No matter what analysts say, vendors advise or your gut feels, improvements to your supply chain are a potential waste if they ignore the most important factor. If the benefits to your customer are not considered when implementing supply chain management improvements, you must ask yourself, why bother?
Although changes to the supply chain can make a business more efficient, reduce costs and raise employee morale, if the customer is not the overall beneficiary, your business may not actually realise any significant benefits. One of the first tenets is that the customer is king, thus they must be at the centre of everything you do, including innovations.
Consequently any supply chain enhancement should go through planning from your business’ point of view and again from that of a customer. Try and define how the change benefits your customer, and better still assign it a definite value. If you cannot, carefully consider whether you are implementing the correct innovation. An innovation that offers no value to your customers is probably not worth the investment required to implement it.
The demand for improved margins come from many different groups with shareholders leading the charge. Often many businesses choose to make efficiencies as a way of offering dividends rather than re-investing the savings for future development. Worse still these efficiencies often come at the cost of customer service. Any benefit to the customer in this situation is an afterthought, or even an unexpected side effect.
Customers who find that they are low down in their suppliers priority list are therefore right to feel aggrieved, especially if profits appears to be taking priority over their needs. In their position, why would they not seek out a supplier who appears to be more interested in them?
Supply chain management provides many, many benefits but if they do not offer similar advantages to your customers, can you really justify them?
January 11, 2012 in
Supply Chain, Supply Chain Management