Typically, supply chain functions have been viewed as order-taking cost centers. Today, as businesses look to gain a larger share in a slowly expanding pie, it’s time they evolve their expectations of their supply chain and look to them to take on a more strategic role in order to help them become a competitive differentiator and drive customer preference.
An excellent example of a company that has done this firsthand and built a large portion of its successful business model around strategies geared toward the customer is Amazon.com. As many of us have personally experienced, the Amazon sales focus is centered around its consumers. However, several of their strategies can also be applied in the business to business supply chain in order to help gain customer preference and help enable sales.
Just as Amazon has increased their customer preference and brand loyalty through their evolved supply chain strategies, so can other businesses. Below are some of the strategies I suggest to consider in order to help you build supply chain expertise and gain customer preference.
1.) Predictability and Reliability; “Commit with Confidence”. Following a challenging ERP transition early in my career, I will never forget the conversation with a customer who told me, “I gave your company my order as my distributor or integrator of choice. In order to keep my business, I expect you to deliver as you commit, regardless of fluctuations caused by demand or supply dynamics and whether or not my order is to be integrated, shipped complete or shipped individually off the shelf.”
It is important in this business to not only provide accurate commitments for services promised, but to also provide the capability and process that takes into manufacturer supply dependability with competing channel demand. Whether your customers’ demand ranges from complex integration services to a single pick, pack and ship part, fulfilling agreements is a must in order to remain reliable to your customers and encourage repeat business.
2.) Reduce Touch Points and Speed Flow of Information to Customers. Minimizing touch points in the supply chain not only provides an internal productivity boost but allows information to flow quickly and allows businesses to build their supply chain expertise around speed and accuracy of transaction and data . Through this, and by providing transparent, real-time accurate data to channel partners, manufacturers can respond quicker to demand changes and channel customers can react and prepare better for delivery, installations and services of the end users.
In Avnet’s supply chain, we have used our productivity improvements to focus on improving the accuracy of the data. For example, faster throughput led to fewer errors and greater “perfect orders”. By providing less touch points, it gives time back to your employees to focus on providing solutions and services to ensure the business is best meeting customer’s needs.
3.) Speed of Delivery. Not only is it important to accurately fulfill customer commitments and work to reduce touch points in order to get information to your them faster, but you also have to be able to give customers what they need, before they need it. That might sound like an impossible task, but by building your process and investing in capabilities that help your supply chain anticipate demand, you can ensure items are available or suggested to customers that they will likely need today or in the future. By analyzing trends and looking at leading indicator data (Big Data) you can predict inventory close to your customers or collaborate with the channel to anticipate that future needs can be met.
At a minimum, your supply chain team should have the capability to analyze past demand and use that data to work with the sales team and customer to help determine what items you have available. Supply chains that are flexible and able to quickly configure and preposition complete or partial integrated solutions can significantly reduce lead time and delight your customers.
So far, we’ve touched on 3 of the promised 6 strategies that the supply chain can implement in order to help meet customers’ demands and build brand preference. Since it’s a lot of information to take in, I’ll be touching on the other 3 strategies that businesses can work on in Part 2 that will be published next Tuesday here on the Avnet Advantage Blog. If you have any questions, or if you’d like me to discuss a particular strategy before then, feel free to reach out to me at Chuck.Fries@avnet.com.