The next big things: "control towers" and demand shaping

Europe continues to set the pace when it comes to supply chain innovation, as evidenced by the presentations at the Council of Supply Chain Management's CSCMP Europe 2011 Conference held in Barcelona, Spain, earlier this month.

In one notable session, for instance, a Procter & Gamble executive described the company's initiative to set up "control towers" to help it manage its distribution networks in emerging markets in Eastern Europe, the Middle East, and Africa. In the supply chain sense, a control tower is a location that provides visibility into inbound and outbound distribution flows—much as a control tower coordinates the movement of aircraft to and from an airport. Although a number of companies in Europe have adopted the control tower concept, P&G's case is particularly interesting because executives believe that this approach will help the consumer goods giant control distribution costs and manage supply flows into emerging markets.

Another presentation, by the British industrial distributor RS Components, focused on that company's plans to adopt an unconventional approach to dealing with demand. Instead of reacting to demand signals, RS plans to engage in "demand shaping"—that is, getting the customer to buy specific products that might allow the company to better manage its own inventory pipeline. For example, if the distributor doesn't have a part in stock, it will suggest a similar one that is available. The company could also use promotions to help it manage its own resources more efficiently, such as offering free shipping for orders placed in the morning as a way to keep its warehouse labor busier during that time period.

As I have said before, European managers continue to be thought leaders when it comes to supply chain strategy—witness the continent's leadership in developing sustainability programs and shared supply chains. It will be interesting to see how many of these and other new practices spread to other parts of the world.