Supply Chain Transformation Blog

Supply Chain Transformation Blog

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

The Digital Revolution: Delighting Your Customers, Annoying Your Operations!

Category : Supply Chain

The “Digital Revolution” has changed the way companies engage their customers and conduct transactions. With the continued growth of online, mobile and social media platforms, customers have a variety of touch points and channels to interact with their favorite companies and brands. This has led to customers demanding an omni-channel experience, requiring companies to provide a seamless customer experience across all channels - digital and physical. Though the digital customer experience has “delighted” customers, it has provided many “annoying” challenges for operations.

The customer experience has evolved, thanks to the emergence of digital channels and tools, and has been operationally demanding for companies that are not quite ready for such disruptive change. Providing an omni-channel experience requires a seamless experience across any and all channels for your customers. Unfortunately, this also means you will need seamless operations to appropriately respond to customer demands. Customers want to be able to purchase and receive products from any channel you have to offer, often utilizing multiple channels to complete their transaction.

In order to successfully satisfy your customers, you will need to address three key operational challenges:
 

  1. Supply Chain Planning & Strategy:

    With customer’s purchases dispersed across multiple channels, it is becoming increasingly more important to integrate your sales forecasting, distribution and inventory planning across online, mobile and in-store teams. Gone are the days that channel teams can work in silos; a collaborative effort is needed to manage your inventory and optimize your network. With the need to perform cross-channel planning, there is the need for better visibility into inventory throughout the different stages of the value chain, which can also be leveraged into providing visibility to customers for purchases online and in-store.
     
    The Home Depot is a great example of a company that has done an excellent job of planning across channels, creating inventory visibility and parlaying their work into a value-add for customers. With numerous cross-functional teams working and analyzing massive amounts of data across all sales channels, The Home Depot is able to efficiently make  decisions that will provide customers with the best assortment options (online and in-store). The Homedepot.com mobile app allows customers to search for product inventory in stores, along with the items physical store location.
     
    A good omni-channel supply chain strategy requires integrated planning and collaboration throughout the organization, breaking down the walls of traditional siloes and ways of working. Combining all sales channels and understanding that customers only see one brand is an important step to overcoming the challenge that digital brings to traditional supply chain planning and strategy. 

  2. Logistics & Fulfillment:

    Logistics & Fulfillment is arguably one of the most challenging aspects of being an omni-channel retailer (or company). With the ability to purchase across multiple channels, there are now numerous combinations with which customers can make and receive their purchases. Common combinations include: 

    • Buy online, pickup in-store
    • Buy in-store, deliver home
    • Buy in-store, pickup in-store
    • Buy via mobile, delivery home
    • Buy via mobile, pickup in-store

     
    Regardless of the channel used to order, or the delivery method requested, customers desire immediate service and fulfillment, with little care for the complexities of their fulfillment requests. These demands can result in:
     

    1. The inability to meet customer demands (delivery times or cost)
    2. Margin degradation through shipping/courier costs.

    With the bar set high by retailers such as Amazon, Zappos and L.L.Bean, who are consistently ranked in Forbes list of retailers with the best customer service, customers expect online and mobile orders to be delivered within days, at little to no cost. Many companies have experimented with non-traditional courier strategies to deliver products quickly and more efficiently. Strategies may include same-day shipping (Walmart and others), Locker Delivery with partner retailers (Amazon) and last mile delivery from traditional stores to deliver products to customers same day or next day. (Please see Adrian Penka’s post on Last Mile Delivery here!).
     
    It is extremely important to use all available assets to deliver products to customers as quickly as possible, and even more important to have inventory visibility throughout the entire supply chain and across channels. Viewing existing stores, DCs and partner manufacturing facilities as fulfillment centers is a good first step in creating an agile logistics and fulfillment strategy that can serve the digital customer.

  3. After-Sales Service:

    Customers do not care where or how they make a purchase. When it comes to service, they view all channels as equals and want the same options for returning or exchanging items as they have for making purchases. Whether a purchase was made online or in-store, they want to be able to make returns or receive support in the manner most convenient to them. This again means using multiple channels to complete their transaction.  Many retailers allow any purchase to be returned in any way, even providing free return shipping, thus setting the gold standard for after-sales service.

    Nordstrom, Saks and Neiman Marcus are luxury retailers that have proven that providing great after-sales service, such as free return shipping and in-store returns for online orders, is a great way to promote online sales; making it easier for customers to make purchases. The less the customer has to worry about, the easier it is for them to spend money!

    After-sales service is a segment of the customer journey that is often overlooked and should be emphasized by companies seeking to provide their customers with an omni-channel experience. Customers should be afforded the opportunity to seek service across all channels, and great companies will be the ones that help facilitate these types of transactions. 

The operational challenges above are far from inclusive of all challenges that the “Digital Revolution” has created, but provide the opportunity for a retailer to excel in customer service and build brand loyalty. Ironically, companies have been able to overcome many of these challenges with simple, scalable digital tools that allow teams to collaborate and function across channels!

These tools can range from inexpensive cloud platforms, such as Google Apps for Work (a cloud-based collaboration suite), to complex POS systems (which combine inventory visibility with clienteling capabilities) providing companies with an abundance of technological options to help transform their challenges to benefits and help make better business decisions. The key to success in the “digital revolution” is to not just prepare for the changing digital landscape, but to also embrace change and position yourself to provide the great digital customer experience your customers deserve!

About the author

Michael Kim
Michael Kim
Michael Kim is a Senior Consultant in Capgemini Consulting's General Consulting Practice. He has helped clients in multiple industries, including retail, consumer products, telecom, pharmaceuticals, industrial products & services and hospitality. His specialty areas include strategy & operations, merchandising, sales & marketing, digital transformation and business development. He is also a Lean/Six Sigma Black Belt.

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