Creating the Customer-Facing Supply Chain in Home Delivery

Chris_Jones-executive-headshot-photography-0008Last October, I wrote a post introducing the concept of the Customer Facing Supply Chain and how it expands the value of the supply chain in the enterprise. There has been a lot of interest in understanding how to create a customer-facing supply chain. The following is such an example for retailers and their home delivery operations.

Enhance the Entire Shipping Experience
Let’s start with the customer-facing supply chain fundamentals for home delivery. The most important concept is that Customer-Facing Supply Chains enhance the entire shopping experience. Check out the commercial from Australian retail giant, Woolworths, to get a good idea of the kind of shopping vision that can be empowered by a supply chain.

For this kind of vision to become reality, the supply chain needs to become a valued part of the “front office” by directly engaging the customer. Figure 1, below, covers the important tenets of the Customer-Facing Supply Chain.

Figure 1: Customer Facing Tenets

Source: Descartes

Source: Descartes

Impact your Organization’s Performance
Customer-Facing Supply Chains go beyond cost management and meeting customer service targets to have a greater impact on the overall organization’s performance. Impacting revenue growth by increasing sales of products and value-added services are an important part of the Customer-Facing Supply Chain. In addition, Customer-Facing Supply Chains increase customer engagement, provide differentiated services and even the brand proposition. Cost reduction is an important part of Customer-Facing Supply Chains, but that impact happens beyond the supply chain organization in areas like call center operations.

To understand the potential business value of Customer-Facing Supply Chains in home delivery, the potential impact across the customer order life cycle must be examined. Rather than seeing home delivery as the “get it done” part of the selling process, Customer-Facing Supply Chains engage the customer and the retailer’s other organizations at multiple points. Equally, the associated business value comes in a number of areas that go beyond the supply chain organization. Figure 2 shows the stages of the customer order lifecycle on the left and the associated business value on the right.

Figure 2: Home Delivery Customer Facing Supply Chain Business Value

Source: Descartes

Source: Descartes

Leverage Available Technology Solutions
Enabling technology is an important part of Customer Facing Supply Chains. Figure 3 maps the key customer order lifecycle steps for home delivery to the type of technology that benefits them. Dynamic Booking provides customers with greater delivery choices and retailers with the ability to sell value added services cost effectively. Delivery Orchestration optimizes and coordinates the customer order to meet services commitments for the lowest cost and enable fast delivery. Dispatch & Tracking helps ensure successful delivery and manage exceptions as well as closing the loop on the commercial agreement with the customer. Mobile applications enable the delivery agent to be more productive and offer the customer greater service. Notifications leverages supply chain information and processes to better engage the customer for delivery success and better overall experience.

Figure 3: Home Delivery Enabling Technologies

Source: Descartes

Source: Descartes

Gather and Improve Key Performance Metrics
Retailers that implement Customer-Facing Supply Chains think differently about home delivery metrics. They evaluate home delivery’s impact on revenue generation, including increased sales of products, value-added services and premium delivery windows, as well as reduced buyer shopping cart abandonment. Supplier participation in home delivery programs is a key metric as leading retailers see their most advanced suppliers move marketing funds from adds to subsidized delivery programs. Customer service and brand perception are important metrics, going beyond delivery performance to include Net Promoter Score, buying experience, returns process and social ratings. Cost metrics are still important, but better aligned with value creation such as cost per minute as opposed to cost per mile or cost per delivery. In addition, cost impacts in other organizations are tracked and include call center productivity, fraud and loss prevention, failed delivery reduction, dispute/returns processing and days-sales-outstanding.

The most asked question I receive is “How do I get the Customer Facing Supply Chain transformation started?”  There are 4 key points for success:

  1. Enlist the commercial organization. They own the customer and revenue. Nothing significant will happen without their support.
  2. Move the supply chain value discussion from “get it done” to “get more”. Supply chain executives need to become part of the revenue, differentiated service and brand enhancement discussions. At a minimum, the supply chain needs to be portrayed as adding value across the end-to-end shopping experience.
  3. Link home delivery to a broader and more relevant set of business metrics. Customer Facing Supply Chains drive revenue and competitive differentiation, so track them. Metrics like cost need to be tied to business value drivers.
  4. Engage the customer. They know best how your supply chain is impacting them and will tell you if they bought because of how your supply engaged them during the buying process. Remember, the last mile is the last word and what customers remember last about your brand.

How is your supply chain making the transition to customer facing? Let me know.

 

Chris Jones is Vice President, Marketing and Services at Descartes. As Executive Vice President, Marketing and Services, Chris Jones is primarily responsible for Descartes marketing activities and professional services for Descartes’ solutions. With over 30 years of experience in the supply chain market, Chris has held a variety of senior management positions including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group.