What is The Price of Flexible Supply Chains? Part III: A Customer Focus
In this post, I'm going to discuss highlights from the CPO Executive Debate on the price of flexible supply chains and focus on why you have to focus on the end consumer.
Although Supply Management doesn't typically deal with the end customer, one of the ultimate keys to success is a fanatical focus on the end customer. In a successful organization, everything you source is sourced to add value to the products and services you offer the end customer. Everything. No exceptions. Legal spend? Services to protect your IP and ensure you can offer your customers unparalleled products and services. Market spend? Services to not only communicate the products and servies you offer to the market, but to also educate the market as to the value they contain. IT? Systems to help you source higher quality materials at lower price points to increase the overall value of the products and services you offer. Simply put, if a product or service isn't adding value to the end customer, it's not adding value to the organization's bottom line. This means that it isn't increasing shareholder value (which business is all about) and the organization should be thinking twice about that product or service. But enough of my ranting ... let's see what the participants of the executive debate had to say.
When asked if it is a priority for any business to know exactly what their customers want and to build everything around it and if it should become a high priority for the corporate strategy, Austen Bushrod responded that we don't want to wait for the customer to get to that point. We have started putting in some strategy in terms of targeted marketing, which allows us potentially to tie in with various suppliers in terms of targeted promotions. This is because successful Supply Management operations know what their customers want and actively pursue sources of supply that will give the organization's customers exactly what they want.
Furthermore, when asked how it would work in a business-to-business environment as opposed to business-to-consumer environment, Guy Allen responded that if you don't totally satisfy your customer, they will cancel the contract, but if your customer only thinks you are average you could lose out on extending that contract and taking on new areas, indicating that you need to be almost obsessive about what your customer wants and deliver service above and beyond what they are expecting.
But if you become obsessed about the customer, as Austen Bushrod noted when asked if they were first out of [the recession], you will be the first to recover after a down-market when customers start spending again because, just as Colin Davis said when asked if he was talking about the people, when it comes to a focus on the customer, the answer is yes, absolutely.
In the next post we'll talk about how you have to balance this customer obsession with supply base involvement.