Supply chains need to balance costs and customer experience

Customers are increasingly demanding. They expect product innovations in shorter time frames, a higher degree of product personalisation, and high levels of customer service. They want the status of their orders, accurate delivery dates, and greater flexibility and agility from their suppliers and logistics providers.

Today’s supply chains are very rigid and streamlined for efficiency. To ensure long-term business success, organisations will need to transform their supply chain operations to be customer-centric and balance efficiency/costs and customer experience (CX). But balancing these opposing business goals is easier said than done.

Becoming a trusted partner

In an ideal world, there’s an uninterrupted global supply of raw material and product components to produce goods. The past years have shown that supply chains can become disrupted, which can lead to poor order fulfillment and, subsequently, poor CX. Poor CX limits long-term business success.

What’s important to understand is that CX is affected by the ability to manage supply chain operations within the enterprise and across the ecosystem. Building and maintaining trust is a key aspect within all relations.

In an interview, a chief supply chain officer of a global textile manufacturer said: “To become a trusted partner for your customers, you need to become a reliable partner who can deliver the right products in the right quality and quantity at the right time to the right place.”

The way to become a reliable supplier or partner is to make supply chains more resilient and frictionless. This requires better supply chain risk management. This will allow organisations to handle increasing customer demands and to thrive in an increasingly volatile and uncertain business environment.

Better collaboration for customer centricity

Improved internal collaboration is also needed. A head of customer services from a European retailer said: “Without insights from the supply chain domain, the customer experience teams cannot provide sufficient information to the customers. Without insights from the customer experience teams about customer preferences and requirements, the supply chain domain cannot improve their operations.”

Nevertheless, “the bigger organisations get, the less alignment, which will lead to more issues with negative customer experiences,” says a global supply chain manager of a consumer packaged goods manufacturer and retailer.

Customer-centric supply chains also require improved collaboration within the ecosystem, as the value for customers depends on how external collaborations are managed, such as with third-party logistics.

Goals vs. data and technology

There’s a lot of room for making supply chains more resilient and customer-driven. However, today’s manufacturers have a high focus on costs, given inflationary pressure, global competition, and higher energy costs than in the past.

Resilient, customer-centric supply chains typically come with higher costs. For example, improving the ability to execute can include supplier diversification (e.g., onboarding new suppliers) or higher stock levels. The trade-offs between the opposing business goals, costs, and CX have to be balanced.

Digital technologies such as cloud, data analytics, and automation can play a key role in helping organisations make data-driven decisions. In fact, appropriate technologies can enhance employee experience by helping to ensure employees have all the relevant data they need to make decisions. This empowers employees to implement and execute customer-centric supply chains.

As the chief customer experience officer of a global mechanical engineering manufacturer said: “Technology alone will not help to better integrate the [supply chain] and CX domain. What is needed are business transformation capabilities on top.”

Find out more about the key pillars of customer-centric supply chains in IDC’s Spotlight paper or gain expert insights by listening to the webinar.