Happy New Year to everyone!

Apart from all the political suff that I do not want to dive into, the year 2022 has seen a lot of exciting events and topics, from the rise and fall of the Metaverse, to lots of defaulting crypto companies. Towards the end of the year, chatGPt stirred up quite some waves.

Not to forget the long story of Elon Musk taking over and handling Twitter ...

In more conventional areas, we have seen more of a renewed interest in affordable CX suites. Earlier in the year, also CDPs have been a big topic. Tips for good engagement to achieve customers having a positive experience is also always a topic.

(Nearly) all of this is reflected in the 2022 top ten of my blog, which has seen a good number of visits. 

A big and heartfelt thank you to all my readers!

Here are your top ten articles of 2022.

#10 How to engage for customer experience and success

#9 How to create value with a CDP

#8 The impact of the supply chain on the customer experience

#7 A great human - bot conversation with lots to learn

#6 How (and why) a marine consultancy made Zoho core of their business

#5 The almighty Metaverse - its Rise and Fate

#4 How to make Zoho a business's operating system

#3 How to Zoho'matize a business

#2 Don't mess with Zoho - A Zohoday 2022 recap

#1  Metaverse - the return of the Undead

All of these are well worth revisiting.

Thank you again for your readership. I wish you all the best for 2023.

Exciting times are lying ahead of us.

In the course of the last year or three, I have written a few times about the supply chain and how it affects the customer experience, sometimes badly so. In my last article ‘the impact of the supply chain on the customer experience’, I explained some of the issues and laid out a couple of high level solutions.

Let me elaborate a little on what I wrote then. Of course, there are challenges in two main areas:

• The demand side
• The supply side

The customer expectations are quite simple: A customer expects that things just work, that the vendor, and information given by the vendor, is reliable, accurate and comes timely; that deliveries after order are coming reasonably fast and that there is transparency about the order and delivery status.

This is all quite abstract, so let us fill this with life.

An example to the contrary goes as follows: You buy something, e.g., some whiteware, from a brand with a very high reputation; you are asked for upfront payment (several thousand dollar, remember, high reputation), get an approximate delivery date two months out – along with a warning that there may be a delay of a month or so.

So far, so good. I could live with that although even the two months should be explained …

Now, imagine that one month into the wait time you get an e-mail notifying you about a changed delivery date, pushing it out by a month. Well, not nice, but also not out of the range of expectations. After all you got told so.

However, the next month you get a similar mail. And the next month, and then in some more months.

This is where the customer experience falls apart. What do you do? You call the vendor. Customer service tells you that they do not know when the delivery can happen, and don’t know a reason other than ‘chip shortage’. It is all up there in the clouds (pun not intended).

This is akin to saying: I do not have any insight into my supply chain.

What? How can this happen?

This is quite unhealthy for a business.

Not having insight into the own supply chain can happen generally only under two circumstances

1. Data is not shared internally
2. The suppliers do not provide any data

The first reason can be mitigated pretty easily. It is a matter of internal collaboration – i.e., processes – and then of setting up a proper data exchange between the relevant systems. That way, all organizations have the data at hand that they need to at least fulfill some functions that lie at the base of the pyramid of customer expectations. Still, the experience is poor, as the customer does not only expect timely and accurate information, but actually a delivery at the agreed upon date and time.

The second challenge is not overcome that easily. As I have written earlier, overcoming it also involves a fundamental strategic change. A change away from optimizing the supply chain using minimizing cost as the sole KPI, moving towards a balance between cost, reliability, and speed, therefore addressing the core customer demands at the base of the pyramid in more situations. As we have re-learned in the past two years, a sole focus on cost makes supply chains inherently unstable.

Why re-learned? Because supply chain disruptions are not a new phenomenon. We have seen supply chain disruptions time and again, albeit usually not on a global scale like now. Reasons for these disruptions can range from traffic jams, strikes, vendor-supplier disputes, outages or accidents, up to natural disasters, pandemics or wars.

A second part of this necessary strategic change also involves more and earlier sharing of information with suppliers, so that they can improve their own planning. The other way round, this is true, too: Suppliers need to be willing to share relevant information about their capacities and/or load situation, too.

The third party of the chain are the transportation agents that offer air, ground or sea transportation.

Of course, this also involves a lot of trust and the assurance that this information is not abused in a power play of any kind, or worse, but used for the sole purpose of serving the end customer better by cooperating.

But just to be clear: Not all corners of the triangle cost, speed, reliability can be improved at the same time. Working this triangle is not a silver bullet but will help reducing the likelihood of not being able to deliver.

So, what data needs to be shared, and how, so that the supply chain can run at its optimum at any given time?

There is data on two levels

• Macro
• Micro

On macro level, demand signals need to be made available to the suppliers, so they can plan production (and their own sales) early. Conversely, available capacity data needs to be available to buyers, so they have a chance to distribute their orders amongst a number of suppliers, as needed. At the same time, transportation capacities need to be secured, too. This is, where the transportation agents come into picture. It doesn’t help, if buyer and supplier get into an agreement and the goods cannot get transported.

Again, this requires a lot of mutual trust that the supply can be produced in time and quality, that payments are made in time, and especially, that the provided data is not or cannot be abused. Alternatively, it requires an infrastructure that enables the participants to trust in the infrastructure instead.

On the micro level, it needs the real-time exchange of detail information that enables a just-in-time supply that allows for detailed scheduling and synchronizing work processes and to possibly prepare for contingencies. This may include IoT data out of the network but also external data like weather, traffic, and lots more.

This can easily become an extremely high volume of data that needs to be processed fast to be useful.

All of this might be a good use case for a system that is based on a blockchain that is provided by an independent party or, even better, by a party that all participants have a stake in (the more the better). The blockchain could be used to secure the promises (demands and available capacities).

On the other hand, there are still significant voices (e.g. Bruce Schneier in his readable post on the dangers of cryptocurrencies and the uselessness of blockchain) that ask where the ultimate benefit of a blockchain is, whether it is a solution in search of a problem or whether it solves existing challenges in just another (not necessarily better) way or even question the promise of blockchain security altogether (e.g. this DARPA analysis).

In any case, every scalable transactional system that allows for efficient and automated negotiation and processing should be capable of delivering these services. After all, the juice lies in the business logic and not in contracts being smart contracts or not.

So, what does it take to address the supply chain problem, given businesses have developed a strategy that focuses on a balance between cost, reliability, and speed?

1. A secure (technical) environment that makes it easy for the participants to trust each other or that makes it even possible to replace trust into each other by trust into the environment. This environment must also ensure that the individual participants are not put at a systematic advantage or disadvantage. This requires a strong governance and is in all likelihood implemented by a network of systems that interact based on a standardized protocol.
2. An ecosystem with enough participants on demand, supply and logistics sides that allows for both, the efficiency of scale and the possibility to build flexible networks between suppliers and buyers instead of relying on tight chains. As said above, the participants must not be put at a systematic advantage or disadvantage.
3. Enough and accurate data that is securely collected, managed, bound by consent and purpose; it is to be only used to fulfill the needed services. This data must be equally accessible and usable by all participants (for this purpose).
4. Scalable and transactional and analytical systems that enable the necessary real-time data ingestion and transaction handling. These systems predict demands and/or shortages on macro level and might also help in mitigating micro-level disturbances.

But as said: Trust between all members of the supply chain, from the end customer through the complete value network is key to the customers having a great experience.

Supply chains must evolve into flexible supply networks, based on mutual trust.

There are a couple of lessons that the pandemic taught us, apart from that there are different opinions about whether Bill Gates makes us all drones via the vaccines …

The most important one is that there is a need to not only look at the demand side but to also look at the supply chain when one wants to improve the customer experience, especially when the customer intention is a purchase. You now might say that the experience happens at the touch point, which is for example the e-commerce site.

However, this is only partly true. It is important to make sure that the front end provides the right information, with good performance and without too much distraction, and to have a smooth and comfortable checkout process. In other words, provide a great e-commerce site.

Still, this is only half of the story.

And this is, where the supply chain comes into the picture.

Detour – what does the customer expect?

On the base level, a customer expects that things just work, that the vendor, and information given, is reliable and accurate, and that deliveries after order are coming fast and that there is transparency about the order and delivery status.

On top of that, customers justifiably expect that the overall process is easy for them and that their time and effort are valued by the vendor. This includes that the process works across devices and channels, without undue hassle.

Lastly, the occasional surprise cannot harm. How about over-delivery to promise? How about proactive information?

Of course, on the base level it is not possible to win a proverbial “flowerpot”, but it is here where vendors lose their customers easiest.

This model can be depicted in what I call the abbreviated Maslov pyramid of customer expectations.

Where does the supply chain come into the picture?

At some point in time, the customer will have placed the order. There is a promise to deliver, and there is the expectation of a fast delivery. Thanks to Amazon Prime for raising the bar to meet high.

In the past two years we have seen supply chains disrupted by lockdowns, by containers being stuck at the wrong place, by a container ship having an accident in the Suez Canal, by a shortage of truck drivers, even by a shortage of raw material (in the case of chips).

In combination with a frequently applied just-in-time strategy that essentially keeps as much stock as possible on the road and not in distribution centers these situations led to product being either not delivered, sometimes not even manufactured. The consequence: the customer’s order is not fulfilled or fulfilled late.

As customers already have learned that delivery happens on short notice, this has become an expectation. An unfulfilled expectation in this case. Hence an inferior customer experience.

So, there is a double challenge, one on the demand side, and one on the supply side.

The demand side is fairly easy to address

As said before, an important part of solving the demand challenge is an e-commerce presence, along with the ability to digitally engage with the customers – and to deliver to them at the end of the day. To accomplish this, there are e-commerce systems that are as easy to implement as for example Shopify, up to high end systems that basically resemble a tool box that can be assembled to support any particular need. Example for this would be Spryker or solutions the likes of CommerceTools, SAP Commerce, via Salesforce Commerce, Magento, Intershop, and many more that have less of a toolbox character.

All of them allow customers to browse and buy from basically every digital premise, including services like Tik Tok, Instagram, We Chat, WhatsApp or one of the other ones that are available galore.

The supply side is not as easy to address

Now that the commerce system is set up, happy customers are ordering all the good stuff.

Which needs to be sourced and delivered.

And this is where the challenge starts.

The supply chain is optimized.

Optimized for cost minimal, regularly for just-in-time delivery. Often there is only one supplier of choice for products, because of scaling effects that can be used and that help at least two sides by increasing volume (good for the supplier) and decreasing price (good for the buyer and maybe for the end customer).

A supply chain like this is easy to manage and it works well – as long as it is working.

Enter Covid or one of the other disruptions I mentioned above.

All of the sudden this supply chain does not work anymore.

The solution for this cannot be covered by a system only. Instead, this needs a more fundamental change. It needs a change of strategy. The supply chain must be optimized using another set of objectives and KPIs than cost and simplicity. There must be a higher resilience against events like these built in, too. So, besides cost, it is important to look at reliability and speed, as these address two of the core customer demands in the pyramid of customer expectations.

And that means reducing choke points and single points of failure. It might mean using more than one supplier to source single parts or products. It might mean looking at the location of the supplier and whether there are alternate means of transportation, if needs be. It might mean looking at the own value chain, answering the questions “Which other suppliers can I work with?” and “Do I need to insource more of my value chain and, if so, which parts?”. Answering these questions then might lead to a fundamental follow-up question: “Do I need to reposition my brand”?

