E-commerce: Connecting Supply Chain Performance to the Customer
To keep pace with e-commerce growth, effectively linking supply chain performance to the needs of our consumers is a business imperative.
Remember the adage, “doing the same thing over and over expecting a different result is the definition of insanity.” Commerce is no different. The buying habits of our customers are evolving and the wholesale model is no longer the “right enough” solution for many companies. Forrester Research indicated e-commerce will consume an average of 17% of all commerce by 2022. For some companies this number is much higher. So, what does this mean for those of us who want to thrive in this new, digital world?
We must examine leading factors like the customer, technological advances, efficiency, and industry disruptors...then, transform. In this blog we will examine mapping supply chain impacts to the customer. To keep pace with e-commerce growth, effectively linking supply chain performance to the needs of our customers/consumers is a business imperative.
Today, customers know more about products without entering a retail location. Thanks to the internet they can find products in other countries, sense how long it takes to deliver products, learn how others feel about a product, and more. While many studies describe the evolution of commerce, you and I experience this new world every day. Yet, many companies struggle to link supply chain effectiveness to the customer’s experience. If the relationship between customer experience and supply chain effectiveness were clear, would we be experiencing so many supply chain transformations nearly two decades after online shopping became a “thing”?
So, what do we do about it? For starters, we continue to evolve by allowing our supply chain success to be defined by customer and consumer outcomes. But, we need to be clear about what "defined by customer and consumer outcomes" means. For example, a customer (purchaser) should be:
aware of the product;
able to easily research the product;
comfortable with the purchase; and,
able to return/exchange the product, if necessary.
And, a consumer (user) should:
see a need for the product;
appreciate how the product functions; and,
believe the product is reliable.
These are customer/consumer outcomes and, as an aside, studies have shown these customer/consumer outcomes to be the norm. We should be able to take these outcomes and measure how much influence our supply chain activities have on them. We can connect these outcomes to supply chain processes through a tool called an "impact map". An impact map helps organizations see how front line behaviors are connected to broader organizational goals; it can be a great performance management tool.
We'll do a simple impact mapping exercise to give you an idea of how it can be used to connect supply chain performance to the customer/consumer.
Supply Chain Performance
For our purposes, we'll leverage an impact map with the following structure:
A pinnacle outcome or goal with success factors
Major outcomes that contribute to the pinnacle outcome or goal
Plus, the action that produces the major outcome, action owner, and measure of success
Additional outcomes contributing to major outcomes
Plus, the action that produces the outcome, action owner, and measure of success
Let's say the C-suite has aligned on an aggressive goal to increase e-commerce revenue by 25% within 5 years. Leveraging an impact map we would take the pinnacle outcome of increasing e-commerce revenue and start to build out connections between the pinnacle outcome and major customer/consumer outcomes, then major outcomes and other outcomes, and so on until we have a clear enough picture to make decisions. Leveraging the visual at Figure 1 we should be able to make some high level decisions.
Figure 1: Basic Impact Map (for illustrative purposes) Keep in mind, Figure 1 is a simple impact map for illustrative purposes; much more goes into an effective impact map. There is a system beneath this visual that has many more nodes and connectors. But, even with this simple visual at Figure 1 we see the levers we can pull to increase e-commerce revenue. Add data to each node in the impact map and you start to see health. Add relationship type (positive or negative) to each connector and you start to see how much teams are aligned in supporting the pinnacle outcome. What questions would you ask the Chief Supply Chain Officer (CSCO) in Figure 1?
Pulling It All Together Nowadays, customers have a ton of information they can leverage to form opinions about products and brands. With the introduction of e-commerce, supply chains have greater influence over customer and consumer experience. To keep pace with e-commerce growth, we must understand how our supply chain functions affect our customers/consumers and respond accordingly. To watch a video on impact mapping, click here. In the next article we'll cover technological advances and their role in furthering supply chain transformation. References Impact mapping, by Gojko Adzic Forrester Research, 2018