, have production A, B, and C in place to meet customer demand swiftly and on demand.

Relying on process improvements alone is not sufficient; the supply side of the house must become much more agile.

You probably need to invest in additional equipment or hire new staff. But don’t think of it as a cost, but rather as an investment.

Research the market trends and read customer reviews 

Market research will give you a better understanding of the current trends in your industry and what consumers are generally looking for.

A manufacturer that can identify a trend before its customers (ie brands) will become a more valued partner and have the first-mover advantage to supply that client with the relevant products and services to sustain and grow the business.

Combine 3rd party market research with existing customer feedback, to get a better picture of your strengths and weaknesses.

Become a more strategic partner

Smart brands are looking for manufacturers who operate as true partners.

Become a manufacturer who can help their customers plot a more profitable and beneficial direction. Someone who is ahead of time and can see trends before anyone else.

With so many smaller providers bringing niche solutions for specific problems, the ability to aggregate relevant niche capabilities, and integrate them to drive business outcomes will be key to becoming a strategic partner.

Outsource when necessary

There may be times when you simply can’t keep up with customer demand. In these cases, outsource some of your production.

Outsourcing is a great way to grow your business without having to make a significant investment in new equipment or staff.

Of course, you will need to carefully vet any potential suppliers to make sure they are capable of meeting your quality standards.

Improve employee safety

Consumers buy from kind brands and care about the well-being of the people who make their products.

Companies have to support the mental health and well-being of employees. Measures that have proved effective include establishing new escalation channels to leadership, offering support programs for employees experiencing hardship (for example, support for single parents), and providing on-site health and mental counseling.

In many industry segments, workers have been logging longer hours to keep pace with demand. Employers should do everything they can to avoid staff burnout.

Treating people right is not just the right thing to do, it’s also great PR and customer attraction.

Summary

Since this demand and supply volatility will be the next normal, manufacturers need to change their practices.

Prioritise strategic thinking, agility, and future readiness.

For all decisions about supply chain changes and production planning, it is important to adopt a framework rooted in a probabilistic model of demand.

Contrary to what many believe, market uncertainty is a manageable risk.