Traditionally, the business world operated in strict silos. Customer service was customer service, supply chain was supply chain, and never the two should meet. But in today’s corporate climate, supply chain executives cannot afford to be self-contained. What happens in accounts payable, sales and customer service never stays in AP, sales and customer service. If there’s a problem submitting payment for inventory, it affects supply chain. A glitch in processing an order? You’d better believe it causes hiccups in supply chain. And without insight into customer service performance metrics, supply chain managers are flying blind when it comes to how much inventory to stock, when and at what prices.
The supply chain can no longer be considered an entity only unto itself, but must integrate with other job functions in order to be efficient and provide the most value possible. Over the last several years, there’s been a shift in supply chain strategy. As companies eliminate silos in an effort to be more holistic, executives are beginning to understand that supplier and customer relations are integral elements of effective supply chain operations. In fact, more and more often, direct responsibility for these areas is falling to the VP of Supply Chain to manage. And more and more often, the VP of Supply Chain reports directly to the CEO on these matters.
Reeve Says... |
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| The supply chain can no longer be considered an entity only unto itself, but must integrate with other job functions in order to be efficient and provide the most value possible. |
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What’s driving the evolution of supply chain?
In the digital age, especially as the millennial generation becomes an increasingly influential buying group, the lines between customer service, inventory management and supply chain logistics have become blurred. Companies like Amazon have conditioned customers to real-time transparency in price and inventory, reliable and accurate delivery time forecasts and a speedy, easy ordering process. Just like everything else in our modern world, the internet—and the changed customer expectations that go with it—has changed the nature of supply chain, and managers need to be able to change with it.
The Chief Supply Chain Officer Report by Gartner’s SCM World revealed that 45 percent of supply chain managers now say that enhanced customer service and customer loyalty is the main way they feel supply chain can impact the overall business. An increased focus on customer service and loyalty was a high priority for every industry represented in the report.
It’s important not only to the company bottom line, but for the strategic value the c-suite places on supply chain within a company. By a factor of nearly 2:1, managers who say their CEOs consider supply chain equally critical as sales and product management also say they place high importance on customer service.
The road to customer satisfaction in today’s business climate is clearly a digital one. The increase in e-commerce and mobile demand is driving complex omnichannel fulfillment and distribution networks, and inventory management has needed to evolve in order to keep pace. In any industry, the company that is able to meet customer demands will have an advantage over its competitors. But in order to be agile enough to compete, supply chain managers need help from modern technologies.
Automation to the rescue
The ways in which an optimized supply chain adds value are somewhat more indirect than other business functions. Supply chain doesn’t make the product, for example, so it can’t improve on design or functionality. But it can have a huge impact on OpEx and customer service capabilities. It helps with the cost of the product through streamlining delivery, reducing ordering errors and establishing the most efficient processes possible. In order to meet the demands that the digital age has created, we have to leverage the tools it’s provided us, too.
Automation can give supply chain managers a huge competitive advantage when it comes to offering predictable and reliable delivery, as well as the transparency that customers and vendors want. In addition, by reducing the number of manual touch points, managers can also reduce errors and better adapt to changes in demand. Customer service representatives can spend time focused on the customer experience and building relationships rather than manual business process tasks.
Automation also has a positive effect on inventory management. If you have too much or too little inventory, it impacts your ability to quickly turn around orders. The insight that automated order processing gives supply chain managers allows them to better forecast demand cycles, identify potential issues and ensure customer satisfaction.
Finally, automation can help control costs and allow for more accurate forecasting by digitizing the accounts receivable (AR) and accounts payable (AP) processes. When invoices and payments are automatically generated, accuracy levels go up. Automation allows easy exchange of currency between a company and its customers and suppliers, simplifying processes for members of your accounting team. And when it comes time to analyze financials for reporting, forecasting or identification of potential areas of cost-savings, the data provided by automation can be an invaluable resource.
What to look for in an automation provider
Implementing an automated sales order processing (SOP), AP or AR system can be painful, and many supply chain executives understandably shy away from such an endeavor. Not only is it stressful to change your own internal best practices, it can actually have a negative impact on the customer service experience if it isn’t carefully thought through. But if you keep your customers and suppliers top-of-mind, the right solution should reveal itself.
For example, in some cases, companies implement an electronic data interchange (EDI). Such a system might seem on the surface to be a good way to digitize the ordering process from the fulfillment side, but what about the customer? It can take months to retrain customers on how to submit orders or payments into a new system, causing inconvenience to them and increasing your potential for error. True automation doesn’t force your customers into unfamiliar technology. Why would you make them change their processes just because you changed yours?
Technologies like optical character recognition (OCR) give you flexibility and allow your customers and vendors to exchange order and payment information the way they always have. In this day and age, if an automation solution can’t feed a fax or email order automatically into an ERP system, it’s not a true efficiency tool.
Your automation system should do more than just eliminate manual processes, too. Again, keep your customer and supplier’s needs in mind, because these days, an excellent service level can very easily be the difference between retaining or losing customers and the supplier price breaks earned by fast pay. Vendors want speedy remuneration and certainty in cash flow. Both groups want convenience, visibility and predictability. Hands down, one of the best ways to provide these things is through an online portal.
If you give the customer the ability to place orders online via a portal, they have access to real-time information on availability, pricing and delivery time estimates. Digitally savvy customers love being able to see exactly what they’re getting, and it takes some of the pressure off of supply chain, too. It also provides another means of communication with live chat, which is exploding in popularity when people need customer support. Busy customers can place orders or check payment status on their own schedules without having to bend to your customer service hours. An online portal can only improve your service level—and your customers’ experiences.
Giving suppliers access to a portal makes the whole vendor relationship smoother and more efficient with shared access to real-time invoice status and payment information.
It’s a brave new world for supply chain managers, one in which the customer experience has become paramount and customer service, procurement and accounting departments are integral to supply chain success. Those managers who embrace digital technologies are positioned to serve overall business goals that represent a c-suite mentality in a supply chain role.
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