Barloworld
Logistics has released its much anticipated eleventh annual
supplychainforesight 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 is growth and expansion into new markets, financial returns, and
increased margins and 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, and
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.
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.
The
level of respondents’ understanding of customer centricity highlighted in the
survey is encouraging. 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.
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.
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. 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. 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.”
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. Ultimately, greater visibility across the supply
chain enables greater customer centricity.
Contributed by Kate Stubbs, Marketing Executive,
Barloworld Logistics
To
download the full report, visit www.barloworld-logistics.com
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.
