Turn These Five Supply-Chain Challenges Into Growth Strategies

February 1, 2018 Quality Digest

How major disruption heralds a new wave of opportunities

By: Earl Van As

Competitive forces are intensifying in the B2B supply chain, increasing customer expectations for service and pricing, and creating more pressure for businesses to maintain an edge. Instead of being reactive to today’s increasingly low margins, decision makers should take advantage of the risks and use them as opportunities to speed ahead. Looking into the future, how can B2B companies adjust their business strategies to transform challenges into positive outcomes?

Viewed as primary sources of disruption, the following five areas of the supply chain should be considered unexpected paths to success in 2018:

Customer transaction management

If 20 percent of existing customers contribute to 80 percent of business, inbound sales carry the highest risk of customers switching. This means that companies must focus on protecting this relationship to maintain customer-relationship equity. Profitability is at stake when customers experience a negative selling event at the point of a transaction because it compels them to turn to a competitor. Therefore, it is crucial to understand all key customers and their specific needs.

Sales reps must spend more time learning about each customer to engage in targeted and personalized conversations. With positive relationships with customers come new opportunities for up-selling and cross-selling. Understanding the value of customer-relationship equity, leading businesses will invest in the necessary technology to support the sales model of tomorrow. Automating purchase order processing, for example, can minimize manual data entry, a time-consuming task that lacks business value. The focus will be allocating sales staff to manage key customer accounts.

The elephant in the room: Amazon business

Distributors and suppliers must compete with new players that previously were outside of their geographical footprint. At the same time, they are attempting to manage their own customer expectations due to Amazon “raising the bar” in customer experience and order fulfillment.

Businesses of the future should consider automation to keep pace with Amazon. Order fulfillment is one of the key areas that determines customer satisfaction, making it a prime process to streamline for operational efficiency. Automating incoming orders means that data can be processed right away without human error. As a result, order cycle times are reduced, which equates to a faster order-to-cash cycle and happy customers. As an added bonus, Amazon can be used as a sales channel for excess inventory.

Discovering new insights from unstructured data

Every business looks to data analytics for actionable insights that improve the bottom line. However, the majority seek data points through typical digital touchpoints like e-commerce. Given that up to 74 percent of orders are still being placed via email, a large portion of valuable information is missed. Unstructured email data can be reorganized and analyzed to deliver a true view of customer activity.

Having a more comprehensive understanding of how orders are being placed by customers, whether by phone, email, or e-commerce, can help decision makers allocate resources for increased productivity. How do your customers want to buy from you? Buying trends like order volume, order channel, and seasonality of orders should not be missed because they inform strategic decision making.

Re-examining the cost to serve

Distributors and manufacturers have many expensive sales platforms in place, including electronic data interchange or web portals for the purpose of delivering a seamless and efficient customer transaction experience. Unfortunately, the execution of these platforms is often not as simple or seamless as originally planned. When customer exceptions within these transactions occur, it can significantly increase cycle times and operational costs to serve customers.

Most distributors look at total sales or gross margin, but going back to the 20/80 rule, it pays to know how transactions take place for the largest customers. Data on how much time customer service representatives spend processing each customer order can help identify which accounts are within forecasted margins, and which cost more to manage. By understanding the true cost of serving each customer, decision makers can apply targeted solutions that address pitfalls of each key account to increase margins.

Addressing the effects of digital transformation

Businesses initiating digital transformations need to make sure they are setting the right objectives. A potential downside is the possibility of eroding customer satisfaction because most digitization focuses on improving efficiency but not customer service. Decision makers will often proceed with the solution that increases productivity to cut costs without considering the negative impact to customer loyalty.

There are solutions that can do both to help supply-chain businesses reap the operational benefits of digitization while enhancing customer satisfaction. The transactional part of sales processes is an area that is easy to digitize but also creates potential for exceptional customer experience. Eliminating routine back-office functions through automation can assist sales reps to build meaningful relationships. Time lost to manual labor can be reinvested into value-added tasks that will ultimately translate into higher customer retention and return on investment.

The future of B2B businesses will continue to be disrupted. It is up to decision makers to implement the right strategies that foster growth and innovation during the disruption. With more new forces entering the competitive landscape, it may be worthwhile to proactively explore the challenges for unexpected ways to excel.

Read the original article here: https://www.qualitydigest.com/inside/management-article/turn-these-five-supply-chain-challenges-growth-strategies-012218.html