Customer Focused Supply Chains

Most supply chains were created based on the infrastructure and needs of each company, seldom were they created keeping in mind the needs of customers. The time has arrived where companies need to redesign and segment their supply chains based on the needs of their Key Customers. This is easier said than done as this will need identification of Key Customers, building strategic relationships with them, ushering in flexibility in the supply chain to incorporate necessary changes and sharing benefits with the customer.
Initial steps would be to classify customers and identify Key Customers. Establishing a policy on Key Customers differentiated from other customers. Approaching Key Customers to form a long term relationship where a single view of both companies supply chains will be taken and the supply chain modification needs from both parties will be identified to raise service and profits on the key products. This may need alteration of the network, facilities, infrastructure, software and resources. The benefits need to be identified, tracked and shared. A separate team in the supply chain needs to be tasked with developing and maintaining such strategic relationships with Key Customers. Large-scale flexibility will need to be built into the supply chain to support this.
Some examples of initiatives that may be necessary are:

• Prioritizing, rescheduling production on some products at short notice
• Facilities for form postponement, keeping the base product produced and shipped to the Distribution Center where final product is produced with some modifications and packaged nearer to real-time demand
• Real time feedback from Key Customer on sales and inventory of Key products which can be used as input into demand planning and adjustments on production plans
• Continuous replenishment at Key Customer’s warehouses based on agreed upon inventory thresh-holds
• Inventory optimization to decide on location, period inventory levels to meet a certain customer service level
• Tracking total cost of delivering the product across the 2 supply chains, base lining current process/cost, determining better processes/cost reductions
• Utilizing network design software to identify new futuristic supply chain networks
• Linking the ERP/databases of the 2 companies to ensure information flow related to the supply chain activities
• Value stream mapping initiatives to drill down to the minute details of each supply chain link and node to drive up efficiencies and reduce costs
• Sourcing product from multiple plants to reduce risk, improve service & response levels/time and optimize costs
• Ensuring Key Customer participation in new product development, existing product reformulation/modifications etc.
• Ensuring Key Customer support in improving production batch sizes, frequency and changeovers.
• Use of niche supply chain software to enable network design, run strategy optimization, transport load and route optimization will be necessary.

This strategic relationship with Key Customers will lead to Joint Business planning which will continuously drive better processes, efficiencies and will also lead to innovation in the supply chain benefitting both companies. There will be constant focus on the most profitable products and new product launch efforts will be speeded up.

In today volatile sales environment, significantly improving forecasting accuracy is an uphill task. Customer focused supply chains will inherently be less dependent on forecast accuracy as it will be more responsive to real time market trends and changes. It will also usher in extensive functional collaboration across the extended supply chains of the company and the customer.