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Demand Management:
Customize Products through the
Use of Product Completion Centers
August 2013
Demand Management:
Customize Products through the Use of Product Completion Centers
2
Manufacturers and shippers are facing increasing diffculty in their ability to
bring product to market in a speedy and cost-effective manner. Companies
are driven to reduce inventory levels as the cost of carrying any excessive
fnished goods is becoming prohibitive.
To aid in their ability to get product to market in a timely, cost-effcient
manner, as well as to better leverage demand forecasts, supply chain
managers are turning to an array of non-traditional solutions. One such
program is product customization which allows for tasks such as light
assembly, kitting, as well as other value-added services to be postponed
right up until fnal distribution. This fexibility reduces the risk of carrying
surplus inventory and enables manufacturers and product distributors to
modify the base product to fully satisfy customer demands.
The motivating force behind the demand for these capabilities is to help
manufacturers and shippers have better control over inventory, help
companies better leverage their supply chains to improve proftability, and
be able to meet customer demands in an effcient and expeditious manner.
A recent survey conducted by Peerless Research Group validated the
overwhelming desire for manufacturers and shippers to reduce supply chain
costs, lower inventory levels, build more fexible supply chains, be more
responsive to customers, and create more effcient ways of getting product
to market.
Yet, curiously, while supply chain managers admit that long lead times,
rising inventory costs, inventory optimization and operational effciencies
are problematic and are in need of improvement, product customization
capabilities (12%), a potential solution to these challenges, ranked near the
bottom of the list when respondents were asked about the specifc supply
chain goals their organizations are looking to address.
The following reveals the details of our research.
Demand Management:
Customize Products through the Use of Product Completion Centers
3
Our greatest frustration in
managing our supply chain
is forecasting and keeping
inventory in balance across
our warehouses.
Supply Chain
Management; Wholesale;
$100M - $250M in revenues
Matching production
cycle lead times with
transportation lead times is
causing unnecessary delays.
Supply Chain
Management; Computers;
$500M - $1Bin revenues
Organizations Supply Chain Operations
Issues such as greater inventory optimization, reduced lead times and
cutting costs associated with inventory management were most often cited
as critical aspects of supply chain operations that organizations need to
improve. Upgrading overall supply chain effciencies and creating supply
chains with greater fexibility are also high priorities.
More specifcally, shippers and manufacturers are looking to improve
inventory management competencies, initiatives related to improving
visibility and communication with suppliers and customers. They are
further seeking solutions to better predict customer demand and align
those requirements with production, streamline inventory and distribution
operational effciencies, contain costs and operate leaner, eliminate inventory
errors and waste, improve inventory turns, and refne planning and demand
sensing capabilities. When all these functions can be done under one
roof with one system, effciencies are even greater. Curiously, imperatives
such as product customization capabilities and kitting rank low, these are
processes likely to improve lead times, lower costs, better optimize on-hand
inventory and advance overall supply chain effciencies!
Aspects of the supply chain that
organizations are looking to improve
Reduce lead times
Lower inventory costs
Greater inventory optimization
Overall supply chain efficiencies
Create a more flexible supply chain
Become more customer-focused/More responsive
Supply chain visibility
Leverage supply chain to grow profits
Streamline sourcing procedures
Shorten production cycles
Product customization capabilities
Assembly/Kitting procedures
51%
50%
43%
42%
35%
35%
34%
29%
27%
23%
12%
12%
Demand Management:
Customize Products through the Use of Product Completion Centers
4
We are moving toward a
collaborative supply chain
where each level was set up
in a pull environment with
materials ready to produce
and ship once the pull was
triggered.
Supply Chain Management;
Industrial Machinery;
$10M - $50M in revenues
On the whole, however, these organizations appear divided in their abilities
to manage inventory levels. While one-third fully assert their supply chain is
highly effective in controlling inventory levels similar percentages feel they
are average (39%) or less than effectual (27%) at managing on-hand stock.
Companys ability to control inventory levels
Good
39%
Fair
24%
Poor
3%
Excellent
7%
Very good
27%
Demand Management:
Customize Products through the Use of Product Completion Centers
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We need to identify levels
of need and changes
in demand and adjust
inventory levels necessary
to have an efect on the
optimum efectiveness
levels throughout the
organization.
VP Procurement, Retail;
<$10M in revenues
Inventory Reduction Strategies
Reducing inventory levels was a recurring theme among shippers and
manufacturers in the survey. More than nine out of ten said its important to
reduce on-hand inventory; in fact, more than half (55%) contend this issue is
critical to proftability. Yet, as we just noted, many still need to improve upon
this aspect.

Yet, curiously, while shippers claim that reducing their inventory levels is
an important goal, less than one-half (44%) say they follow an inventory
reduction plan.
