Customer focus in supply chain management

In SCM, new areas of competition are emerging that go beyond manufacturer vs. manufacturer, distributor vs. distributor and retailer vs. retailer tussles. Organizations are now competing on flexibility, speed, and productivity, and focusing on meeting consumer demand.

Organizations can be flexible, quick and productive only if they align their strategic initiatives with their supply chain partners' strategic initiatives. In this competitive environment, organizations need to do more than just optimize their supply chain activities.

Today's competitive environment is the result of the convergence of forces on all members of the supply chain. These forces are the development of new technologies, increase in communication capabilities, increasing demand for better quality and customer services and demand for quick and efficient response to market. Earlier, many supply chain members, especially the ones who were the farthest from end consumers (for example suppliers of components to manufacturers), gave attention only to those factors that directly affected their immediate customer and supplier. However, for survival in today's highly competitive environment, organizations need to focus on end customers and see how these forces affect their end customers. The key to survival will depend on the supply chain members' focus on the demand side of the supply chain equation. From a corporate standpoint, end-use forces will influence the way things are done in the supply chain and determine the best operational practices for meeting the requirements of end users. From the point of view of consumers, end-use forces such as technology and changing lifestyles will help determine what is done in the supply chain. Thus, the objectives and goals of supply chain activities will be influenced by customer focused analysis. Management professionals have often debated the effectiveness of "push" and "pull" strategies. In the current scenario, the consumer provides both the push and the pull, in a process known as demand-chain management.

Demand-Chains: A Focus on End Users

Instead of building and operating a supply chain from manufacturer to market, demand-chain leaders focus on developing alliances with those channel partners who are in the best position to meet the requirements of their customers. The focus on end-users has directed the attention of all supply chain partners to the demand side of the supply chain equation and caused them to reexamine their roles in the supply chain. The players in today's emerging demand chains are the same as those in traditional chains, but their respective roles and responsibilities have changed. In a demand chain, products don't necessarily originate from manufacturers. Any player in the supply chain can develop them at any point. The products developed are based on consumer research and information gathered by any supply chain partner. For instance, retailers can provide comprehensive information on consumer spending patterns and preferences to the manufacturer. This information will help the manufacturer produce products with attributes that meet customer requirements.

When developing a demand chain, it is important to define who will be responsible for identifying consumer needs and wants. Is it the retailer, wholesaler or manufacturer? It's also important to know whether these responsibilities change with the situation. Traditionally, retailers have been the closest to consumers. Because of this proximity, retailers assumed the role of monitoring consumer preferences. But with rise of the Internet and direct sales, consumers are now interacting with different entities in the purchasing process. So every member of the demand chain, whether it designs, manufactures, markets, sells, or transports a specific product, needs to monitor consumer needs and wants. Since all chain members cannot conduct direct consumer research, information regarding relevant consumer trends and products should be shared by all members. This knowledge makes it easier for everyone in the demand chain to identify product and packaging requirements, marketing opportunities, and determine the need for extending the brand. The success of a product and the channel members depends on the level of participation and coordination between the channel members from the time the product is conceptualized to the time it is launched into the market. Whether information is obtained from point-of-sale databases, focus groups, quantitative surveys, or from newer methods like "shadowing" of consumers and in-home research, the data must be shared, analyzed, and utilized by all channel members. This is essential if supply chains are to be transformed into demand chains.

Broad Trends and Misconceptions

When developing a demand chain, channel partners must be aware of broad demand trends in consumer markets, which are based on demographics, lifestyle and other social factors. For instance, due to the fall in the birth rate in industrialized nations, the overall size of the average family has shrunk, thus bringing down the number of new consumers. Further, due to increase in automation, the size of the workforce has also shrunk. As a result, organizations in industrialized countries are looking for new markets and segments.   

In new markets, organizations have to perform efficiently with few resources (time, money, human resources etc.). Therefore, supply chain partners need to change their operations and strategies. These changes influence the way in which consumers purchase goods. Changes in consumer buying patterns can be seen in the way they purchase products, where they purchase them. Failure to acknowledge these changes leads to two common misconceptions about the working of the demand chain. The first misconception is that customers will always buy from retailers. This may be true in most cases, but the trend is changing. Now consumers are actively looking for new sources to obtain products and services. In their endeavor to get value for money, they are prepared to buy products and services from any channel member who can provide them with quality products, timely delivery and a reasonable price. Therefore, through their buying habits, consumers are now determining which supply chain entity would succeed and which one would fail.  

All members of the supply chain must work in unison to improve the profitability and performance of all members. Consumers' investments in terms of time, attention, and money on a particular business indicate which business will succeed in the future. Channel partners should realize that if consumers select a particular retail outlet for fulfilling their needs and wants, they are affecting the whole supply chain.

The second misconception about demand chains is that business-to-business companies need to monitor only their customers. In other words, since they are not dealing directly with end-users, they do not need to be concerned about them. In industrial or business-to-business organizations, solving your customers' problems sometimes means solving your customer's customers' problems. All customer/industrial demand for products or services across the supply chain is derived from end-user demand. Business-to-business customers will not order more parts if consumers are not buying their end products.

Creating the Demand Chains of the Future

Demand-chain management focuses on the supply of items that consumers are willing and able to purchase. Unlike supply chain management, which focuses on the efficient distribution of products and services, demand chain management focuses on meeting customer requirements efficiently.

Demand chains aim to bring together channel members to delight customers and solve their problems by:

• Gathering and analyzing information about consumers, their problems, and their unmet needs.

• Identifying and choosing the right channel partners who can effectively perform functions needed in the demand chain.

• Developing a system for information sharing among channel partners about consumers and customers, available technology, and logistic challenges and opportunities.

• Developing products and services which are able to solve customers' problems.

• Choosing the most optimal transportation and distribution methods to deliver products and services to consumers in the expected format. 

Email based Operations Management assignment help - homework help at Expertsmind

Are you searching Operations Management expert for help with Customer focus in supply chain management questions?  Customer focus in supply chain management topic is not easier to learn without external help?  We at www.expertsmind.com offer finest service of Operations Management assignment help and Operations Management homework help. Live tutors are available for 24x7 hours helping students in their Customer focus in supply chain management related problems. We provide step by step Customer focus in supply chain management question's answers with 100% plagiarism free content. We prepare quality content and notes for Customer focus in supply chain management topic under Operations Management theory and study material. These are avail for subscribed users and they can get advantages anytime.

Why Expertsmind for assignment help

1. Higher degree holder and experienced experts network
2. Punctuality and responsibility of work
3. Quality solution with 100% plagiarism free answers
4. Time on Delivery
5. Privacy of information and details
6. Excellence in solving Operations Management questions in excels and word format.
7. Best tutoring assistance 24x7 hours