Customer Demands Should Drive Operational Designs

In the next five years, customer behavior is set to disrupt businesses in all industries. However, most operations fail to deliver what customers value now, or three years from now, according to a recent study from PwC. The research surveyed 1,262 operations decision-makers across the globe about their supply chain.

The majority of operations executives are focused on transformative change and new ways of creating value. Despite this, to take advantage of the opportunities that the value chain brings it is necessary to align the operational priorities with the corporate strategy and to achieve collaboration across the company to do the work towards reaching the strategic goals; 61% of operations executives said that increasing cross-functional collaboration has the greatest potential to help them.

“C-suites have been thinking of operations more broadly than the traditional view of sourcing, manufacturing, and supply chain, or in the services sectors, front, middle and back office,” said Brad Householder, principal and supply chain leader at PwC. Across industries, the majority of the survey respondents manage customer insight, marketing, sales, service and support, and new product and service development as part of operations, according to Householder.

Customer centric approach key for successful businesses now & in the future

By designing operations around their customers and knowing what customers value operations executives get insight to make appropriate tradeoffs and timely decisions when change is inevitable.

The PwC survey asked operations decision-makers for their views on how they lead their operations functions in their organization. According to the results, 61% of operations executives expect changes in customer behavior to become a disruptive factor in the coming years.

Only 25% of the interviewees are extremely confident that their operations are designed to provide customer value and a distinctive experience. 63% say that understanding what customers' value is a challenge for their own company operations.

The study identified a number of key trends:

  • Knowing what customers value is a real and persistent challenge for operations executives. This makes it difficult to set up priorities, manage costs in a strategic way, and choose the right trade-offs when necessary.
  • Companies plan to do more than just improve existing processes. Instead, they are looking for ways to transform their businesses without letting day-to-day performance slip.
  • Operations itself is being reimagined. Leading companies realize they need a model that aligns operations with business strategy and helps them stay resilient in the face of significant change.
  • Strategically aligned companies are more confident and more likely to focus on a few differentiating capabilities. When taking this path, there are two dimensions to consider: What customers value in your chosen markets, and your company's existing operational strengths. 

Facing the challenge: Knowing what customers value

PwC's report, Reimagining Operations: Insights from PwC’s 2015 Global Operations Survey (full report, PDF), revealed that 63% of operations executives say that understanding what customers value is a challenge for their own company operations.

Reimagining operations

By 2018, 43% of the companies surveyed plan to focus on linked capabilities to stay resilient in times of change, the report found. This could be a significant improvement since only about a third of companies today prioritize a few cross-functional capabilities with most of the others working in silos, with each function making independent decisions on which capabilities matter most.

Looking at the more strategic companies, which represent about 15% of the survey pool, PwC found that they are 51% more likely than their peers, representing a 29%, to focus on building a few differentiating capabilities to drive a competitive advantage.

They also reported being more confident that they will achieve a broad set of performance objectives, revenue, and cost targets, all of which helped them drive strategy, provide a distinctive customer experience, and adapt to change.

What makes your company different? Are you offering the right things? Are you doing the right things? Working on the answers to these questions could help operations executives to create customer value in their supply chain.

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