Home Uncategorized Supply chain survey highlights major shift in business

Supply chain survey highlights major shift in business

Kate Stubbs, marketing executive at Barloworld Logistics: “To be truly customer focused, an organisation must reach and sustain a high level of intimacy with its customers, understand their needs and be fully engaged in delivering in line with their customers’ requirements.”

In the short period of just a year, the ball game of ‘Business South Africa’ has changed significantly as the speed of change continues to escalate as a result of increasingly competitive global markets and advanced communication technologies. The winners of today cannot be the winners of tomorrow without accepting that ‘doing business as usual’ is an unlikely formula for continued success.

This is one of the conclusions reached in the Barloworld Logistics eleventh annual supplychain foresight survey which explores how companies are adapting to the shift in consumer power and how they are realigning their supply chain strategies and business models to meet customer expectations.

Based on independent research by Frost and Sullivan conducted on behalf of Barloworld Logistics, the theme of this year’s survey is ‘The Rise and Fall of Companies and Customers’, and it examines the perceptions of businesses across a wide range of industries of how customer centric they are.

Kate Stubbs, marketing executive at Barloworld Logistics, says new business models are emerging that are changing the way people work and creating a paradigm shift in business. “Much of this change is driven by customer and consumer demand and increased global competition, which underlines the importance of customer centricity as key to future success.”

More than two-thirds of survey respondents hold C-level, director or general management positions across various business functions and the majority of the rest of the respondents hold either managerial or consultant positions. The top three ranking strategic business objectives for all respondents to this year’s survey are:
• Growth and expansion into new markets
• Financial returns and increased margins
• Increased market share.

Respondents are also seeking to increase flexibility, agility and responsiveness in their business, to use their supply chains as more of a competitive advantage, and to increase new products and services. The top five strategic business constraints cited by respondents were:
• Lack of relevant skills
• Cost of doing business
• Rising competition
• Currency volatility
• Labour unrest.

Responses to questions on strategic supply chain objectives indicate a clear recognition of the necessity of aligning the supply chain strategy to the business strategy to drive success. “This recognition of the strategic role of the supply chain in business is a common thread running through the results of the supplychainforesight survey over the past four years,” says Stubbs.

Improving service levels to customers is respondents’ key strategic supply chain objective for the third year in a row, and other objectives cited in this area would all contribute to enhancing service levels to customers.

The top ranking supply chain constraints respondents envisage over the next five to ten years are cost of transport followed by reactive versus proactive approach, internal and external silo-based mentality, availability of supply chain skills, and labour unrest.

Stubbs says the level of respondents’ understanding of customer centricity highlighted in the survey is encouraging. She says the shift from customer service to customer centricity clearly shows that the understanding of the concept of customer centricity in South Africa goes far deeper than simply offering good service.

In this regard, the three top priorities rated by respondents were long term relationships aimed at driving customer delight at every interaction, thinking deeply about customers’ aims and objectives to drive more value before the client asks for it and continuously working to improve the customer experience.

“To be truly customer focused, an organisation must reach and sustain a high level of intimacy with its customers, understand their needs and be fully engaged in delivering in line with their customers’ requirements,” says Stubbs.

Respondents ranked greater customer expectations and increased competition as the top two customer centric drivers. This was followed by improved communication technologies and use of social media, increase in technology and internet usage, and speed of change and innovation, which were all rated as being equally important.

Stubbs says while respondents show a deep understanding of customer centricity and the value it can create for a company, survey results reflect a big disconnect between theory and reality.

Respondents rated lack of appropriate skills, no structure or plan to innovate or embrace continuous change, and lack of alignment with business functions as the top three constraints to achieving customer centricity.

Ninety two percent of respondents agree that customer centricity cannot be achieved without a supply chain strategy focused on delivering customer value. At the same time, 88% agreed that the supply chain function is seen too often as a way of managing logistics rather than being core to customer strategy, and that companies struggle to manage the complexity required by the rise of e-commerce and online shopping.

Sourcing strategies and inventory management are ranked by respondents as the two most important areas of the supply chain that need improvement. These two perceived short-comings were followed closely by integration of systems and processes, collaboration with suppliers and customers, supply chain outsourcing strategies, supply chain visibility and technologies, and market intelligence.

“Again this highlights a gap between what is needed and what is currently being achieved, showing a considerable number of areas of focus and improvement for companies going forward,” says Stubbs.

She says respondents’ perceptions of alignment of measurement systems to deliver customer centricity demonstrate an extremely high need for alignment across all industry sectors. Only 19% of respondents said their systems are aligned, measured and managed, while 19% indicated the exact opposite. This highlights the 58% of respondents who said there is room for improvement.

Stubbs says achieving customer centricity relies heavily on the alignment, integration and coordination of many external organisations, processes and people. “The ability to align these components of the supply chain requires a unified approach to ensure the final product or service satisfies customer needs.”

Survey results show a critical need for alignment across all industry sectors to enable the management and measurement processes to ensure customer centricity is being performed at all levels and by all functions in a business.

Respondents indicate that the major difficulty of implementing customer centricity lies in their companies’ culture and structure. “The issue of company culture, together with challenges of change management and the ability to get company-wide alignment to business strategy, highlights the need for management, leadership and direction,” says Stubbs.

Only 23% of respondents said their supply chains captured critical information, with 77% indicating that customer information is collated but there is need for improvement. The real issue here goes beyond capturing information to the quality of the data and how it is interpreted so that it provides the ability to understand and anticipate customer needs more proactively and effectively.

Supply chain visibility increases the agility, flexibility, reliability and responsiveness of a company to operate more effectively in unpredictable and ever-changing environments.

It is about how organisations capture and integrate data to extract critical information and business intelligence, says Stubbs. “Ultimately, greater visibility across the supply chain enables greater customer centricity.”

Kate Stubbs, marketing executive at Barloworld Logistics: “To be truly customer focused, an organisation must reach and sustain a high level of intimacy with its customers, understand their needs and be fully engaged in delivering in line with their customers’ requirements.”

Since its inception in 2003, the supplychainforesight survey has grown annually in size and stature, achieving a thought provoking mechanism that has found favour with businesses, academia and public enterprises. It has also provided a measure of performance and identification of trends and opportunities for South African businesses and their supply chains. It has grown to include specialised studies on issues such as Africa and more recently, the Middle East, exploring the changes taking place in supply chain management in the Gulf Corporation Council (GCC) states.

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