Shippers and manufacturers did note, however, that they have set various
inventory reduction targets for the next 12 months, which range from 5
percent to as much as 70 percent levels in reducing inventory.
Importance of reducing inventory
Very
important
36%
Somewhat
important
36%
Not very
important
7%
Not at all
important
2%
Extremely
important
19%
Demand Management:
Customize Products through the Use of Product Completion Centers
6
Supply chains ability to manage customer demand
Understanding distribution channel
Understand market potential
Ability to recognize customer buying patterns
Understand demand at point-of-purchase
Product category buying patterns/Market shifts
!
40% 41% 19%
38% 38% 24%
34% 36% 30%
31% 39% 30%
30% 41% 29%
Excellent/Very good Good Fair/Poor
Managing Demand
Shippers and manufacturers varied in the assessment of their supply chains
ability to predict customer demand. Overall, roughly one out of three rated
their supply chain either very good to excellent or, conversely, fair to poor on
its ability to recognize customer buying patterns, evaluate demand at point-
of-purchase locales, or to forecast buying trends by product category.
Demand Management:
Customize Products through the Use of Product Completion Centers
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We ship factory direct
to the consumer with the
only middle stop being for
postponement activities,
packaging, customization,
etc.
Director, Warehousing
Operations; Food & Beverage;
$1B - $2.5B in revenues
In particular, the demand management issue rated as most important is the
ability to provide more timely alerts of demand changes that subsequently
impact operations (60%). In addition, integration of line of business supply
chain needs with their overall supply chain planning and logistics execution
(47%), collaboration within the enterprise and with trading partners (44%),
and the ability to predict the impact of marketing promotions or other
irregular activities (42%) sales activity are also considered important
aspects.
Slightly fewer than one out of fve (18%) said they have a postponement
strategy in place to help manage demand. Reducing fulfllment errors,
minimizing risk across the supply chain and enabling greater control over
inventory levels are seen as favorable results. Those who are not operating
this type of program cited cost as the main barrier for adoption.
Key demand management capabilities
Providing more timely alerts of demand
changes impacting operations
Integrating line of business supply chain
needs with my overall supply chain
planning and logistics execution
Enabling collaboration within the
enterprise and with trading partners
Predicting sales impact of marketing
promotions, or othe irregular activities
60%
47%
44%
42%
Demand Management:
Customize Products through the Use of Product Completion Centers
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We put demand forecasting
in close alignment with
production, inventory, and
distribution operations
capable of efcient low cost
customization of customer
requests.
Director/Manager of
Distribution; Food & Beverage;
$2.5B+ in revenues
We repackage current
inventory to meet the
situation. We are wasting
labor and packaging
materials.
Director/Manager of
Logistics; Chemicals; $100M -
$250M in revenues
Product Customization
In describing what they consider as the ideal supply chain, shippers cited
improved inventory management and fulfllment processes, streamlined
operations, better integration across systems and platforms, greater levels of
automation and increased visibility across suppliers and customers. Clearly
what shippers want is what product customization services can provide.
With that, a product customization capability is perceived as a highly
important function for many. Almost one-half (46%) expressed the need
to make changes to a product just prior to sending it off to distributors or
channel partners; one in four (27%) dont require this capability.

Product Completion Centers
Desires for having the right product at the right time at the right place at the
right cost all point to increased use of a product completion center concept
or model. Shippers and manufacturers are reaching for leaner supply
chains, yet need the ability to be fexible to support demand as it ebbs and
fows. This requires a coordinated product manufacturing and distribution
network that assures that some product is always at the supplier, some in the
warehouse, and some in manufacturing centers, all fowing seamlessly.
The concept of a product completion center was described to respondents
as . . .
Having a need for product customization
Sometimes
28%
Not very often
33%
Never
13%
Almost always
6%
Often
19%
Demand Management:
Customize Products through the Use of Product Completion Centers
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A unique distribution solution to postpone fnal product customization
closer to the point-of-sale. This approach consolidates multiple vendors
and services into a single facility from break-bulk to packaging to retail
delivery.
This concept, as described, was foreign to many of those we surveyed.
While roughly one out of fve (21%) said they are quite familiar with this
concept, one-half (50%) claim they are unfamiliar with this strategy.

Familiarity with the concept of
a product completion center
Somewhat
familiar
29%
Not very familiar
31%
Not at
all familiar
19%
Extremely
familiar
6%
Very familiar
15%
Demand Management:
Customize Products through the Use of Product Completion Centers
10
It would be difcult because
of federal regulations
and approvals need to
be procured prior to any
alterations (Pharma
Products). Lead times would
be an issue, impacting our
speed to market.
Director, Manager
Warehouse/Distribution;
Chemicals;
$2.5B+ in revenues
It is not on the packaging
side we have customization
issues, its more of the
product confguration side
of things.
