We live a world shaped by experiences. Our experiences with the things we buy and consume determine the actions we take and the products we use. Consciously or otherwise, we share our experiences with our friends, colleagues, and families. This exponentially propagated knowledge paves the road to better practices in a closed-loop feedback process.
While our experiences at the receiving end help companies improve their products and services, we might be understating other areas in experience management (XM). One such field is supply chain management.
Whether we call it supply chain management (SCM) or design to operate, or segment it into sub-categories such as procure to pay, XM should be embedded into SCM. But how should XM work in SCM?
I often meet C-level executives from prominent distributors and FMCG manufacturers in EMEA. One managing director of a distributor in Saudi Arabia told me he was confused about what value XM could offer because his company basically worked as a middleman between principals and retailers and rarely faced consumers directly. His assertion had some legitimate reasoning in terms of consumer experience (CX). But he also mentioned he could understand the value behind employee experience (EX) and that he would like to work with my company to uncover some missing correlations – for example, to explore why his organization was unable to retain millennials for more than two years.
We then concentrated on the organization’s food service distribution business, which included some unpredictable cases, mostly relevant to supply chain and last-mile delivery. The pinnacle of our discussion was how to use the “why’s” and “who’s” to improve their “what’s.” He was familiar with studies by XM Institute (formerly Temkin Group) indicating the correlations between the CX and operational data (O-Data) and showing how cross-selling, up-selling, and other revenue areas relate to experience data (X-Data).
We pondered on how we could embed XM – i.e., the human factor – to supply chain. It was obvious that it would get too complex to consider all the supply chain processes, so we decided to focus on last-mile delivery.
After discussing the business case and return on investment (ROI), we concluded that we needed to focus on three value drivers that would benefit the bottom line: reducing inventory carrying costs, increasing order fulfillment ratios, and reducing last-mile delivery transportation costs. We decided to kick off this brand-new project: XM in Last-mile Delivery.
Currently, we are collecting and collating X-Data. Gathering this data from the company’s 500+ van drivers, who serve the entire country, is the first phase of the project. The second and third phases are to focus on their central and satellite warehouse employees and route planners in the head office, respectively.
These should not be considered strict project phases – it is hardly plausible to gather X-Data from van drivers and sleep on it for weeks or even months. But whether or not the phases overlap, they should be completed in a short time, with gathering and comparison of data processes continuing in cycles.
We expect to see results coming and ideas flourishing in the next couple of weeks. Adding the human factor to business lines other than consumer- or customer-facing is nothing new. If we find significant correlations, our goal is to try to create a sustainable feedback cycle to improve operational KPIs, which will in turn positively affect value drivers behind the processes and boost ROI.
If we succeed, my next action will be to propose an XM project to help cut operations costs for one of the biggest cash-and-carry wholesalers in UAE.
For more insight on supply chain management, read Strengthening The Supply Chain Through Supplier Collaboration.