In Part I of my Supply Chain Strategy series, I clarified the five tenets of Profitable High-Performance Supply Chains, and how they can help you redefine your supply chain strategy. Part II helped us understand how retailers adopted customer-centricity as a reaction to internet-based retailers. Part III explained the advanced capabilities companies need to develop to be part of this new economy. And Part IV provided a step-by-step model to embark on this journey towards customer-centricity.
This Part V will help you accelerate your journey. Some companies are moving at a faster pace than others, but the trajectory is different for each industry and company. All companies will eventually put the customer at the center, pushed by relentless technological innovation and new ways of value creation. Customer-centricity is the ultimate goal of each supply chain journey, but also the hardest to achieve.
New technologies will empower consumers in all industries, giving them the freedom and flexibility to redefine customer service, and putting them at the center of the supply chain network. Amazon is one company exploring new technology innovations to redefine their supply chain network, building on new technologies to invent innovative processes and flexible delivery models, and offering superior, more tailored customer service. This push for personalized service is starting to be visible across all industries.
Figure 1 – Personalized Coca-Cola Cans
How will personalized service look for your company, and what are the right steps to successfully walk through a multi-year business transformation? That is the question we need to answer if we want to accelerate your journey, since many companies get stuck along their journey and miss this critical shift towards a customer-centric supply chain.
Without external support, the journey might simply take too long or head in the wrong direction. The improvements and resulting benefits I shared in the roadmap for supply chain excellence (in my previous blog posts) do not come in a linear fashion.
There are two distinct phases in the journey towards supply chain excellence. In the first phase, internal optimization and synchronization are the focus for supply chain improvement. When companies reach a certain excellence level, the improvements start having an outward focus, first to other functions and suppliers in the value chain, and later to downstream partners such as distributors, retailers and the end-consumer.
It is this shift from inward to outward focus that pushes the boundaries for a company’s supply chain talent, as they start experimenting on very new and unfamiliar grounds. And that is where lack of experience and inertia may slow down progress, or force a company to stumble forward by trial and error, testing new approaches on a smaller scale.
Even if these experiments succeed, the results are often difficult to replicate due to a lack of organizational readiness, a wide diversity of processes or IT system limitations. The struggle to shift company operations from an inward to an external focus is a huge and challenging undertaking.
So where do you get started?
Point of View Framework
First, you need to build a Point of View (PoV) for where the journey will take you. This starts with developing a credible value proposition supported by a practical roadmap and a clear understanding of the impacted KPIs.
Figure 2 – Typical Point-of-View Framework
A Point-Of-View document translates your values and operational environment using best practices and benchmarking information. This helps you prepare your business case. Current and future states are thoroughly analyzed to help develop a roadmap for your organization, processes and systems.
A Point-of-View framework answers three questions:
- How will this initiative improve my business and what will my organization get out of this effort?
- How long will it take and when will the benefits be realized?
- What is the impact on key financial KPIs?
Templatized deliverables should include:
- Current state, future state and opportunity assessment, with value estimates
- Future state recommendations
- Validation via peer analysis and proof-points (numeric and qualitative benchmark)
- High-level solution roadmap, with prioritized initiatives
The Point-of-View is the first step on a customer-centric supply chain journey. It helps supply chain executives envision a credible way forward based on validated processes and benefits.
The second step is to develop a detailed Strategic Assessment to clarify the potential benefits of investing in technology to power the new processes. Technology helps re-define needed processes as much as the processes and pain points define technology choices. Processes cannot be defined in isolation, nor can technology be chosen independent from a company’s process maturity level.
A Strategic Assessment contains three components:
- Business case
- Detailed solution roadmap
- Organizational readiness assessment
The business case typically deepens your understanding of the strategy, processes and pain points, and delivers a detailed picture of the future state and potential benefits of the business transformation.
The detailed solution roadmap helps you prepare all required projects to support the business transformation and supply chain objectives. It clarifies how the company can deliver its supply chain strategy through new processes and IT systems, giving you a detailed roadmap for the future.
Figure 3 – Supply Chain Solution Roadmap
An organizational readiness assessment looks at softer and less tangible aspects related to the organization and its people. How well is the organization prepared to adhere to coming changes and what level of change management activities are required to facilitate understanding and adoption of future processes? If necessary, a change management program could be suggested as part of this assessment, because often organizational change is required when new processes and systems are being introduced.
A third step, the Business Diagnostic, helps define a detailed future state vision and processes, compatible with the new solutions.
A Business Diagnostic consists of two components:
- Detailed process maps of future state, assessing the gap versus current state
- A KPI framework supporting cross-functional performance measurement and tying strategic, tactical and operational KPIs impacted by the process changes
A Business Diagnostic helps you visualize a ‘day in the life’ leveraging the future solutions and what the resulting process changes will be. This helps define which KPIs to track, the benefits new processes will deliver, and the education and training for involved stakeholders, user communities and supervisors.
Figure 4 – Process Documentation Priorities
It is hard to translate the journey to customer-centricity into manageable components that consider the organizational, process and system changes that will be required to succeed. Point-of-View, Strategic Assessment and Business Diagnostic are three exercises which help companies embark on this journey, customized to their situation and process maturity level.
For more information on accelerating the journey to customer-centricity, contact firstname.lastname@example.org.