Companies invest heavily in marketing and demand generation. While this does create higher demand, more often than not they fail to fully capitalise on it, almost always for the same reason: inadequate availability. Too often, companies overlook the supply chain that ensures products are available when and where the consumer wants them. This article explores how an integrated approach - marketing + supply chain - can help companies achieve sustainable growth.
Marketing fuels demand — But that’s not enough
Marketing and branding have always been crucial for driving demand, shaping perceptions, and even creating entirely new product categories — for example, smartwatches only became mainstream after Apple positioned the Apple Watch as both a fashion accessory and a health tool. Reflecting this importance, global advertising and promotion (A&P) spending surpassed $1 trillion in 2024 and is projected to grow ~10% annually, underscoring the pivotal role of marketing and brand building.
However, all this investment pays off only if the consumer actually finds the product in the store. With unpredictable demand and countless choices across brands and variants, consumers switch quickly if what they want isn’t available. Yet companies often neglect this, as supply chains remain misaligned or under-prioritised.
Why the supply chain fails to deliver
Traditionally, supply chains are viewed primarily through a cost lens, with companies focused on cutting expenses and improving efficiency. As a result, their core purpose, ensuring products are available at the right place and time — is often compromised in the pursuit of cost savings.
{{/usCountry}}Traditionally, supply chains are viewed primarily through a cost lens, with companies focused on cutting expenses and improving efficiency. As a result, their core purpose, ensuring products are available at the right place and time — is often compromised in the pursuit of cost savings.
{{/usCountry}}A widely cited business school example is Nike’s supply chain challenges in the early 2000s ⁽¹⁾, when a cost-driven inventory and planning system resulted in mismatched supply: some products were overstocked while high-demand models were missing from shelves.
In situations like this, companies often conclude that the problem lies in insufficient production capacity. They respond by investing crores in machinery and new plants. To recover these costs, they double down on cost-cutting measures, negotiating hard with vendors, increasing batch sizes, limiting inventory at locations, further entrenching the same problems.
Despite these efforts, the fundamental issues persist: companies remain trapped in a cycle of stockouts, excess inventory, and lost sales.
The way forward: Agile, demand-driven supply chains
To address these challenges sustainably, companies must build agile and responsive supply chains that continuously align with market demand and support marketing efforts effectively.
The biggest obstacle to agility is the reliance on forecasts – based on historical data, sales team input, and intuition - which are inherently inaccurate. This hit-or-miss approach often leads to excess inventory in some locations and stockouts in others.
Instead, companies need to rethink how they operate:
Shift from forecast-driven to market-pull-driven systems
Maintain inventory buffers at aggregated points, such as plant warehouses, where forecasts are more reliable / avoid stocking maximum inventory at the point of purchase, where demand is hardest to predict.
Align the supply chain to respond to daily pull signals from the market
By keeping inventory in aggregate buffers and letting it flow in response to real daily demand signals, companies gain flexibility to move stock where it’s needed most. As downstream nodes pull from the buffer, upstream nodes replenish it — ensuring the right products are available in stores when customers arrive.
This demand-driven system minimises both stockouts and excess inventory - without requiring significant investments in equipment, manpower, or technology. It only requires reimagining the supply chain and its strategic role.
Our experience shows that companies adopting this approach have achieved:
- Increase in product availability to high 90s
- 10%–15% increase in sales
- Without additional cost or inventory - boosting overall profitability
Conclusion
Marketing and supply chain management are the two wheels that drive business success. Marketing creates demand, while the supply chain ensures that demand is fulfilled by delivering the right product, at the right time, in the right place.
It’s time companies start treating the supply chain as a strategic enabler of growth, not merely a cost centre to optimise. Done well, it can be a game-changer for any business.
Authored by D R Kartikayan, Associate Partner, Vector Consulting Group
References
[1] https://www.henricodolfing.com/2022/10/case-study-nike-i2-supply-chain-management.html
Note to the Reader: This article is part of Hindustan Times' promotional consumer connect initiative and is independently created by the brand. Hindustan Times assumes no editorial responsibility for the content.