RESILIENCE AND CUSTOMER-CENTRIC SUPPLY CHAINS: WHY YOU CAN’T HAVE ONE WITHOUT THE OTHER

Publication of articles, ads, etc., about “customer-centric” supply chains seems to be growing. Is that an accident? Is it marketing? Or is it a sign of a new trend?

At Terra Worldwide Logistics we believe “customer-centric” supply chains represent the future. In other words, customer-centric supply chains are not only coming, but they’re here to stay. And they will transform supply chain management at its core.

In today’s world, resilience is the dominant planning factor. It has displaced Just-in-Time efficiency. Being able to respond to and rebound from crises is now a critical factor.

It’s becoming a driver of logistics planning with the customer at the center of your planning. A growing body of evidence shows placing the customer at the center of planning is the optimal way to achieve resilience.

In this blog post we’ll delve into why this trend is gaining traction and what that means for your business.

THE NEW WORLD OF PERSISTENT SUPPLY CHAIN DISRUPTIONS

A number of disruptions (natural disasters, pandemics, etc.) have affected supply chains of late. And they have become more frequent and more damaging. So, supply chains must adapt to keep supply lines open and running.

That means today’s supply chains must be resilient to survive. Without it, your business will wither. With it, you’ll gain a competitive edge. For example, businesses that can snap back from disruptions outperform their competitors. And that results in gained sales, revenues, and market share.

Until a few years ago, the emphasis was on lean enterprise, e.g., Just-in-Time (JIT) logistics support. In today’s post-pandemic marketplace, resilience has replaced lean and JIT. That’s not to say lean and JIT don’t provide any value. They do. But the emphasis has shifted.

To explain the shift, we’ll drill down into their causes.

COVID-19 AND THE RISE OF ECOMMERCE

With the experience of the pandemic fresh in our minds, let’s review a few of the disruptions caused by Covid-19.

Drastic Workplace Adjustments. The rapid and massive spread of Covid-19 led to many workplace changes. These changes were necessary to keep cargo moving from Point A to Point B. They were also necessary for the safety and well being of workers on the frontlines.

First, businesses began to put social distancing into practice. This was government-mandated, but more important, businesses implemented it out of sheer necessity. Keeping workers safe and healthy arguably became the top priority. Without people, supply chains would have ground to a halt.

Next, businesses began looking at implementing remote work – working from home. Indeed, s some IT companies have decided to continue remote work permanently. The nature of their business, unlike logistics, allows them to do that.

Nonetheless, other companies implemented remote work where it made sense. Support functions lend themselves to working remotely. But working on the frontlines in warehousing, transportation, and maintenance do not.

So support staffs and frontline logistics personnel had to learn to work together under these new conditions. Instead of working together in physical units, workers had to work separated from one another. Some worked remotely and others worked on the frontlines. Some companies excelled at this, while others struggled.

Frontline personnel also had to adapt their workplaces and practices. They had to sanitize their work areas while keeping work areas sanitized. That is, they had to take time to prep their workplaces before, during and after work. That remains tedious and time-consuming, detracting from productivity.

Some had to wear personal protective equipment, depending on the job they performed. That included the wearing of masks, gloves, and coveralls, to name a few.

All together these workplace changes required adaptation of existing processes and procedures. These changes slowed operations down. They made work more difficult. They adversely affected the delivery of timely and seamless logistics support. And they added cost.

Combined, these factors negatively affect customer service and support.

Supply and Demand Imbalances. As the pandemic spread, factories and retail stores shut down. The movement of supplies slowed and then halted. This threw supply and demand out of balance worldwide.

Also, customer demand became skewed as consumers panicked about the availability of toilet paper, masks, gloves and basic cleaning supplies. The upshot was empty store shelves unlike we ever seen.

Consumers’ fits and starts contributed to the “Bullwhip Effect” in supply chains. Downstream processes severely impacted upstream processes. Forecasting became impossible. This contributed to inventory build-up upstream. That affected quality and led to other inefficiencies, all impacting the consumer.

As the recovery set in, capacity constraints manifested themselves. This further affected the free flow of supplies and merchandise.

The effects of the pandemic accelerated certain trends, such as Ecommerce. Let’s look at how Ecommerce is changing supply chains.

ECOMMERCE: THE MAJOR DRIVER TRIGGERING REALIGNMENT

We’ve written a little about the emerging Ecommerce trend. For example, Ecommerce was gaining in popularity before the pandemic. But the pandemic has accelerated that trend. As this trend continues to accelerate, you need to know what that means to your business.

The Need for Speed. You could say there was always a need for speed. Of course that’s true, but now it’s even more critical. That’s because consumers’ expectations have risen, as they’ve seen what technology can do. Technology, for example, now makes speedy delivery the art of the possible.

The Demand for Reduced Pricing. Ecommerce reduces prices and consumers understand that. Ecommerce cuts out the middleman and that saves costs. Amazon has shown us that. Online business beats offline business on cost – plain and simple.

So, the trend for reduced pricing is increasing. More and more consumers are shopping online. And that’s putting downward pressure on prices at brick-and mortar stores. The demand for reduced pricing is persistent.

The Relentless Rise of Customer Expectations. Along with the two criteria above, customer expectations were rising before the pandemic. But since the pandemic, this trend has accelerated as well.

Besides speed and low prices, consumers are demanding customized products and services. Customization, like speed, is not within the realm of the possible, thanks to technology. Consumers are no longer satisfied with standardized products and services.

Finally, pandemic or no pandemic, consumers demanded friendly customer service. Consumers expected companies to find alternative solutions to disruptions upsetting their daily lives. Thus, friendly customer service means having consumer-oriented policies. Namely, businesses must make it easy to buy and return orders.

As disruptions persist, Ecommerce will hasten the shift from lean/JIT supply chains. Resilience informed by customer-focused supply chains will dominate how business gets done

THE INEVITABLE RISE OF RESILIENT AND CUSTOMER-CENTRIC SUPPLY CHAINS

Planning to achieve resilience begins with the customer. It only makes sense. Logistics exists to serve the customer, not the other way around. Logistics is an enabler – albeit an important and necessary enabler.

It’s all about ensuring all support processes operate like clockwork. Logistics comprises an intricate network of operational and financial communication flows. When you focus those communications flows on customers, you will unavoidably create a resilient enterprise.

Do you have a customer-centric supply chain? If not, are you wondering how to get started? Do you know where to begin, or maybe you’re stuck?

Whether you want to start transforming your supply chain or kick-start it, why not contact Terra Worldwide Logistics! We can help you in developing a resilient supply chain.

Contact us today to help you create a resilient chain that adds value for your customers. We deliver solutions, savings, and performance by focusing on the customer.