8 Ways To Make The Supply Chain More Customer-Centric

This article by Richard Howells, SAP, is a great example of customer-driven operations. Original is here.

The 21st-century consumer is always on, always connected, and doesn’t make a move without consulting the Internet. The millennial generation is emerging as a major demand driver, with access to huge amounts of information about products and trends on “what’s hot and what’s not,” via social media.

Take my teenage son (please!!!) for example, a basketball player in his high school. Every season, he wants the latest and greatest sneakers that will make him run, jump, and rebound better and faster. So what does he do? He turns on his tablet to go online to check out what’s available. And here he can not only see and buy what the NBA stars are wearing, but he can also customise the shoes to match his school colours and have his name and team number stitched into each sneaker. Through the advent of omnichannel sales, he can (once he gets my credit card of course) order from anywhere, on any device he has access to. Long gone are the days of the only option being the white high top!

And what happens when my son posts a pic of his new kicks on his social networks? Inevitably many of his friends are going to jump on their devices and order a pair for themselves. Is your business prepared to deliver to meet demand when your product is deemed “hot” and goes viral among the millennials?

Point of sales at the store is not the ONLY source of data to drive the replenishment process. It is no longer good enough just to be “demand driven.” We need to be “market driven.” We not only need the information from orders and sales forecasts, but also from weather forecasts, traffic reports, market share reports, and customer sentiment. We need to know what is being tweeted about our products, what and where products are hot, and what is being said, both good and (sometimes more importantly) bad via social media. This involves all the sources of data that describe the market and where the market is going at the most granular level.

Why is this important? Because the customer, or consumer, is becoming more demanding. If I order something online, I expect delivery on the same day or at least the next day. That introduces the need to think about demand differently. It is not possible to compete with aggregated demand for a product family in a region. To respond with speed, we need the information at the detailed level, so that it can be aggregated and analysed to service a channel, market sector, customer, and specific order.

It sounds so simple, but to deliver those custom basketball sneakers to my son before he gets impatient, how high does the supply chain have to jump to enable him to make that three pointer?

Here are a few ways that we have to re-imagine this business process to be centred around the customer:

1. Design a customisable sneaker, with all possible allowed combinations of colours
2. This design is handed over to both the sales and manufacturing organisations, to enable customers to design their own sneaker, and to the manufacturing site to produce it
3. At the moment an order is placed, through any sales channel (in store, online etc.), the specific demand is instantly visible. The customer can specify unique text or numbers to be stacked onto the sneaker. They can also determine the shipping rules and instructions
4. The specific order is planned and scheduled at an appropriate manufacturing facility
5. The production line is set up to create all combinations of the sneaker for a “lot size of one.”
6. At the final manufacturing step, the unique text is stitched onto each sneaker
7. The logistics processes are configured to uniquely pack and shipped to the desired pickup or delivery location based on the shipping rules determined by the customer
8. Processes need to be in place to capture real demand signals coming from social media as demand for these custom sneakers takes off in certain markets, regions, or even cities

This is just a simple example of some of the business processes that have to be adjusted, and how leveraging a digitised extended supply chain can deliver a personalised solution by putting the customer in the centre of the process.

The benefits of this scenario are significant:

• Improved customer service and engagement
• Stronger competitive differentiation
• Compelling and holistic brand experience
• Improved revenue