To Enhance Customer Focus in the Supply Chain
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The current competitive environment is the outcome of the convergence of various forces on all supply chain members and to compete in it, organizations need to do more than optimize their supply chain activities. These forces include the development of new technologies, increase in communication capabilities, increasing demand for better quality and customer services, and the demand for quick and efficient response to market.
Earlier, supply chain members who were away from the end consumers stressed factors that directly affected their own immediate customer and supplier. But now, they too need to focus on the end customers and see how these forces affect their end customers. The key to survival depends on the supply chain members focus on the demand side of the supply chain equation. From the corporate perspective, end-use forces like technology and changing lifestyles will help in determining the supply chain. Thus, customer focused analysis influences the objectives and goals of supply chain activities.
Customer Focused Supply Chain Management. CFSCM, is a strategic approach to acquiring goods and services. CFSCM is based on the idea that by enhancing your customers overall satisfaction with your product or service, in the long run, you will improve the profitability and efficiency of your entire enterprise which includes your supply chain partners.
The overriding philosophy of CFSCM is that everyone in a customers supply chain is linked to the customer, and that the supply chain is only as strong as its weakest link. The strategy of CFSCM is to establish collaborative relationships up and down the supply chain; from upstream raw material suppliers to downstream final users of the product or service. With CFSCM we seek new and better ways to acquire goods and services that will increase our customers satisfaction and improve profitability.
Increased customer satisfaction means greater profitability, because loyal satisfied customers provide long term revenues and reduced costs. It is less costly to maintain satisfied customers than it is to acquire new ones. Also, be dealing with loyal “customer-focused” suppliers, you can achieve efficiencies and cost savings well beyond those achieved from the traditional approaches of competitive bidding and price negotiations.
The mistake that too many companies make is employing the tools and techniques of SCM without having first established collaborative relationships with their customers and suppliers. It is not the tools that make you successful in SCM; it is the relationships. Collaborative relationships start with trust, honesty, mutual interests, and mutual benefits. Traditional arms-length relationships with suppliers do not support collaboration. Many of these relationships are competitive based on everyone “getting their share of the pie”, often at the expense of others.
Once the entire supply chain becomes focused on the needs of the customer, you can begin to employ the tools and techniques of SCM: outsourcing, 3rd and 4th party logistics, supply chain collaboration, “early supplier involvement” (ESI), and SCM software.
The first step in implementing a CFSCM program is to establish free and open two-way communications with your customers and suppliers. Understand their needs. Work with