Supply Chain Management: From Customer-Facing to Customer-Serving: Keeping the Supply Chain investment focus

With recession fears forcing a cut-back on spending, there's greater competition for investment dollars among business functions, among departments that run those functions and the respective apps they run on. In such a scenario, it’s natural to think about putting in more money on customer-facing applications and functions like sales & marketing at the cost of back-end or less visible functions, which may all get clubbed together as support stuff.

We all know that SCM is critical and many a time, the lifeline to the company's existence, especially if you happen to be in Retail or Manufacturing. How do SCM practitioners fight for their cause in the boardrooms and in front of those who hold the purse strings?

Late January, I got a refreshing new way of looking at this conundrum from Erik Frederick, Vice President Information Systems Finance & Operations at Staples. Erik and team were visiting the Infosys campus to get to know us better. Since Supply Chain Execution is an area I take care of at Infosys , I got a good bit face time with the audience - Sterling Commerce was their primary area of interest, they have put in a lot of faith in the product's ability to manage both their B2B and B2C sides of the house (it’s a very unique company with a strikingly strong presence in both, a 60-40 split). The Distributed Order Management offering has been there for awhile at Staples, the company being an early adopter during the Yantra days itself.

So, what was it that I learnt from Erik that stayed with me long after we parted? It was a simple semantic twist in terms of his investment focus when he told me that the dollars are going to flow in 2009 into "customer-serving" apps - as he called them - as against "customer-facing" apps. When you think about it, that puts supply chain squarely in the investment column and suddenly brings with it inevitability that if your steering wheel needs to turn, your SCM wheels need to be oiled right as well.

If you stretch back into the chain of Plan-Buy-Move-Sell chain of trading companies (both B2B and B2C), how far can the "customer-serving" be stretched to? My guess is that it’s easier for sell-side supply chain (including TMS & WMS, which in any case stretch on both sides) to pull this off compared to the buy-side. Out there at Staples, the core platform based on best-of-breed packages is well set, so it’ll surely be interesting to see how they crank up the “customer-facing” apps portfolio to the next level of efficiency, squeezing in more from the offered functionality within the existing landscape.

Comments

This is certainly refreshing to see in light of so many companies being squarely and solely focused on cost reductions within the supply chain.

I personally believe, while necessary, this is a short-term mindset that will prove damaging. It sounds like Staples has it right. In these challenging times, it's not enough to cut back on costs throughout the supply chain. You must also re-double your efforts to improve customer service. There are fewer deals to be won and your competitors may get desperate and do some off the wall things. You can't take your eye off the customer right now - even while you try to squeeze every cost possible out of the supply chain.

Posted by: Randy Littleson | February 23, 2009 10:44 PM

Thanks Randy for the detailed comments. If the order capture/entry - order management - order fulfillment cycle can be shortened via investments to start with, in data integrity and better cross-app integration, that could directly have a step impact on customer service. Thanks again and appreciate the perspectives you brought in to the post.

Posted by: Gopikrishnan G R | February 25, 2009 8:51 AM