Research led by Steve Melnyk, a supply chain management professor at Michigan State University, and published in the journal Supply Chain Review, explains how millennials have disrupted the entire supply chain and created the “experiential supply chain.”
Millennials, defined as the 56 million people between the ages 21 to 36 in 2017, “want more than price and availability; they want speed, convenience and they want to be involved in the co-creation of the product,” says Melnyk. Basically, they are looking for the experience they get with a product.
What does this mean? Melnyk suggests experience might mean having exclusive tastings for the latest Starbucks coffees (and learning firsthand how coffee cherries are converted into roasted coffee beans), hand-picking ingredients for a meal or even sharing your exact measurements with a stylist to have a custom-made shirt hanging in your closet in a week.
Millennials make up more than one-third of America’s labor force, 35 percent, making them the largest generation in the U.S. labor force, according to a Pew Research Center analysis of U.S. Census Bureau data.
Millennials have replaced baby boomers as the major consumer and workforce segment, and there is a great difference in what is being demanded from businesses. Not only do they want speed and availability — they want it right now, and not next month. But millennials want even more.
The experiential supply chain
The experiential supply chain is about the experience shopping gives to the consumer. It is so much more than going to the grocery store and buying a pound of coffee. Millennials are interested in where the coffee was grown, and how the beans were processed.
How about greater social responsibility, greater transparency, and more customization? “It also helps to understand the difference between shopping, which is very experiential, and simply buying, which is not,” Melnyk said.
Each customer today wants to feel special, especially if they are paying $10 dollars for a cup of coffee. They want to think the company is doing something just for them, and that includes the service they receive, either in person or online. And this is the heart of the experiential supply chain – and a compelling reason for a company to treat the customer as a “market of one.”
Melnyk says, “Since experiences are specific to individuals, supply chains have to deliver somewhat customized offerings.” And as Melnyk explains, this “market of one” development is recent and began when technology could anticipate consumer demands.
“Companies like Amazon are finding the value of the market of one. When this occurs, these companies become the supplier that customers instinctively go to when they have a need to fill,” he said. “We could not realize the promise of the market of one in the past because the technology wasn’t ready.”
And companies will have to change their strategies to meet these new consumer demands, just to stay afloat. “With the experiential supply chain, we see the walls disappearing between the customer and the supply chain. It is the shape of things to come,” Melnyk said.