Supply Chain
Manager; Chemicals;
$2.5B+ in revenues
Shippers and manufacturers were also equally split on how a product
completion center would beneft their supply chain operation. Just over half
(52%) contend that a product completion center strategy would be of great
value to their supply chain while those who dont believe this approach
would be as useful attribute this to either a perceived lack of need or a low
level of awareness.
Value of a product completion center
Somewhat
useful
33%
Not very useful
32%
Not at
all useful
15%
Extremely
useful
5%
Very useful
14%
Demand Management:
Customize Products through the Use of Product Completion Centers
11
Benefits of a product completion center
Improves overall customer service
Reduced order cycle times
Can quickly customize orders per client specifications
Increased supply chain flexibility for special orders
Increased responsiveness to unstable customer demand
Increased speed to market
Greater inventory optimization
Optimize inventory/Lower inventory costs
Improved cash flow
Improve product customization capabilities
Kitting customization flexibility
Streamlined assembly processes
Streamline sourcing procedures
41%
37%
36%
34%
34%
33%
32%
31%
26%
26%
25%
19%
17%
A multitude of benefts are acknowledged as a result of employing a product
completion center strategy. Critical factors such as improving customer
service (41%), having the ability to quickly customize orders per client
specifcations (36%), increased supply chain fexibility (34%), greater
responsiveness to variable customer demands (34%), and speed to market
(33%) were all features that supply chain managers are looking to improve
and were listed among the top advantages.
Demand Management:
Customize Products through the Use of Product Completion Centers
12
We outsource some of the
in-house assembly work
and fabrication as well as
shortening the lead times in
order to turn inventory over
more quickly.
VP, Procurement and
Sourcing; Automotives;
<$10M in revenues
Outsourcing
Roughly four out of 10 (41%) indicated they now outsource functions
associated with product completion centers. Among the tasks being
outsourced or are most likely to be outsourced are packaging and
repackaging (34%), build to order (20%), light assembly (18%), kitting
(17%), product customization and testing (11%), and bundling/unbundling
(10%).
In addition, one in four (27%) either currently or plan to near-shore supply
chain assignments.
Conclusions
The results to our study reveal that respondents clearly consider the ability
to sense and respond to demand as one of the more critical challenges
they face today. Yet, in most cases they are not fully leveraging the tools
and techniques to develop that capability. Postponement and product
customization is a case in point. While more than one-half acknowledge
that a product completion center, for example, would help them develop
these capabilities, only a small percentage is now using such services. The
obvious message is that theres a need for product customization services
to accomplish better control inventory, manage fulfllment processes, cut
expenses and provide profcient customer service. Yet, organizations appear
slow to recognize its benefts.

Outsourcing: Tasks being outsourced
Outsource supply chain tasks
Packaging, re-packaging, re-boxing
Build-to-order
Material supply management
Light assembly
Inventory management
Kitting
Reverse logistics and return management
Labeling
Sort and recycle
Product customization and testing
Bundling/Unbundling
Sequencing and line-side delivery
Configuration and management
Do not outsource supply chain tasks
41%
34%
20%
20%
18%
18%
17%
14%
13%
11%
10%
7%
5%
59%
17%
Demand Management:
Customize Products through the Use of Product Completion Centers
13
Methodology
This research was conducted by Peerless Research Group on behalf
of Logistics Management magazine for Ryder Supply Chain Solutions.
This study was executed in December 2012, and was administered over
the Internet among subscribers of Logistics Management.
Respondents were qualifed for being involved in decisions related to supply
chain operations and applications such as demand management, risk
management, product development, network optimization, etc.
The fndings are based on information collected among 366 top
managers holding job titles in logistics and operations (25%), supply
chain management (20%), and executive management (13%). A range of
manufacturing industries are represented and include food and beverage,
chemicals and pharmaceuticals, computers and electronics, and automotive
and transportation. Wholesalers and retailers are also included in the study.
Companies of all sizes are also well-covered.
About Ryder Supply Chain Solutions
Ryder Supply Chain Solutions is an end-to-end supply chain partner with
nearly 80 years of experience helping companies in North America, the
UK and Asia transform their supply chains. Ryder provides a full range of
services, from optimizing day-to-day logistics operations to synchronizing
the supply of parts and fnished goods with customer demand. As supply
chains become more complex, Ryder leverages fve strengths to deliver the
best in supply chain execution: know-how, lean methodologies, a proven
track record, deep expertise in key industries and a breadth of resources.
At Ryder, we understand that when it comes to logistics, Execution is
Everything. To learn more about Ryders state-of-the-art Product Completion
Centers, visit us at www.RyderSCS.com or call us at 1-888-887-9337.
Ryder Supply Chain Solutions
www.RyderSCS.com
1-888-887-9337
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