When it comes to supply chains, it’s what’s good for the customer that counts not what’s good for the nucleus company or even what seems to be good for the supply chain itself Supply chain management needs to be focused on giving the final customer the right product at the right time and place for the right price. It isn’t necessarily about the most advanced product or service, nor is it always about the lowest price, the fastest time, or the most convenient place. It’s about the balance of quality, price, and availability (timing and place) that’s just right for the supply chain’s customer.
How does one determine what is the right amount of each of those factors? There isn’t a simple formula that will help the supply chain manager with this decision. But there are some basic premises that will help you get started in determining the appropriate balance:
- Serving the end-user customer is the primary driver of supply chain decisions.
- Organizations in the supply chain have to make a profit and stay in business to serve the customer.
Functional teams in the organization will provide their input and research on the optimal balance for the supply chain to meet customer needs. Design engineers – or, better yet, design teams from across the network—design products that are right for the end customer and can be sold profitably. Market research looks for the true, and not always obvious, needs in potential consumers that the supply chain can be engineered to satisfy profitably. Logistics supply chain strategy begins with data about customer demands for availability—of materials, components, service, or finished products, depending upon the customer—and then it looks for ways to move products in a cost-effective way with acceptable risk.
Decisions are not just about product features or price or speedy delivery. They are about the right features at the right price on the right schedule. DOS was not a great operating system; it was just the right operating system for the time and the market.
The term “customer” can be a complex concept in relation to supply chains because there are multiple customers with different stakes in the process. When we talk about customer focus, we mean the end user, the consumer of the product. But usually only the retailer actually sees the end user and has a direct relationship with that person or entity.
Everyone else in the supply chain has a more immediate customer just downstream to our right in the supply chain diagram. If the supply chain is completely aligned in its focus on the end customer, then, at least in theory, serving the customer just to an organization’s downstream side would automatically serve the end user and also be in the supplying organization’s best interest as well as the interest of investors.
Moreover, within each supply chain partner there are internal “customers” whose needs also must be aligned with corporate and supply chain strategies. Each manager must understand his or her role in making the supply chain profitable, and staff, too, must be rewarded, motivated, and trained in alignment with the needs of the supply chain’s end customer.
Consider sustainable supply chain management. Successfully managing for sustainability requires a strategic mindset, involving numerous personnel and financial resources and a commitment from suppliers from first to lower tiers of the supply chain as well as consumers further up the supply chain. Departments must cooperate with other departments in their organization (e.g., purchasing and environmental or design departments) and with their counterparts at suppliers. This type of collaboration between supply chain partners necessitates breaking down cultural barriers and building a culture of trust to ensure that the focus is on end-to-end supply chain activities and not just discrete supply chain processes. Creating and managing a sustainable supply chain requires an organization to be informed, exercise leadership, and cooperate with all supply chain partners in achieving positive results on the triple bottom line.
