Feeding the Beast

E-customers want answers, and they want them now. Is your customer response infrastructure up to the task?

By Frank Wilhelm

The Internet revolution has fundamentally influenced everyone in the business ecosystem, drastically changing their behaviors and mindsets. One of the more important consequences is the fact that with instant access to information, products, and services through business-to-consumer (B2C) portals, customers now expect near-instant fulfillment of online requests.

The Internet is enabling companies to react more rapidly and intelligently to consumers' unique needs, but customers are also becoming more demanding and less patient. And why shouldn't they? After all, the competition's Web site is just one click away.

To increase their agility in this regard, companies need to transcend traditional enterprise ownership boundaries and transform themselves into "e-corporations." But success in e-business is far from guaranteed. If your organization undergoes this transformation without simultaneously building the necessary customer response infrastructure, your e-business efforts will fail.

GartnerGroup estimates that approximately 75 percent of e-business efforts will fail due to lack of technological consideration and poor business planning. Gartner further predicts that, through 2004, virtually every type of business will face competitive pressures from companies that offer better responsiveness, a more affordable infrastructure, and Web-enabled business models.

With these facts in mind, your organization needs to look beyond simply Web- enabling its back-end systems. Rather, you need to organize your business around converging applications that allow the creation of a true "value chain."

Whether your company is a dot-com startup or a traditional, established enterprise getting its feet wet in e-business, a successful e-commerce strategy is predicated on nimble, easily managed, and Internet-enabled supply chain capabilities, as well as collaborative business processes that can effectively support them.

In this article, I'll examine how these new business pressures are challenging companies to provide goods, services, and information rapidly in order to differentiate themselves from the competition, and to drive revenue by developing a value-added supply chain strategy focused on proactive demand management and electronic integration.

Demand Drives the Value Chain

Up until recently, demand data came into the enterprise in a time-delayed, paperbound system, forming intelligence gaps that created market uncertainty. In reality, it was hard to predict exactly what the demand cycle, or appropriate response, would be. These estimates were called forecasts, and businesses reacted to them through a chain of ritual events - from the negotiating process to the scheduling process, through the enterprise, and finally to suppliers. From master production scheduling to request-commit processes and capacity planning, companies waited in anticipation of a demand that would manifest at some point in time. But too often, the difference between anticipated demand and actual demand led to stagnant inventory and unnecessary costs.

With the Internet's instant accessibility, demand is no longer an ambiguous chain of events; rather, it's a discrete occurrence manifested through the order process. By giving customers free admission to enterprises and encouraging near-instant fulfillment of online requests, organizations in essence let them arrange scheduling directly with the factories.

This control, along with mass customization and more efficient delivery channels, is forcing companies to understand and respond to demand more economically. Traditionally, supply chain processes have been linear, production-focused, and designed to improve bottom-line performance by moving goods in bulk. Now, companies must focus on moving smaller quantities at a higher velocity, and the supply chain must be hub-shaped rather than linear, with the customer at the center of that hub.

Giving Customers What They Want

Responding to demand requires placing a higher value on customers. Their needs should come before products, processes, or production. This idea is hardly new; many successful businesses have taken that approach for years. The difference today is that electronic technology greatly increases both the speed and volume of information across the supply chain. With customer relationship management (CRM) and other software that can capture every customer contact, as well as sort, categorize, and analyze the information, you now have the power to predict and understand client needs in ways never before possible.

Yet, even with such awesome tools at your disposal, the customer is still the central figure in successful demand management. And the best way to gain and maintain lasting relationships with customers is to give them what they want. In today's fast-moving, competitive environment, most say they want quality products, 2437 accessibility, removal of geographic boundaries, easy ordering, on-time delivery and fast, responsive service. If one company can't deliver, very likely, customers are willing to click over to one that can.

Surprisingly, according to Internet research firm Jupiter Communications, as many as 42 percent of top-ranked Web sites took longer than five days to respond to a customer inquiry, did not accept email, or never responded at all. What sort of impression is this approach likely to leave with customers and prospects? Reengineering the supply chain around customer demand and fulfillment is a strategy that can add value not only for customers, but for the enterprise as well.