Marketing for Manufacturing: Closed-Loop Strategy
August 28, 2012
Improper Communication Causes Problems in Distribution Chains
Distribution chains are complex networks, and that issue is further aggravated by the lack of communication. The closed-loop strategy, a means of improving communication and bolstering trust throughout the chain, is one way to alleviate this issue.
Unfortunately, the majority of distribution chains do not operate in a closed-loop environment. Interactions typically happen in a one-way fashion, with each member of the system communicating directly with their downstream partner. Original Equipment Manufacturers(OEMs) deal with distributors, distributors work with vendors and vendors sell products to the customer.
For the OEM, this is a bad proposition. That means they have little idea who their customer is, while they also forfeit some control of their brand along the way. All vendors care about is selling to customers, and distributors’ top concern lies only in offloading an OEM’s goods as quickly as possible. Trying to work within the parameters of a brand is an additional complication, and frequently leads to a gap between how an OEM thinks of its brand and how consumers perceive it.
How to Align Communication Within your Chain
These gaps most frequently stem from communication issues. If one partner in the chain is directly downstream from the other, they have little means of communicating backwards. That means that vendors may have little contact with OEMs or that manufacturers have no touchpoints with the people even buying their products and services. So what can OEMs do to rectify the situation? How can they get their various distribution channels in line with their own objectives and collaborating with each other?
As previously mentioned, one possible solution is the closed-loop strategy. This creates a cyclical environment that connects the dots between various distribution partners, ensuring open communication throughout. For example, in a closed-loop environment, vendors can work with OEMs to provide them with solutions to maintain brand compliance. At the same time, they can also glean more insight about their customers. A closed-loop system makes it easier and more beneficial to work together with other distribution partners.
If you would like to learn how the closed-loop feedback system answers the problems that many manufacturers face and how to integrate this solution, please download our latest white paper: