Four Dimensions of Supply Chain – Part 1

This is a long story summarised into four parts, I will publish part 1, 2, 3, and four in separately in order to give the readers time read in leisure and digest the information delivered in this long article.

According to the Oxford Dictionary, the supply chain is defined as “the sequence of processes involved in the production and distribution of a commodity.” In simple terms, it is a chain of events that results in producing and delivering the goods and services from the point of production to the point of consumption.

The importance and impact of the supply chain on Organisational performance are phenomenal.  In my opinion, the four dimensions impact any supply chain.  I call them “the four Cs”.  The first C is Customer, the second one is Competition, the third one is Corporation and the final one is the Commodity.

The Customer:

In the past customers have previously had very little influence on the efficiency of the supply chain as they were not fully aware how they can influence corporations supply chain effectiveness.  In today’s globalised economy, the customer preferences and needs are changing very fast due to product proliferation and choices made available by the competition. The customer is fully informed about where the product is manufactured, how long it takes to reach the shelf and what to expect as a price of the product and what features to look for. The customer now has access to information on all these areas and have therefore gained unprecedented influence over supply chain management efficiency. The customer is the key figure in the supply chain and their needs and opinions will affect the supplier’s decisions. According to a report published by the consulting firm CAPGEMINI, 90% of the supply chain managers confirmed participating in a survey confirmed that “Consumer demand is fluctuating more rapidly”.  The same report confirmed that “73% Consumers would purchase the item from a different store than originally intended” if the product is not on the shelf.  Further, the survey outcome reported that the main pain points of the customers with regard to supply chain include, delivering wrong product (95%), Late Delivery (93%), stock on available when required (82%), doest not offer options such as order online and pick-up in store (63%).

Today’s consumer expectations are unpredictive and making predictive supply chains shiver with the thought of fear of failure. The above-mentioned report also reported that 89% of the customers are likely to choose different store if the product is delayed by one day.

The power of the customer – “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”

The best customer service – “The best customer service is if the customer doesn’t need to call you, doesn’t need to talk to you. It just works.”

How to manage the customer – “The golden rule for every business man is this: ‘Put yourself in your customer’s place.”

How a customer can destroy your Organisation – According to one estimate, if the customers are not satisfied, 13% of them will tell to 15 or even more people that they are unhappy. On the other hand, 72% of customers will share a positive experience with 6 or more people. The biggest problem is that 67% of customers mention bad experiences as a reason for churn, but only 1 out of 26 unhappy customers complain.

Cartoon Source: Randy Glasbergen