Feeding the Beast

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

By Frank Wilhelm

Continued from Page 1

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.

Electronic Convergence

Because fulfillment is where the credibility of a supplier is made or broken, your organization must connect its enterprise systems to one another and to the whole trading community in order to make a realistic commitment to an online customer. By focusing as much on external collaboration as on internal processes, a company can add value for customers by improving quality and reducing time to delivery, and add value for the enterprise by increasing efficiency and eliminating or minimizing non-value-added costs. In essence, creating a value chain provides more than bottom-line savings; it can drive top-line growth and optimal customer service.

As issues such as fulfillment time become increasingly important to satisfy customers, you must use the Internet as a channel through which companies collaborate with partners and integrate business systems in order to manage reactions to customers. Management has to rethink business from the ground up and build a collaborative environment that is responsive to changing customer needs. In fact, according to GartnerGroup, 90 percent of enterprises that fail to apply supply chain management (SCM) technology and processes will lose preferred supplier status by 2004.

A value chain takes the multidimensional factors of CRM, SCM, and Web-based technologies into consideration to help organizations respond to customers and serve them well, in addition to providing improved business intelligence internally. Whether customers are consumers or other businesses, a fully transactional Web site that provides key links to a company's ERP, supply chain, sales and marketing, logistics, and other mainstay legacy systems will provide a higher, more personalized level of value.

Because data can be captured at every point of customer contact, from order entry to fulfillment - whether that contact is by telephone, fax, remote call center, or Web site - your company can transform that raw customer data into valuable information to help it increase competitiveness in your market space. In addition, presenting a unified view of customer data to trading partners and opening up the communication flow will let everyone in the supply chain focus on giving customers what they need, when they need it.

The CEO and management team must also reach beyond their own four walls to form collaborative partnerships with trading partners and customers. Sharing key information can speed up cycle time from customer order to delivery, as well as facilitate information flow, replacing non-value-added tasks with realtime data feeds to all involved parties. With the walls down and the costs associated with maintaining those walls eliminated, the enterprise and its partners can finally focus on what's truly important: getting products to customers how, when, and where they want them.

In creating an efficient value chain, you can eliminate non-value-adds to hasten product delivery and reduce transactional costs. Doing away with ritual, redundant tasks and streamlining time-consuming processes - such as purchase orders, RFQs, and other partner/ manufacturer paperwork - not only simplifies the process but also offers the opportunity to deploy time-saving tactics such as Internet-enabled networks, vendor-managed inventories, automatic stock replenishment, and more.

Fulfillment in a Dynamic Environment

When company management has been motivated to move toward a value chain model, it should reexamine its business processes to understand the holistic chain of events and redefine the role of its trading partners and their relationship to the demand signal and inventory. To create real value for customers and the enterprise, supply chain members must work as a team - sharing costs, risks, and profits - and focus on serving the customer. And to gain a market edge, companies need to integrate their entire supply chains digitally to include realtime, event-based communication, shared planning and analytic processes, monitoring systems, and intelligent supply chain execution.

Prior to the widespread public use of the Internet, most enterprises were forced to operate with a lack of realtime demand visibility. This approach resulted in excess inventory, cycle time, and expense. But little by little, the traditional ways of master production scheduling and passing demand through the supply chain have given way to instant accessibility as dictated by true demand. Because the Internet enables everyone in the supply chain to have immediate access to the demand signal, it becomes imperative for a company to devise a rules-based environment that facilitates the supply of goods, services, and information across enterprise boundaries to meet customer-specific needs. Those rules generally have to do with inventory posturing and the frame agreements that instruct suppliers how to react.

Instead of having to estimate demand, a company's entire supply chain "knows" when an order is placed, and for what product. Therefore, inventory can be held at the least point of value and most versatility until it is needed, as opposed to moving it through the transformation process and having it become increasingly committed to an end item the customer may not want. Rather, now the raw materials can be held until what the customer wants is known. When orders come in, they can be fulfilled rapidly. This process typifies dynamic demand management, a strategic paradigm that can keep the execution environment operating profitably while meeting customer requirements.