Dissolving the wall between the customer and supply chain has never been more important for businesses.
The rippling effect of digital technologies and the way they have transformed customer behaviour (and expectations) means that businesses need to fill any gaps in their supply chains that can’t meet a higher standard of customer service.
Not long ago, before the proliferation of digital technologies, there was a middleman between the customer and the supply chain. If there was something wrong with a customer order, customers communicated with the marketing department who would then trickle the information through the sales and operations teams to update information on orders.
It’s not hard to see that this system simply does not work in a constantly evolving landscape. Supply chains today don’t have the time to wait for information to trickle through departments. Supply chain managers and despatch workers need the information instantly and in real-time and that's why in this post we look at the nature of the customer-centric supply chain.
1: Know your customer
It’s easy for businesses to overlook who their customers are when they feel as though a product they have is good for everyone. Sometimes looking at raw, objective data can be surprising and it could potentially provide you new insights into who your customers actually are.
- Do you have any single channel customers?
- Do you have multi channel customers?
- Which customers are the most profitable?
- Which customers are the most engaged?
Maybe your customers aren’t concerned with flexible delivery, in that case you can probably close this window in your browser and go one with your day. But if you have customers that do care (which we dare say takes up majority of end-users and distributors today), there is a certain level of customer service and communication that is expected.
So what’s the first step? Put yourself in your customer shoes. What do they want? If they want reliability, prove to them you’re reliable. If they want speedy delivery, prove to them you have the fastest supply chain out there. They don’t need to know about the in’s and outs of how your intralogistics and supply chain works, all they want to know if that they ordered their goods on a Monday night and they were ecstatic to receive it on Wednesday morning.
The customer-centric supply chain also may require you to build segmented customer strategies with varying policy and execution. This obviously depends on the nature of your business, but you don’t want to lose business to Customer A when you’re catering to Customer B.
2: Work on velocity in your supply chain
Along with the transition of customer expectations supply chain strategy has had to shift from cost efficient to customer purchase location. This means that the business objectives across the whole businesses need to take the customer experience into consideration.
Because it’s fair to say that not every business has the sheet grunt and power behind a supply chain that runs as well as the Amazon supply chain, regular businesses need to make this work at their own scale.
In an article in Inbound Logistics, Aaron Baker, Sr Director of Supply Chain Development at Damco writes that if a business wants to save time and money when meeting customer demands, they need to focus on the velocity of products. Aaron states;
“The velocity of products moving through the supply chain and being available when and where a customer wants to purchase them is a combination of lead time, safety stock policy, and demand variability. In many respects, the math to calculate the velocity is easy; it's the demand variability input that holds much of the complexity. In many industries, we are challenged to design and execute a supply chain that is agile enough to respond to demand while being cost efficient.“
To get this right, Aaron states that you should think of a supply chain like “dots on a hill where a ball is rolling”. The hard part is establishing where the dots go, and how to get the ball there in the most efficient and cost effective way.
3: Assess everything with data
If you’re goal is to truly be customer-centric, then you need to conduct data-driven analysis of your success and failures all throughout your supply chain.
Did you know that less than 10% of manufacturing companies are effectively using data to manage cross-functional interactions and costs? And did you know that the reason behind this is because it’s much easier to start a new strategy than it is to keep it going?
If you want to be successful in a customer-centric era, your supply chain has to have a clear focus on outcomes. Set your supply chain up with a series of scorecards the meet particular business objectives. Use data and business intelligence to rate your performance in these fields so you can adapt and change anything lacking in your supply chain.
Executive changes at the most important moments of truth. There would be no point getting through steps 1 and 2, and then faltering when it comes to assessing outcomes. Your supply chain can either meet the goal, or it didn’t. Data will help you establish why the outcome was or wasn’t met, so don’t be afraid to utilise it at every turn.