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What are the right strategies to get adaptive and customer-centric in an agile environment?

The Supply chain is experiencing a period of unprecedented and rapid changes. That has been caused by different factors; from global changes in the political and economic environment to new and always evolving ways on how customers and consumers are served in order to fulfil their even more demanding needs, driven by more influencing behaviours.

All the experts, analysts, industries and observers clearly acknowledge we all now live in the so-called VUCA world, that stands for Volatile, Uncertain, Complex and Ambiguous.  And all of this is driving the new challenges to every company, every business model, and every decision maker.

And customers who are the main actors at the end, know all of this as well. They know that they can get a more personalized product and service and they know they want them and can get them cheaper, earlier and with the expected quality. Otherwise, they can easily change, complain and even forget about that purchase. They know they matter but, when the successful purchase comes together with a stronger satisfaction and a better experience, customers are willing to reward this. The important thing for a product or service provider is to come across and land on the most valuable segment along the supply chain and be capable to extract that value, both for customers and shareholders.

To achieve all of this, understanding and embracing the changes and the new trend is critical. Getting adapted to new situations and rapid changes in the interaction with your customers is key. And in order to succeed, I would list the following strategies and milestones.

a) (Re)thinking the role of Supply Chain: from a cost center to profit contributor

If it tends to be all about customer outstanding experience it is clearly no longer sufficient WHAT you provide as a manufacturer or service provider. It is rather on HOW the product or service is provided. And there is a big difference only with this. Supply Chains have to respond to serve customers.

Competing on the cost to serve is still a MUST to achieve the cost advantage but it is only the basic. In order to succeed in the new environment and arena, the final scope should be a competitive advantage. And this can be gained if we are agile, creative and open-minded.

Supply Chain function can drive a step change here as it is in the right place both from organizational and market perspectives. They have a key role in customer deliveries as well as in the organization.

The challenge for that function is leaving the idea of only managing costs, optimizing them and look for the efficiencies. They can become a sales driver by using their knowledge and the tools to understand supply chain and to predict and give solution both internally and externally. Not only from the inside to the outside but also the other way around: getting and capturing from the outside factors and trends like customer behaviours, needs and then give the opportunities and the solutions to sales on how to create value. Being revolutionary and create an impact.

b) Value Chain approach: from Supply Chain to Value Chain and the real disruption

In the new environment, the secret to success is to create value. It is demanded and rewarded both by customers and shareholders. When there are different choices and options, it is easy to define why, how and what you want to achieve. But for a company and a function, it is not easy to clearly understand where the opportunities are and how to maximize them if they don’t start looking for transformation, disruption and challenging the status quo. It is not only about winning new opportunities to grow, the effort must be done at least to survive in this new environment.

Segment the business into clearly defined value chains and then understand how we can please and get customer satisfied so they can see and acknowledge the value for money. That is the right strategy to survive and grow as this will allow companies to aim for delivering the value both from commercial and supply chain perspectives. Starting with customers and get this aligned with all the activities and metrics so we can make sure every process exists only because it is necessary to create customer satisfaction and value.

The real disruption is to take control and excellently manage the entire end-to-end value chain, as on top of the value generation that can even turn into the possibility to guide and even influence customer behaviours/needs/preferences. Trying to establish an eco-system: achieving that,  an entire environment, industry and business model can be changed and even disrupted like it has happened in most recent, famous and successful cases (e.g. Amazon, Uber, Airbnb, etc.)

c) Servitizing and adapting your business model

Consumers are demanding speed and personalized service. Sometimes they do not or cannot be specific either about the physical product they want, or the particular service they need. They just want solutions for their needs, whether it is their current needs to satisfy or something they will demand in the future. The proof of success comes from industry disruptors mentioned above. It is the service and experience behind or beyond the product chosen and the way it is provided, which fulfil the real need for a positive and unforgettable experience, that makes the difference for customers. Servitizing and adapting the business model to what is demanded is the new trend for most of the industry, as it allows to monetize the experience, create value and get a competitive advantage which can be very difficult to challenge by other parties.

Once again Supply Chain has a key role here. For most of the industry it is becoming less important where the product, hardware or software is manufactured. That was a previous problem and it has been solved or can be solved quite easily. And sometimes it is just a matter of being “good enough” to market it (to capture early adopters and then disrupt the market). What is more relevant now is the experience it brings or the needs it fulfils. That is why a supply chain has a key role: closer to the customers so companies can understand their needs and predict the solutions.

d)    Digital agenda

Transformation, disruption, adaptation, and revolution can only happen in this world if they are supported by digitalization. There is not simply any other way for a company to succeed in the VUCA world. The level of complexity to cope with and the number of rapid issues, choices and options that must be worked out simply require supply chain to come on top
of the agenda.

Technology is getting disruptive by itself: IoT, Autonomous vehicles, AI, Robotics, Augmented Virtual Reality, Commercial UAVs (drones), 3D and 4D printing and Blockchain will certainly support the way companies interact with customers and allow to get and improve both cost and competitive advantages.

Digital strategy for Supply Chain needs to be defined with the aim of understanding customer behaviours and needs in order to allow companies to take the advantages from this. Main objectives for the digital Supply Chain should be:
-    controlling the metrics: ex-post;
-    collect data: online;
-    prediction: ex-ante;
-    providing solutions: internally and externally.

e)    Visibility and transparency: the power of the information to achieve B2B integration

Smart, connected and controlled eco-system together with digitalization are the game changers. It is possible to link products and services at the front-end of a business with the back-end of a business. B2B integration can be achieved and improved by creating solutions that connect together different segments of the value chain. By collecting and managing information it is possible to predict and ensure availability of the products, asset efficiency across the network and optimize net working capital. Visibility and transparency in the supply chain is the key to keep on maintaining excellent service level and financial performance.

I believe those are the key milestones and strategies that companies should focus on in the future. Big questions to be raised and answered for companies aiming at growth and survival in the new environment should relate to the following:

-    how to delight customers with the supply chain experience;
-    what is the impact of digital transformation;
-    controlling the present to create the future

Finally, some conclusions worth to highlight:

-    the value chain of the future will align new technology seamlessly in order to delight and get customers satisfied
-    the need to be customer-centric is an opportunity, it can even become an obsession but should not be seen as a challenge to stand clear of.

What would you like to achieve by attending the Supply Chain Controlling and Performance Management conference?

Attending the conference will certainly give me the opportunity to share valuable and interesting insights and point of view from other leaders from different and important companies, exploiting their experiences and current challenges they are facing.

How to contribute building up the Supply Chain of the future where we see risk and opportunities. How we can drive right behaviour in our organizations and how we can support sustainable and profitable growth, in a more challenging environment for everybody.