The CSCO’s next big opportunity: Building a customer-centered supply chain
March 19, 2020
Linear supply chains are becoming a thing of the past. A new normal is transforming supply chain management. It calls for Chief Supply Chain Officers (CSCOs) to build customer-centered supply chains that help drive top-line growth. But the CSCO’s current role does not allow for this. And the supply chain function’s existing capabilities are not equipped for it. However, CSCOs can digitize the supply chain and put customers at the center. We explain how in this article.
By Mo Hajibashi, Senior Managing Director, Accenture
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For keeping up the competition CSCOs must respond with a new digital transformation of the supply chain. | Image: unsplash / Maarten van den Heuvel
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New expectations from connected customers who want to see, try and buy products anywhere at any time. New business models from nimbler, digitally native competitors that aim to seize control of the market. And new growth opportunities, driven by an explosion of disruptive technology that enables new forms of value creation. These developments are shaping a new normal in consumer goods and impacting supply chains worldwide. The CSCO must respond with a digital transformation of the supply chain if they’re to keep up with the competition. Moving from a “cost-center” supply chain to a “customer-centered” supply chain is the goal.
A pace of change
The new normal is shattering linear value chains—most supply chains can’t keep up with the unprecedented pace of change. Today’s supply chains use an inflexible, one-size-fits-all design with slow response times. They produce fragmented, siloed views of the customer and rely on owned-asset networks. And they find it expensive to deliver on customer demands. To overcome these challenges, CSCOs must use digital disruption to their advantage. This will enable them to reconfigure the supply chain into a network that is, flexible, smart and customer-centric. One that delivers real-time insight, enables innovation and acts as a key competitive differentiator. But CSCOs cannot drive this change unless they position themselves to play a much more strategic role. For this they’ll likely need support/buy-in from the CEO or the board. Ultimately, the CSCO is responsible for shaping, selling and executing the business case for this customer-centered supply chain of the future.
Don’t lose out
It’s essential that the CSCO takes the lead in the digital transformation of their organization’s supply chain. Driving collaboration with other executives or functions within their company as the broader organization digitizes, in order to realize the supply chain and broader organization growth agenda.
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53%
of supply chain leaders see the supply chain as an enabler of growth.
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Satisfy customer needs
While many companies today focus on running their core business efficiently rather than transforming their supply chain, they are aware of the benefits. Indeed, 53 percent of supply chain leaders see the supply chain as an enabler of growth. This is because growth does not typically come from operating the core well. Instead, it comes from freeing resources from the core to invest in innovation. Examples of innovation include new channels such as e-commerce, new products that start small but quickly grow and multiple, and new capabilities that delight customers and build loyalty. It’s important to consider the customer experience when developing new innovation. The end-to-end customer experience starts with a search for a product or service. It continues through the receipt and consumption of the product/service. And it concludes with the eventual end of life of the product/service. The customer-centered supply chain continually looks for opportunities to elevate the customer experience. This is how it delivers true customer centricity that fully satisfies customer needs.
Elevated experiences
Companies elevate the customer experience in a number of ways, including through new channels that offer more customer choice. Or different products and services that offer access to untapped markets and better target customers. Similarly, elevated experiences leverage digital and the Internet of Things (IoT) for faster introductions of new products and services. Greater speed and agility can be achieved by using flexible manufacturing and fulfillment approaches for faster responses to customer needs. Adjusting supply chain operations in real time lowers costs and improves customer services for better flexibility and affordability. Greater connectivity and convenience are reached by breaking down silos. This helps with collaboration across functions and with external partners. And regarding sustainability and ethics, customer trust is built through tracking and traceability for responsible sourcing and delivery.
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The results
To illustrate the value of customer-centered supply chains, we developed an example. If a $10 billion company transforms its supply chain, it can achieve:
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Image: Accenture / Blomqvist
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The customer-centered supply chain provides faster, convenient, one-stop shopping with flexible supply chain solutions. It’s cost-effective and ensures on-time delivery. And it includes value-added services from collaborative partners. Perhaps most important, the customer-centered supply chain focuses on ethics and sustainability to build customer trust.
Why it works
In short, the customer-centered supply chain works because it:
- Innovates using data as an insight generation engine for new products and services designed around the customer.
- Connects with external parties for real time E2E visibility and integrated planning and execution.
- Configures the supply chain into an asset-light ecosystem that delivers the customer experience in new, unique microsegments.
- Operates a service-orientated operating model (plan, make and deliver) that leverages a hybrid workforce to deliver the customer experience.
- Optimizes day-to-day operations using analytics, performance monitoring and continuous innovation.
Customer-centered supply chains deliver winning customer experiences efficiently. However, it is impossible to achieve this without the right technologies.
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The problem with legacy systems
Legacy systems are a barrier to the customer-centered supply chain. Issues include: deteriorating functionality and a lack of scalability; mounting maintenance, hardware and upgrade costs; cybersecurity threats; compliance and regulatory issues; and batch vs. real time processing. According to our research, 44 percent of supply chain leaders struggle with incompatible legacy systems.i As a result, investments in emerging technologies that help speed innovation are hindered.
Transform through digital
The first step in the journey to the digital supply chain is to rev your digital engine. Intelligent platforms enable the supply chain to connect with assets, processes and people in real time. Leverage accessible, rich data for valuable customer insights. And harness artificial intelligence, automation and IoT to drive responsive operations.
Once this is done, set your north star. Articulate the customer experience you want to provide and define your strategy. From there, create the value case and roadmap to your supply chain transformation. We recommend that you then obliterate walls by uncovering efficiency and agility for rapid customer delivery. Break down functional and organizational silos and organize around customer outcomes.
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81%
of companies agree that ecosystems enable their organisation to grow in ways otherwise not possible.
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From there you can grow a digital workforce. Adopt automation to complement your existing workforce. Empower humans for strategy and innovation. And remember to shift the culture to outcome-focused and optimized for customers. The last step on this path is to embrace collaboration. Start by collaborating across functions to get it right for the customer. Orchestrate and co-innovate across the ecosystem—81 percent of companies surveyed agree that ecosystems enable their organizations to grow in ways otherwise not possible. Finally, use asset-light, 3rd party networks that share physical assets.
Architecture that unlocks growth
A modern operating architecture is essential to unlock growth. Simplify and standardize the new digital core with enterprise resource planning (ERP) and processes. Likewise, leverage cloud-based solutions to drive innovation faster. Manage complexity with a flexible technology architecture to support changing customer demands. In particular, implement connected applications plus events and services. And fuel innovation engines through machine learning, AI, automation and IoT. It’s important to remember that an ERP transformation alone will not generate ROI. But digitally transforming the supply chain will.
Deliver customer centricity, drive growth
The customer-centered supply chain is how companies is one way companies can drive growth now and in the future. Start your supply chain transformation today and elevate customer experiences and make the most of all the CSCO can offer in the post-digital age.
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Ecosystem research
Are ecosystems important? Most companies have yet to seize their full potential.
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About the author
Mo Hajibashi
Mo Hajibashi is a Senior Managing Director in the Management Consulting Practice of Accenture. He currently leads Accenture's North America Industry X and Supply Chain & Operations Organization for the Products Industry. Get in contact with him via Linked in.
