The rise and rise of customer centricity in SCM
Barloworld’s 2014 supplychainforesight Survey highlights the growing importance of educated, empowered and connected consumers – and how the demand for personalisation is driving complexity and competition in the supply chain, Tech-Pro tells SmartProcurement.
Today, the demands of ‘information-enabled’ consumers fuel a highly competitive global economy. To prosper, supply chains need to identify, understand and respond to the changing needs of individual consumers – or, become more customer-centric in response to ‘customer power and influence’.
Customer centricity is defined by Booz and Company as the ‘re-orientation of a company’s entire operating model around the customer, increasing customer satisfaction and their own profitability in the process’. This involves ‘tailoring business streams – product development, demand generation, production and scheduling, supply chain, customer care – towards delivering the greatest value to the best customers for the least cost’.¹
Benefits of a customer centric supply chain²
92% of respondents to Barloworld’s supplychainforesight 2014 agreed that ‘customer centricity cannot be achieved without a supply chain strategy focused on delivering customer value’.
Achieving customer-centricity in the supply chain offers many benefits.
The Barloworld Survey found that a better understanding of customer needs and expectations leads to increased responsiveness to these needs which, in turn, generates a competitive advantage – ranked as the leading benefit of customer-centricity.
Other benefits include improved collaboration, visibility and cost management and the ability to manage complexity better.
The customer-centric south african supply chain²
While 90% of the supplychainforesight 2014 Survey respondents agree that ‘customer-centric companies enjoy better returns than those which are not’, many South African companies are not yet sufficiently customer-centric.
The Survey found that:
• 67% of respondents feel that South African companies are not getting customer-centricity right.
• There is a ‘perception that it is costly and time consuming to perfect customer-centricity’.
• There is a‘disconnect’ between how South African companies think and what they deliver as 68% of respondents indicated that they believe ‘they engage with customers sufficiently’.
• Only 10% of respondents feel that their own suppliers are ‘customer-centric’.
• Respondents ranked the leading constraints to creating a customer-centric organisation as a ‘lack of appropriate skills’ – highlighting the need to source or develop the right Supply Chain skills and competencies – and ‘out-dated, silo-based corporate cultures’ that lack leadership, alignment, innovation and strategies to deal with change.
Creating customer-centric supply chains
Booz and Company’s research shows that the key to building a customer-centric supply chain lies in ‘striking the right balance between customer pleasure and company profit’.¹
Achieving this balance requires 6 winning traits:
1. Customer life-cycle view:
‘Life-cycle marketing’ –which creates a ‘holistic and continuous view of each customer’s evolving life-cycle needs as he or she moves through transforming life experiences’, sometimes using technology.
2. Solution mindset:
A shift in mindset from selling ‘off-the-shelf’ products to delivering customised solutions that solve specific client issues, while turning a profit.
3. Advice bundling:
Customer-centric companies engage in continuous, ‘no-obligation’ dialogue with a customer, starting before purchase and continuing indefinitely, post-sale.
4. Can-do customer interface:
Empowering front-line staff to solve customer problems immediately – without requiring management input or authority – differentiates customer-centric companies.
5. Fit-for-purpose business processes:
Avoid organisational complexity by tailoring business streams so that complicated product offerings are ‘diverted to more customised streams, isolating complexity and minimising costs’.
6. Collective, cross-functional effort:
Unprecedented collaboration across all business functions, supported by cross-functional teams of employees working together to deliver a streamlined client experience.
‘There is only one boss. The customer. And he can fire everybody in the company from the Chairman on down, simply by spending his money somewhere else’.
Sam Walton, Founder of Wal-Mart
Is achieving customer-centricity currently a strategic focus for your supply chain? What strategies do you have in place to achieve ‘customer-centric’ goals? What challenges do you face? Share your thoughts by joining our discussion on LinkedIn.
¹: ‘The Customer-Centric Organisation: From Pushing Products to Winning Customers’, Booz and Company, 2004
²: 2014 supplychainforesight, Barloworld