A brand repositioning might be necessary due to possible price or quality changes that do not resonate with the existing brand message when addressing the supply chain challenge. As a brand repositioning is a major act, companies tend to avoid this, especially if it were only for operational reasons.

How to address the customers’ expectations?

To do this, we need to look at two layers, one the transparency and communications layer and then the underlying supply chain itself.

The easy part

In the case of accurate information and transparency, this is actually be pretty easy. For a business, make sure you know your inventory and its location. With RFID, the necessary technology to track movements exists for quite some time. Name it the Internet of Things if you want a more fancy name. Put the product on a truck. You know which truck it is on. The truck has a GPS, which makes its position known. The customer could know at any time where the purchase is. Up to the meter. Delivery services already often use this.

Ah, the goods are in a container and on a ship? Well, the container is tracked, too. So is the ship. In the case of the ship, this is even public information. Use it, and offer it to the customer. This is no rocket science and gives a good deal of transparency and enables the update of expected delivery times (remember the traffic jam at the Suez Canal?).

What is remaining is to not ask the customer to switch from one app or site to another to get the information.

The hard part

The harder problem to solve is the one of reliability. What we have learned is that supply chains are pretty reliable as long as there is no disturbance. They, however, are not quite resilient. And this affects the customer experience.

There are five basic ways that can increase the customer experience by addressing the supply chain side from sourcing to delivery to the customer.

The simplest approach is to increase stock in the own warehouses. While this does not fix the challenge completely, it provides a larger buffer until shortages take effect than a just-in-time strategy.

A bit more challenging is having a look at existing suppliers with the objective of determining whether and how they could supply necessary goods from more than one site. With these sites being at different locations, ideally combining nearshoring and offshoring, this will also allow for employing different modes of transportation, like trains and trucks as opposed to ships. Again, the result is more resilience.

A variation of this approach is to become a member of a larger marketplace. Often, it is possible to use business networks like Ariba to source necessary goods from different vendors if needs be.

Insource more of the production and produce closer to where the parts are needed. This is for sure a more long-term strategy that will take time to be implemented. In times of rising energy cost and increasing degrees of automation, this still might be one of the more important ones.

The last one would be insourcing the transport itself and becoming your own transportation company. Of course, this needs scale and a lot of capital. On the upside, owning containers, chartering ships, and trucks for long haul as well as the last mile creates quite some independence. E.g., use smaller harbors, which are cheaper and less congested. Or deviate your own ships from one harbor to another one. Amazon does this quite successfully.

What these strategies have in common is that they require a careful and regular check of what is important for the business and even “core” to the business. Usually, the word of “concentration on the core business” means more outsourcing.

Maybe, we need a change towards more insourcing to support better customer experiences.

Amazon is surely an example for a company that has the reputation for good CX. Where does it come from? After all, the site is ugly. Too much advertisement, too. But then Amazon has outstanding supply chain and logistics.

Customers like having alternatives even when they buy habitually. Amazon was good at delivering in 2-days and forgiven for not doing so during the pandemic. So they established their reputation before disruption upset it. Amazon also focuses on consumer experience. Many other firms don’t manage their supply chains that far forward.

We are discussing with Steve LeMay, Associate Professor of Marketing and Logistics at the University of West Florida, and Professor Emeritus of Marketing and Logistics at Mississippi State University. Steve has a long history in researching supply chain, supply chain ethics and circular closed-loop supply chains.

And he is the person who knows Paul Greenberg longest - apart from Paul's brother ...

This makes him the perfect guest to talk about the impact that supply chains have on CX, and how to make sure that they contribute to a good CX.

Have there be learnings from the Covid crisis? Or from the 2021 blockage of the Suez Canal? Which ones? Are they being implemented?

Are lean supply chains too lean? How to make them lean and resilient?

What is the state of research?

Steve shares a wealth of experience and examples in this episode, which make it well worth reviewing it.

Enjoy the last CRMKonvo of the year 2021. CU again on the other side of New Year's Eve!