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Supply chain-customer service partnership is vital

A company's success depends on a supply chain that can meet customers' expectations. To do that well, supply chain leaders must partner with their customer service counterparts.

Today's rapidly changing business landscape has no room for silos. Supply chain leaders and customer service leaders must form strong partnerships to quickly adapt to changing consumer expectations.

A supply chain's function isn't complete until a product has reached the end user, and often even beyond that. And the customer service team is critical to gathering intelligence on what the customer wants, when the customer wants it.

Supply chain-customer service, a dynamic duo

One company that understands the importance of this collaboration is McGee & Co., an interior design firm and online furniture and homewares store based in Lehi, Utah.

The challenge for McGee & Co. was to ensure that its customers received a high-quality delivery experience, said Jessica Mecham, claims and home delivery supervisor at McGee & Co.

However, the company was relying on spreadsheets and emails to help coordinate order and delivery issues, including vendors that shipped orders directly to customers, she said. This meant details were spread across multiple email chains, making it difficult to identify any common causes behind delivery issues.

So McGee & Co. implemented Elementum, a supply chain incident management platform that enabled teams to capture supply chain incidents, analyze trends and assess priorities and collaborate across teams to quickly resolve issues, Mecham said.

"When we see trends in Elementum, like a particular item is getting damaged a lot, that essentially feeds our supply chain leaders and they are able to make adjustments," she said.

For example, in the fourth quarter of last year, Elementum enabled McGee & Co.'s customer service team to identify a large increase in damaged items -- about 35% -- with one of the company's freight carriers, Mecham said. The customer experience team was able to fill that information in because they had a direct connection to customers, who told them about damaged items.

Mecham and other stakeholders were then able to present the information to supply chain leaders.

"We … said, 'We're having a very high damage ratio for our customers. These customers are even getting replacements that are also damaged, and this is essentially ruining our customers' vision of what they expected,'" Mecham said.

At that point, McGee & Co.'s customer service leaders worked with the supply chain leaders to reassess the carrier-of-choice, ultimately selecting a different carrier that had more experience handling higher-end furniture, Mecham said.

"Now, we're seeing a significant drop to about 5% to 7% of orders being damaged," she said.

How customers help with demand planning

Given the complexity of a typical supply chain, understanding where teamwork can pay off is critical.

One of the best ways customer service leaders can work with supply chain leaders is on the demand planning and forecasting side, said Bernie Donachie, global supply chain lead for Protiviti Inc., a management consulting firm headquartered in Menlo Park, Calif.

Demand planning is generally based on historical data, Donachie said. However, customer service leaders can add nuance on what they see in the marketplace or are hearing from customers.

For example, say the automotive market is switching from four-door sedans to SUVs. The customer service leaders would then work with the supply chain leaders to determine how long it will take to start producing and delivering more SUVs, Donachie said.

"And the supply chain's role is to provide feedback to the customer service people that says, 'Here's what our capabilities are. Here's what we can do.' Or, 'This is how long it's going to take us to respond to these shifts in the market,'" he said.

As customers increasingly expect companies to provide a more holistic customer experience, supply chains play a key role in creating this value-driven customer experience, according to a report on customer-centric supply chains from Accenture.

The leaders in this area base their supply chain strategies on what the customer values -- a more tailored and personalized experience as compared to traditional approaches, according to the report.

Historical patterns don't matter anymore; they're not good predictors.
Kris TimmermansGlobal lead for supply chain and operations, Accenture

To accomplish this, supply chain leaders and customer service leaders work together in a multidisciplinary team, often on a weekly basis, to do sales and operations planning, also called integrated business planning, based on demand signals from customers, said Kris Timmermans, global lead for supply chain and operations at Accenture, and one of the authors of the report, in an interview.

It's important for customer service leaders and supply chain leaders to collaborate on demand planning and forecasting, Timmermans said.

"There is a lot of customer-specific data that steers the inventory parameter and other algorithms in the supply chain," Timmermans said.

Traditionally, demand forecasting was based on historical sales data and used to predict sales going forward, which worked really well, he said.

"But all of a sudden there is too much variation, too many SKUs, too many options, and disruptions from COVID-19, among other things," Timmermans said. "And those historical patterns don't matter anymore; they're not good predictors."

Today, companies need to enrich this forecast with much better signals coming from customers through distribution channels as well as from external data insights, Timmermans said.

"All these things need to feed those algorithms in a much better way so that they become forward looking rather than looking at forecasting from the past," he said. "So the other big touchpoint for these multidisciplinary teams is to figure out the data model, the external data sources, the customer distribution-related data that feeds into the supply chain algorithms."

AI and other ways to listen

COVID-19 has shed light on why connecting customer service and supply chains is so important.

When the pandemic began, customers started interacting with companies via messaging, virtual agents or online chat, said Dawn Anderson, Accenture's Customer, Sales & Service global practice leader.

Increasingly, customers are starting to ask more and more questions related to the supply chain through these customer service channels, she said. That means organizations have to integrate their AI technologies and their chatbot agents with their supply chain technologies so supply chain leaders can understand product fulfillment issues, Anderson said.

In the past, linking the customer service and supply chain systems was just an afterthought, Anderson said.

In other words, today's supply chain success requires new approaches.

Companies that are successfully getting the right products to the right customers at the right times are working with customer service leaders and listening to what customers are saying on social media, doing sentiment analysis on telephone calls and collecting and analyzing data gathered from customer surveys, said Beth Coppinger, senior director analyst for supply chain research at Gartner Inc.

And using the insight gleaned from the voice of the customer helps the supply chain play an active role in defining and responding to customer needs, she said.

"Leading supply chain organizations use [voice of the customer] feedback to understand if service matches customer expectations," according to the Gartner report, "How Supply Chain Leaders Can Use Voice of the Customer to Improve Customer Experience," co-authored by Coppinger.

Relevant customer insights provide supply chain leaders with the information they need to develop the right skills and capabilities to improve the customer experience and, therefore, the overall supply chain, according to the report.

"Understanding and responding to customer needs is no longer the responsibility of any one function within the company," according to the report. "Top companies take a cross-functional approach to understanding and meeting the needs of the customer. For supply chain leaders . . . it means listening and responding to the [voice of the customer]."

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