“In a survey we conducted, 74% of C-level executives say the disruptive impact of constantly shifting customer demands has increased.” But many organizations are missing opportunities to build the backbone to truly embed the customer-first mentality throughout the enterprise.

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of C-level executives say the disruptive impact of constantly shifting customer demands has increased.

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Your competitors—many born in the internet—can respond to customers more quickly. With digital at their core, they have the architecture to shape the strategic direction of the company. By the way, they’re not using only internal data. They’re pulling industry-wide information from across resources to lure—and keep—customers.

And they’re putting the supply chain at the center of customer demand.

Is your supply chain up to task?

The supply chain is undergoing a revolution. Goods used to be produced at mass scale—with very little insight into the customer. Shoes were shoes, and you assumed your customer wanted the same shoes every season. But today, consumers have the option to customize and personalize their shoes with their names, specific colors, glitter and so on.

The supply chain traditionally provided demand and forecast information months after a product went to market. The cycle went unbroken, and customer satisfaction was rarely, if ever, conveyed back to the business.

We connect in real-time to glean insight

Today, we can connect data in real-time. Gaining information and making changes based on customer feedback fuels the next round of product innovation and production.

We’re seeing a constant evolution—a continuous cycle of information. It used to take years to update a product. Today it’s a matter of weeks—or even days.

Consumer demand is now at the point of near-instantaneous gratification. Consider how grocery stores are delivering within an hour or two of receiving an order. That was all but inconceivable even five years ago.

Of course, this transition comes with a host of challenges, including heightened customer expectations, sometimes daunting technical capabilities, nimble competitors and geopolitical constraints.

Ask some tough questions to bring your supply chain up to speed

Are you meeting these challenges? Is your supply chain part of the problem or part of the solution?

An intelligent supply chain is complex, flexible, responsive and cost-effective to serve the needs of customer microsegments. If yours is not, it’s time to reconsider some fundamentals. It’s time to design a supply chain that helps enhance the customer experience, build loyalty and act as a source of business growth.

In fact, 53% of executives in our survey see the supply chain as pathway to growth.

It’s tempting to say this transition is easy, but it does require some new thinking. It means breaking down silos and dispensing with the old way of doing things.

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Building an intelligent supply chain means breaking down silos and dispensing with the old way of doing things.

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Functional silos slow you down, increase bureaucracy and add unnecessary complexity. Today’s agile innovators and startups see through organizational walls and build the business around consumer outcomes. Breaking out of the silo mentality requires looking across the landscape through the customer lens and organizing the workforce accordingly.

Reinvent your business model around the customer

This new way of thinking has created new business models—not only identifying customer demand but shaping it. Not just responding to need but creating it.

Admittedly, asset-light startups and innovators have an advantage here. But that doesn’t mean legacy companies can’t catch up. To do so, though, requires reinventing your operating model and reskilling your workforce. And it means building an intelligent ecosystem of partners in areas like manufacturing, distribution and fulfillment to increase speed, flexibility and efficiency.

We’re seeing the revolution happening all over the world. Companies that once just sold printers are in the subscription business. Beer breweries are getting into the retail bar business.

One global brick-and-mortar retail giant I work with is using cloud to, among other things, redesign the supply chain in response to changing customer preferences. Among other benefits, this is helping the company design and scale innovative new products and services faster, allowing in-store staff to spend more time with customers.

Take four steps to reinvent your supply chain

In my experience, there are four essential steps companies can take to start modernizing their supply chain:

  1. Create a functionless organization—Do away with old roles such as planning that operate in separate timeframes and don’t communicate effectively.
  2. Put digital at the foundation—Create transactional layers of real-time data visibility and make it digestible for leaders to make quick decisions.
  3. Transform your talent—With a human + machine framework in mind, design analytical and strategic levels of work across the enterprise to automate or eliminate certain functions.
  4. Create partnerships and collaborate in new ways—Lighten your assets by sourcing partners to achieve operational efficiency, increase yield or innovate products.

While the risks of failing to modernize your supply chain are high, the rewards can be even higher. Our research shows that with a modernized supply chain a $10 billion company can:

  • Increase sales by up to $100 million
  • Reduce lost sales by 98 percent
  • Save 62 percent through improved forecast accuracy
  • Reduce obsolete inventory by up to $45 million
  • Lower labor costs between 20 and 40 percent
  • Reduce distribution costs between $25 million and $50 million

The supply chain is no longer a support function. It should be a growth engine with a “network of a thousand hands.” Once you free yourself of the burden of ownership through digital, automation, partnerships and other approaches, you’ll start to discover new pockets of value, lower costs, create new delivery options and develop a growing base of satisfied customers.

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The supply chain should be a growth engine with a “network of a thousand hands.”

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Carly Guenther

Managing Director – Strategy & Consulting, Supply Chain & Operations, Customer-Centric Supply Chain Lead

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