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11/12/2021

The Winning Ways of Customer-Centric Supply Chains

These are reasons why 90% of supply chains are not partaking in the growth benefits of customer centric practices. At the foundation is knowing your customer at a deeper level.
These are reasons why 90% of supply chains are not partaking in the growth benefits of customer centric practices. At the foundation is knowing your customer at a deeper level.

If you work in any aspect of the supply chain, you already know the value of forward-looking analytics.

Where challenges vary are the details: the time to obtain the right data and develop an insight, make the process repeatable, measure and communicate results, then find time to iterate while testing new ideas.

Whether you work in the business, or as an analyst or data scientist, your job was pressure-tested in early 2020. Hopefully, your organization’s analytics kept pace with customer demand fluctuations throughout the pandemic.

[See also: Supply Chain Execution Playbook 2022]

Even as global supply chains experience disruption well into 2021, Gartner in May reported CEOs bullish on economic recovery. So much so they are prioritizing growth for the remainder of the year and into 2022.

Implications for Supply Chain?

Supply chains bruised by COVID are unlikely growth engine candidates, but Accenture discovered that 10% of companies achieve 13% gains over peers through “customer-centric” supply chain practices. This is precisely the type of growth CEOs are looking for.

Among the features of these “masters” is their unique approach to analytics: “Analytics enable a company to look at all dimensions of its products, customers, and channels to understand how to segment customers by common characteristics and needs — and then configure the right supply chain activities to meet those needs.”

Traditionally, machine learning applied to demand forecasting offered a ready path to better financial performance; according to McKinsey, up to a 2% lift in sales and a half percent improvement in margin.

Those figures, however, are from a time when sudden supply chain disruption was the exception, not the rule. As McKinsey wrote more recently:

“In a few short months (of COVID), consumer purchasing habits, activities, and digital behavior changed dramatically, making preexisting consumer research, forecasts and predictive models obsolete. Moreover, as organizations scrambled to understand these changing patterns, they discovered little of use in their internal data. Meanwhile, a wealth of external data could — and still can — help organizations plan and respond at a granular level.”

A key feature of customer centric supply chains is that they leverage external data strategically to navigate through the eyes of their customers, to uniquely deliver on their brand, service and experience promises.

Today, disruptive events and shifting consumer behaviors make external data essential just to maintain a competitive pulse on demand, let alone activate this into areas such as procurement.

[See also: Biden Supply Chain Strain Initiatives Include Better Data Sharing]

Unfortunately, internal data issues continue to plague most supply chains. Accenture finds an overall data strategy is the barrier: “data is one of the biggest challenges that executives face in building intelligent customer-centric supply chains.”

CEOs and their boards must know about the $15 trillion economic value up for grabs that McKinsey estimates for AI. The supply chain will be in the crosshairs for prioritization, if not already.

Overcoming Hurdles to Better Visibility

External data from sources such as syndicated providers and point of sale have long been staples in the CPG industry, and used in trade promotion and shopper marketing analytics, and consumer and customer insights.

As you expand the lens to consider potential data that might improve analytical outcomes, hurdles start to accumulate:

  • Different providers requiring unique contractual terms
  • How to technically access, obtain and manage the data relative to your internal data?
  • How your people perform the work while also institutionalizing the capability? The cost, time and complexity become prohibitive with too many one-off relationships.
  • How to apply advanced analytic methods like AI and machine learning efficiently at scale given constraints on skills and cost?

These are reasons why 90% of supply chains are not partaking in the growth benefits of customer centric practices. There are many factors in play — not all data and technology related — but at the foundation is knowing your customer at a deeper level.

Fortunately, there are Cloud marketplaces for external data that obviate the challenges such that organizations of any maturity can participate in the advantage of greater visibility into prescriptive demand signals. They make it easier to experiment with different factors influencing demand even before customers express intent.

CEOs seeking growth are wise to explore supply chain analytics using external data for customer centric signals that foretell shocks to the system. Those same signals lend precision to insights into customer needs and wants that can improve processes throughout the company — not only within supply chain — but in marketing, product development and service.

Gib Bassett is director of solutions marketing and industry GTM at Alteryx.

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