Omnichannel Leaders Widen The Gap Through Customer-Centricity

Richard Howells

In a recent blog – Creating A Customer-Centric Supply Chain – we discussed how customers becoming more informed, connected, and demanding is inspiring businesses to make their processes and supporting technologies more customer-centric. Customer-centricity has been a hot supply chain topic for several years. We merely referred to it with a different name: “demand-driven.” But it is no longer enough to just be demand-driven; we also need to be market-driven.

This has been further endorsed in a recent SCM World report titled Customer-Centric Supply Chain: Omnichannel Leaders Plan to Widen the Gap, which outlines the business drivers of a customer-centric supply chain and highlights how omnichannel leaders are not only getting returns on their investments but doubling down and increasing their commitments in omnichannel processes and technologies.

The importance of demand sensing

The first steps in becoming customer-centric, as SCM World points out, are:

  1. Collecting data from direct and indirect customers
  2. Translating data from customers into actionable supply chain insight

Based on findings from SCM World research, these also tend to be the most difficult for many supply chain organizations. In fact, 74% of survey respondents say that customer insight of demand data from consumers/end users is both difficult to obtain and highly valuable.

The good news is that 78% say that they have data from direct customers that is less than a week old and valuable. Additionally, 34% say that this data can be accessed in real time. However, 62% say that they have no valuable data from indirect customers, with 34% stating that they have no data whatsoever.

The report also points out that “better demand sensing creates clarity on value, but is meaningless without a response.” It states that supply chain organizations that have advanced customer-centric processes with omnichannel sales and fulfillment, inventory visibility, and improved planning processes are by far the most successful.

The state of omnichannel sales processes

Omnichannel sales require collaboration across business functions such as sales, marketing, manufacturing, finance, and supply chain. Changes to the sales process have a direct impact on demand, both in total volume and in volume per channel.

While not typically the primary responsibility of the supply chain organization, it is clear that involvement in establishing core omnichannel sales processes and technology is increasing. In fact, many supply chain strategy teams are currently involved in inventory and channel strategy discussions.

The maturity of omnichannel sales is improving, with 58% of surveyed respondents believing that they have good processes in place. However, 68% say that they have weak technology solutions to support omnichannel sales. With this in mind, 63% plan to invest in omnichannel sales technologies in the next three years. Meanwhile, omnichannel sales leaders, who already have good technology and good processes, are also planning heavy investments over the next three years – at five times the percentage rate of the laggard group.

Omnichannel fulfillment: Leaders vs. laggards

In many cases, customers are now demanding shorter and shorter delivery cycles, with same-day or even one-hour deliveries becoming commonplace. To enable this, businesses must possess a combination of good processes and technology. Forty-three percent of survey respondents say that cost to serve of last-mile delivery is both high value and hard to get.

Fifty-nine percent of respondents believe that they have good omnichannel delivery processes, while 67% say that they have weak technology solutions to support omnichannel delivery.

Sixty-three percent plan to invest in omnichannel delivery in the next three years. But again, when you look at the omnichannel fulfillment leaders, this number rises to 77%.

Integrated omnichannel inventory visibility

It’s critical to provide visibility into, and analytics of, the available inventory across all channels and at all levels of the supply chain. We are increasingly seeing that the items in all locations within the network –warehouses, distribution centers, stores – are considered available inventory when servicing an omnichannel sales order.

Forty-nine percent of SCM World survey respondents believe that they have good omnichannel inventory visibility processes in place today. However, 68% of respondents say that they have weak technology solutions to support omnichannel visibility processes. More than half – 55% – plan to invest in omnichannel inventory visibility in the next three years.

Integrated omnichannel demand and supply planning

Being able to synchronize supply to demand across channels is becoming a competitive differentiator, and the numbers show that there is huge room for improvement in this area. Only 41% of survey respondents believe that they have good omnichannel demand and supply planning processes, while 73% say that they have weak technology solutions. So it isn’t surprising that 62% plan to invest in omnichannel demand and supply planning in the next three years.

Omnichannel leaders put customers at the center

The SCM World report shows an interesting correlation between the value of customer data and an organization’s omnichannel capabilities. Almost without exception, across sales and fulfillment, those that have good processes and/or good technologies tend to have better direct and indirect customer data – and thus results – than their counterparts with weak capabilities.

It is also clear from the research that omnichannel leaders are planning even more investments to widen the gap between their capabilities and those of their competitors with weak processes and/or weak technologies.

Finally, there is a direct correlation between good omnichannel processes and demand sensing. Leaders show that the value of data from direct and indirect customers is significantly better than that of their peers across omnichannel sales, fulfillment, returns, inventory visibility, and integrated planning.

For more on strategic supply chain management, see Creating A Customer-Centric Supply Chain.

About Richard Howells

Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.