News / Customer-centric supply chains: the 'make or break' factor in business today

© Jakub Jirsak

The meteoric rise of e-commerce has been a forceful driver of the prominence of customer centricity and matching supply chains. Somewhat oddly, this does not extend to delivery commitments, as a legal tussle between Amazon and a customer, seeking to launch a class action lawsuit against the e-commerce behemoth, shows.

Industry experts have identified customer-centric supply chains (CCSCs) as a vital ingredient of doing business today, an element that makes or breaks the success of a business. The message has been received in c-suites: a survey by Gartner found that 83% of supply chain leaders had been asked to improve the customer experience, and developing a customer-centric supply chain is widely regarded as road to get there.

While the experience of the past couple of years has turbocharged the concept, placing the customer at the centre is not a novel idea, noted Douglas Kent, EVP of strategy and alliances at the Association for Supply Chain Management.

“Demand-driven models have been around for a while,” he said, citing the vendor-managed inventory concept as one example. What distinguishes today’s CCSCs is the advanced level of tools used – above all, the reservoir of data and the tools to mine it, he added.

Armed with these insights, supply chain providers and their customers gain better capability to plan demand. In turn, they can give more information to clients, first and foremost in terms of visibility and traceability of shipments, to allow for seamless order fulfilment, explained Mr Kent. Visibility has to be end-to-end and beyond, to post-sales service and returns.

Various studies have indicated that most companies have poor visibility of their supply chain beyond tier-one suppliers. The flow of data in a CCSC should improve this. Mr Kent noted that, increasingly regulations require companies to report their Scope 3 emissions, which obliges them to have better visibility.

Consumer-facing companies are well ahead of their B2B peers in the development of CCSCs, believes Mr Kent. On the latter side, he sees the greatest potential in sectors like the defence, aeronautics and automotive, which are characterised by very tight relationships between firms and their suppliers.

When it comes to obstacles to developing a CCSC, he pointed to the challenge of keeping technology and yjr talent that uses it at the same pace. Typically technology advances faster, he said, adding that this has emerged as the biggest problem with AI.

The second major obstacle is trust, as trading partners have to share data. While there is a ready recognition that this is necessary, it is also a fear factor, and concerns about cybersecurity have heightened discomfort with this, added Mr Kent.

Having a lot of data about business partners allows supply chain providers to make more proactive recommendations (such as consolidating traffic or offering more sustainable solutions to clients that place lager emphasis on such credentials). Overall, placing the customer experience at the centre of all decisions within a supply chain – the classic definition of the concept – suggests a high degree of customisation, but this is not necessarily the case.

Mr Kent pointed to Amazon, which runs a highly customer-centric business model without tailoring offerings to specific customers.

That said, it would seem that offering a number of choices for delivery would entail a firm commitment to the parameters of those services on offer. One customer of Amazon thinks this should be the case, and has tried to take the e-commerce giant to court over the matter with a consumer class action lawsuit.

It accuses Amazon of failing to deliver an order within the four-hour window picked by the consumer by several hours, and refusing reimbursement for the extra shipping cost. The plaintiff had paid $2.99 for a rush delivery within four hours for his order of herbal tea. Amazon has asked for the case to be thrown out, arguing that the shipment was delivered on the proper delivery date.

In a court filing, Amazon said that “for transactions that are covered by a delivery guarantee, the contract states, 19 different times, that the guarantee extends only to delivery on the promised date”.

The plaintiff’s lawyer estimated that a class action lawsuit on the matter could extend to “millions of Amazon customers”.

A federal district judge in Seattle dismissed the case, but allowed the plaintiff to file an amended lawsuit by 8 July.