Millennials and the Market of One Redefining Supply Chain

Last Updated July 15, 2019

Each generation reshapes the world in its own image, from culture to politics to commerce. In the aftermath of World War II, the Greatest Generation and its famous offspring, the Baby Boom, spurred revolutionary change in how Americans spent their time and money.

The allure of convenience and must-have gadgets, coupled with the dawn of modern advertising, drove advances in manufacturing and distribution as businesses sought a slice of the burgeoning consumer market.

New research by a team of Michigan State University faculty members highlights how the economic might of the Millennials – now the nation’s largest generational demographic – is transforming the customer experience and, with it, the supply chain.

“Millennials have replaced baby boomers as the major consumer segment, so we are seeing a change in what is being demanded,” said Steven A. Melnyk, Professor of Supply Chain and Operations Management and lead author of the MSU research, Serving Up An Experience, published in Supply Chain Management Review in February 2018.

“Millennials want more than price and availability; they want speed, convenience and they want to be involved in the co-creation of the product,” Melnyk told MSU Today recently. “This experiential supply chain, where customers are controlling more than they ever have before, involves much more than what they’re buying. It’s about the experience they get with it.”

The ‘Market of One’

That experience, at its core, is designed to make the customer feel special, as if she or he is a “market of one,” according to Melnyk and his colleagues at MSU’s Eli Broad College of Business, Assistant Professor of Marketing Clay Voorhees and Nick Little, Managing Director of the Railway Management Program.

This can take many forms: custom-tailored clothing shipped seasonally; fully prepped, chef-made recipes delivered weekly; and invitation-only coffee and wine tastings.

Today, the onus on fulfilling a consumer’s unique desires does not lie solely with retailers. Melnyk, Voorhees, and Little highlighted how the accelerating trend toward customer experience is redefining supply chain management:

• Supply chain managers must communicate directly with customers, rather than with marketing teams, to gain a precise understanding of consumer needs.
• Supply chain operators must effectively deliver the services or products intrinsic to the promised customer experience.
• Key performance indicators along the supply chain must extend beyond traditional measures, such as cost, and incorporate values such as innovation and responsiveness.
• Supply chain leaders must learn to manage along the edges of the logistics operation, collaborating with decision-makers in engineering, finance, marketing, and strategy.

The MSU team delved into the theory of the experiential supply chain as an offshoot of its work on Supply Chain Management – Beyond the Horizon, a joint research project of APICS and Michigan State.

“Companies like Amazon are finding the value of the market of one,” Melnyk, Ph.D., told MSU Today. “When this occurs, these companies become the supplier that customers instinctively go to when they have a need to fill. We could not realize the promise of the market of one in the past because the technology wasn’t ready.”

Digital Wallets to Drones

Thanks to their smartphones and other mobile devices, Millennials’ thumbprints are all over the retail landscape, from when and where 21st-century consumers expect to be able to make a purchase (anytime, anywhere) to when and where they expect their purchases to be delivered (right now, right here).

Savvy businesses seek to satisfy this need for speed with features such as digital wallet services, in-store apps and the prospect of delivery by drone. Companies that ignore this new marketplace reality do so at their own peril.

More than 1 in 4 Americans were born between the early 1980s and the start of the new millennium, according to the U.S. Census Bureau. Those 83 million Millennials, who surpassed the roughly 75 million boomers as the largest living generation in 2015, pack a spending power punch estimated at $2.45 trillion.

This financial muscle gives Millennials a megaphone in any conversation about the future of the supply chain. The generation already has influenced the shift toward sustainable operations, diversity and equality, and corporate social responsibility.

“While the changes in technology have facilitated the advent of the experiential supply chain, it is the change in the market and the advent of the Millennial that has really propelled this type of supply chain,” the MSU research noted.

“With the experiential supply chain, we see the walls disappearing between the customer and the supply chain,” Melnyk said. “It is the shape of things to come.”