Change demands rapid action. In today's digital world, rapid change not only affects businesses and their supply chains but also customers and their decision making. Optimizing the supply chain means focusing on getting products and services to market faster and better in order to meet customer's demands.
The responsibility of the Chief Supply Chain Officer (CSCO) goes from planning to procurement to production to logistics to customer service, and even to finance (See Supply Chain Management Primer: The Financial Supply Chain). CSCOs need to oversee customer satisfaction while increasing efficiency and productivity. To accomplish all this, they need to collaborate with suppliers, logistics providers, manufacturers, and business partners. So, how do they create a customer-activated supply chain on top of all that?
Building a customer-activated supply chain
According to a study conducted by the IBM Institute for Business Value after interviewing more than 200 CSCOs, a paramount ingredient to build a customer-activated supply chain is to effectively use the data analytics collected to create value along all the stages the supply chain. This value will support the three phases that constitute the multi-dimensional process required to build a customer-activated supply chain, i.e. sharpen visibility and insight, partner for innovation, and becoming customer-activated.
IBM's study notes that financially outperforming enterprises are not only leading the way but also staying one step ahead their customers. CSCO in such enterprises adopt an analytics-led, technology-enabled approach to gather intelligence from their customer data in order to better understand their customers' needs and know what they want and how they want it before they ask.
Sharpening visibility and insight
According to interviews conducted by IBM, three-quarters of the supply chain executives are working to integrate their entire supply chain ecosystems and sharper their visibility within the next two to five years by synchronizing and optimizing every element of the supply chain. They are using advanced technologies to make their supply chains more intelligent, more flexible, and better prepared to respond to rapid changes. But, it's not as easy as it sounds. From the 70% of CSCOs' predictions in 2010 saying that their supply chains would be optimized within five years, only as little as 9% have succeed.
The biggest challenge is integrating data and using advanced analytics to predict demand. Furthermore, CSCOs find it difficult to follow the pace of the fast growing volume of data from the increasing number of sources. Yet, they can't give up; they need to keep up, try harder, and try to stay ahead of the game, like the CSCOs in outperforming enterprises do.
Staying ahead of the game means changing tactic. It means integration and automation. It means more use of advanced analytics. It means use of social networks to predict demand. To sharpen visibility and insight,it is recommended to synchronize, optimize flows, and create a forward vision, according to IBM's study.
Partnering for innovation
For CSCOs, collaboration becomes crucial over the next two-to-five years if they intend to create a customer-activated supply chain. Expanding networks by including customers as well as external influencers adds up to the collaborative goal. Competitors may become potential partners; by doing so, they add value to the supply chain.
Predicting disruptions, managing and mitigating risk are consistently in today's CSCOs' agenda. The use of analytics to predict risk-management in order to react and act promptly to mitigate risk help CSCOs to create an agile supply chain, which helps in the creation of an on-demand network of partners. IBM's study suggests to:
- Connect the dots: Collaborating extensively with value chain partners and focusing on optimization.
- Get a handle on risk: Incorporating risk-management policies and programs.
- Pool brains: Encourage innovation by sharing information, networks, experiences, skills, and insight with partners as much as possible.
No customer-activated supply chain is complete without the customer's perspective. According to IBM's study, most CSCOs plan for the next three-to-five years include an increase in collaboration with their customers. CSCOs recognize the influence customers have on their products, services, and even pricing strategies.
From the total of CSCOs interviewed by IBM only 35% say they understand their customers; 70% expect to get a better understanding as well as to become better at dynamically sourcing and distributing talent and other supply chain assets within the next three-to-five years.
Following the steps of CSCOs in outperforming enterprises, CSCOs also plan to integrate more the supply chain with marketing and become more involved in improving their eCommerce operations toward the goal of meeting customer expectations.
Take a look at the infographic below to see more details of the study.