Despite many years of increased organizational focus on the customer experience (CX), many supply chain leaders remain willing to leave the role of managing the CX to commercial and/or marketing teams. However, real opportunity exists for an active supply chain voice to drive CX-related business strategy and outcomes in areas such as:
- Design — Know and align strategy, operating model, measures, product and service options to address customer needs and preferences
- Operations — Reliably and seamlessly deliver products, services and experiences to meet customer expectations
A growing number of leading supply chains from the Gartner Supply Chain Top 25 and beyond recognize that CX investments aren’t just altruistic — they can drive measurable business outcomes. What are the most common outcomes expected from CX investments, according to more than 400 supply chain participants surveyed by Gartner? Optimized costs (57%), improved service metrics (55%) and revenue growth (46%).
The challenge is in proving the relationship between the supply-chain-driven CX investment and business outcomes. Materials science giant Dow, an engineering-cultured company, is one such organization that has been able to leverage this relationship. Dow has demonstrated mathematical correlations between its supply chain performance, the CX, and both margins and growth with Riccardo Porta, Dow supply chain director, recently saying to us:
“Every supply chain professional has experienced the frustration of unsuccessfully trying to counter a cash flow inventory reduction value proposition with an on-time, in-full (OTIF) argument. But, what if you can turn the OTIF percentage into CX impact, and CX impact back into margin and growth? That’s the power of CX for supply chain!”
We explore how leading supply chains are driving customer value through culture and insights in the August executive report (available to Gartner clients) and in the accompanying podcast, which is available on Spotify, Apple Podcasts and Google Podcasts.
But, Who Owns CX?
Overall ownership of CX in our organizations can be hard to pin down, particularly where there is no formal CX executive leader or group. Without some type of central coordination, leaders of functions and business units are often unaware of completed CX projects, and the value that they create for the business more broadly and their function more specifically. Chaos ensues when each group acts independently, even with the best intentions — the organization inevitably stumbles.
Leading organizations start the shift toward customer centricity by creating cross-functional leadership councils or steering teams focused on the CX. Supply chain is not typically the lead — more often it is marketing, sales or a designated CX leader for the enterprise. But the supply chain needs to be a core member of the CX steering team. In lower maturity organizations, where this leadership cannot be easily identified, this may mean that supply chain must work to convene a cross-functional group focused, initially, on driving the CX for top accounts.
Although the framework for governance varies across companies, effectiveness relies on consistent and efficient CX principles that business partners adopt into their decision making. Without consistent execution and operational standards, end-to-end management of CX across the enterprise is almost impossible. At minimum, a supply chain should have its own working group focused on the CX, if one does not exist at the enterprise level.
This top-level leadership and alignment must be reinforced by bottom-up initiatives that clearly connect what people do in their jobs to how it impacts the customer. Employees must see a direct connection to their “role in the goal” while being provided with sufficient information and insight that will enable them to execute.
For example, companies such as Lenovo are “democratizing” their customer insights. This is about giving broad access to employees across an extensive set of data points. This includes individual customer, consumer and channel partner insight communities, customer surveys and analysis of indirect and inferred customer sentiment from social media. The objective of these sensing activities is to identify an opportunity or root cause of a problem, then enable employees to take action.
For the supply chain, this more empowering, collaborative approach to delivering the CX has led to material improvements in service levels such as a 6% year-over-year improvement in products delivered on, or before, the delivery promise date. Lenovo even recognizes the importance of incentives and ensures that employees have skin in the game when it comes to CX performance. Between 10% and 20% of employee bonuses are explicitly tied to CX metrics.
Of course, it’s not a linear path to get to the point where you can democratize customer insights across your supply chain organization as Lenovo has done. Or link CX investments to business outcomes as Dow has been able to do. However, you may aspire to these types of capabilities where the supply chain is recognized as something more than a cost center — as a department that drives value to customers and organizational growth. If so, then it’s time to either make the case for supply chain to have a voice at the CX leadership table or reinforce the critical role that you play in that leadership group so that you can open up new opportunities.
Senior Director, Analyst
Gartner Supply Chain