Businesses becoming increasingly customer-centric, reveals survey

11th March 2014

By: Natalie Greve

Creamer Media Contributing Editor Online

  

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Barloworld Logistics’ eleventh yearly supply-chain foresight survey has revealed a shift in consumer power, with companies subsequently realigning their supply chain strategies and business models to meet increasing customer expectations.

Based on independent research by business consulting firm Frost & Sullivan, conducted on behalf of the logistics group, the study revealed that emphasis had shifted from customer service to customer centricity, which Barloworld Logistics marketing executive Kate Stubbs said clearly demonstrated an understanding by businesses that customer satisfaction went beyond simply offering good service.

“The level of respondents’ understanding of customer centricity highlighted in the survey is encouraging and new business models are emerging that are changing the way people work, creating a paradigm shift in business,” she noted.

“Much of this change is driven by increasing consumer demand and global competition, which underlines the importance of customer centricity as key to future success.”

More than two-thirds of survey respondents held C-level, director and GM positions across various business functions and the majority of the remaining respondents held either managerial or consultant positions.

Improving service levels to customers was identified as the respondents’ key strategic supply chain objective for the third year in a row.

In this regard, the three top priorities rated by respondents were long-term relationships aimed at driving customer “delight” at every interaction, thinking deeply about customers’ aims and objectives to provide greater value before a client asked for it and continuously working to improve the customer experience.

“To be truly customer-focused, an organisation must reach and sustain a high level of intimacy with its customers, understand their needs and be fully engaged in delivering in line with their customers’ requirements,” Stubbs noted.

Respondents ranked greater customer expectations and increased competition as the top two reasons for the adoption of a customer-centric approach.

This was followed by improved communications technologies and the use of social media, an increase in technology and Internet use and the speed of change and innovation, which were all rated as being equally important.

However, Stubbs said while respondents showed a “deep” understanding of customer centricity and the value it could create for a company, survey results reflected a “big” disconnect between theory and reality.

Respondents rated the shortage of appropriate skills, the absence of a plan to innovate or embrace continuous change and the lack of alignment of business functions as the top three constraints to achieving customer centricity.

Ninety-two per cent of respondents agreed that customer-centricity could be achieved without a supply-chain strategy focused on delivering customer value.

At the same time, 88% agreed that the supply-chain function was seen too often as a way of managing logistics rather than being core to customer strategy, while also stating that companies struggled to manage the complexity required by the rise of e-commerce and online shopping.

Meanwhile, the top three strategic business objectives for all respondents were growth and expansion into new markets, financial returns and increased margins and market share.

Respondents were also seeking to increase the flexibility, agility and responsiveness in their businesses, to use their supply-chains as more of a competitive advantage and to increase new products and services.

The top five strategic business constraints cited by respondents were a lack of relevant skills, the high cost of doing business, rising competition, currency volatility and labour unrest.

Responses to questions on strategic supply chain objectives indicated the clear recognition of the necessity to align the supply chain strategy to the business strategy to drive success.

“This recognition of the strategic role of the supply chain in business is a common thread running through the results of the survey over the past four years,” said Stubbs.

BIGGEST CONSTRAINTS IDENTIFIED

Respondents envisaged the top ranking supply chain constraints over the next five to ten years to be the cost of transport, followed by a reactive rather than proactive approach, an internal and external silo-based mentality, the availability of supply-chain skills and labour unrest.

Sourcing strategies and inventory management were ranked by respondents as the two most important areas of the supply chain that needed improvement.

These two perceived shortcomings were followed closely by the integration of systems and processes, collaboration with suppliers and customers, supply-chain outsourcing strategies, supply-chain visibility and technologies as well as market intelligence.

“Again, this highlights a gap between what is needed and what is currently being achieved, showing a considerable number of areas of focus and improvement for companies [in future],” Stubbs outlined.

She said respondents’ perceptions of the degree of alignment of systems to successfully deliver customer centricity demonstrated an “extremely high” need for alignment across all industry sectors.

Only 19% of respondents said their systems were aligned, measured and managed, while 19% indicated the opposite.

Achieving customer centricity relied heavily on the "alignment, integration and coordination" of many external organisations, processes and people, Stubbs explained.

“The ability to align these components of the supply chain requires a unified approach to ensure the final product or service satisfies customer needs.

“The issue of company culture, together with the challenges of change management and the ability to [achieve] company-wide alignment to business strategy, highlights the need for management, leadership and direction,” she concluded.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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