Why a Customer-Centric Supply Chain Matters

The Blume Global Team | May 03, 2019

Customers have never had more choice, and providing exceptional products to consumers is becoming increasingly important. If your business wants to thrive, it needs to differentiate itself. Businesses are looking for every advantage to become more customer-centric and competitive, and looking upstream to the global supply chain can be a big win if you have the right customer strategy.

Developing a Customer-Centric Supply Chain Strategy from the Outside In

The most important part of developing a customer-centric supply chain is to start from the end customer’s perspective. That’s what we mean by “from the outside, in.” The “outside” is how your products and services appear to and interact with your end consumers—their price, availability, quality, purpose, features and more. The “inside” is the various policies and processes you need in your supply chain to deliver on that promise and create powerful, positive experiences for your customer.

Building a truly customer-centric supply chain is not easy. Your organization, together with all the parties involved in the supply chain, from suppliers and manufacturers to logistics service providers, needs to buy in. You must create new ways of thinking throughout your business and third parties. Everything needs to be re-engineered to meet customer needs and exceed their expectations. Get it right, and you’ll create a powerful competitive advantage and excellent customer advocacy.

Evolution or Revolution for the Customer-Centric Supply Chain?

One vital question you’ll need to answer: Do you completely re-engineer the supply chain so it gets radically customer focused, fast, or do you transition it slowly over time?

The first approach will be more painful and costly, but will make you more competitive and faster. The second approach is more sensible, but could give faster-moving, disruptive competitors a time advantage.

Your choice will depend on your current position in the market, where you want to be, how long you have to get there and your resources to re-engineer the supply chain. This all needs to be balanced together in the business case for a supply chain improvement program.

The Business Case for a Customer-Centric Supply Chain

You will need to conduct extensive analysis to build a strong business case for a move to more customer-centricity. Here are some of the areas to include in your business case:

  • What realistic benefits do you expect to get from moving to a customer-centric supply chain model?
  • What are your projections for time, resources and funding required to re-engineer your supply chain towards customer-centricity?
  • How will these changes enhance customer outcomes?
  • Have you analyzed the market to see how sensitive it is to a move to greater customer-centricity?
  • How do those enhancements translate into tangible competitive advantages, revenue increases and profitability?
  • Who are the main internal and external stakeholders who will need to be involved?
  • What’s the scope of the customer-centric supply chain re-engineering project?

These will be difficult questions to answer, but it’s important to involve analysts and stakeholders from across all areas of your business, and the key third parties you work with, including suppliers, manufacturers and logistics service providers.

Understand Exactly Who the Customer Is

If you want a truly customer-centric supply chain, you need to understand who you’re building it for. If you’re supplying to retailers, is the customer a consumer in a retail store, a wholesaler or a white-label vendor who’s going to brand your product and sell it through their own channels? If you’re supplying homebuilding materials, is the customer an individual tradesman, a home improvement store, a building supply company or the budget controller in a construction project management business?

You need to define your customer clearly, because each one will have different needs. A customer in a store will be focused on product pricing and availability, while a wholesaler needs to know you can deliver in bulk and when you say you will. This is the first part of going from the outside in—understanding exactly where that outside, customer perspective is coming from.

Of course, many supply chains don’t just have one customer, and that may mean developing a slightly different strategy and business case for each individual customer segment.

 

 

Define the Needs of the Customer

Once you understand who the customer is, you need to understand their needs and the way that your products help customers to meet those needs. For example, let’s assume that your customer is a project manager for a construction company. Their needs are likely to be:

  • Access to a complete range of building materials from one place, so they don’t have to waste time going to multiple suppliers.
  • The ability to purchase the most innovative, new building materials due to the demands of their customers.
  • Reliability in delivering materials to specific building sites so that tradesmen can complete construction quickly and are not constrained by a lack of products.

You can understand the needs of your customers by asking them. Set up calls to understand their pain points and issues and interview them to identify their “must-haves.” This will help you create a short list of requirements for every customer.

Common Customer Needs

Many customer needs are based around the following areas:

  • Features — the product has all of the functionalities and features that the customer expects to make it fit for purpose.
  • Availability — the customer can get hold of sufficient quantities of the product exactly when they need it, with minimal delay.
  • Variation — there is sufficient variability among different SKUs to meet the customer’s exact use cases.
  • Distribution — the product will be delivered to where the customer needs it.
  • Quality — the product performs as expected and does not have any flaws or issues.
  • Value — the product is priced appropriately for the value the customer will get from it.

Translate Customer Needs to Supply Chain Processes

The real secret of developing a customer-centric supply chain is to translate the needs you’ve identified into changes you can make to the supply chain to focus on customer outcomes. These changes will be unique to every organization, but here are some examples to get you thinking in the right way.

Building Product Features That Customers Love

  • Integrate supply chain managers with the product development team to get early sight of supply and manufacturing needs.
  • Get early prototypes from manufacturers so the product development team can test with customers, get feedback and iterate.

Create Availability So Your Customers Never Go Without

  • Contract with multiple logistics providers so you have various ways of shipping products depending on inventory levels and customer demand.
  • Build strong quantity targets into supplier and manufacturer agreements to ensure they will be able to meet demand.
  • Streamline the order management process to minimize time between product sales and restocks.

Optimize Fleet Routing for Flawless Delivery to Customer Sites

  • Use AI, machine learning and mapping software to direct products where they need to be.
  • Track product locations using IoT devices so you can identify and resolve problems and bottlenecks quickly.

Provide Value for Money Through Quality and Pricing

  • Monitor how your products are being stored and transported to ensure they arrive in good condition and are fit for purpose.
  • Understand the various costs throughout your supply chain so you can price competitively while delivering the profit margins you need.

Moving to a customer-centric supply chain is one of the best changes your organization can make to give you a competitive advantage. It takes a lot of effort, but through the right changes, you’ll deliver much better experiences for your customer, ensuring they keep coming back and helping your business to grow.

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Blume Digital Platform is data-driven and connects trading partners in a collaborative supply chain ecosystem to drive real value and growth for our customers worldwide. Our cloud-based platform is open and neutral, and its extensible architecture enables continuous innovation to forge the future of the global supply chain.

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