The goal of any business is to create value. Value for customers. Value for the organization. And, increasingly, value for society.
The value proposition is a clear statement that links the value of a product or service to the needs of the customer. For many companies, we see these value propositions changing. For example, companies like Alibaba, Google and Amazon have created enormous value by leveraging changes brought about by their business needs and customer requirements. They focus on reshaping value propositions and transforming business models using digital technologies for achievement of ultimate business goals.
The disruptions over the past several years have made supply chain a critical partner in the pursuit of value creation. Our research (Supply Chain Executive Report: The Future of Supply Chain 2022) indicates that CSCOs should anticipate a transition from a demand for operational excellence as a value driver to commercial innovation as a growth driver. Current and future investments must be balanced between capabilities to sense the voice of the customer and enablers for greater innovation of supply chain unique commercial offerings.
Innovation is Key
We see this rebalancing already occurring for many of the companies that compete for a position in the Gartner Supply Chain Top 25. There are multiple dimensions to these assessments. But for us at Gartner, one of the highlights is the presentations by organizations competing for the top slots. It really is a privilege to see the amazing work of these top performing supply chains. These companies are transforming their supply chains to manage today’s disruptions and establish mitigations for future disruption events so they can meet customer expectations.
There is a heightened focus on innovation to ensure responsiveness and resilience to meet the changing volatility in both demand and supply. Redesign of manufacturing and distribution networks. Redesign of planning methodologies. Redesign of organizations. Redesign of how to engage and manage people, digital automation, digital augmentation. Everywhere you look, you see change. And these transformations are happening at a very fast pace. I often tell clients that the supply chains they were running in 2019 no longer exist — or at least are severely broken. Innovation of the supply chain is key to meeting the demands of our new normal, as well as to driving value creation.
In many cases, these supply chain leaders are taking this innovation and value creation further and moving beyond their four walls to co-innovation with partners and the extended ecosystem. Integration of resources, processes, data and analytics with suppliers and customers is increasingly becoming the norm. Leaders are aggressively pushing to build out a truly aligned, integrated and transparent end-to-end supply chain.
What the Customer Wants
From a customer perspective, engaging in co-innovation and the extended ecosystem requires an increased level of trust. Trust in your partner. Trust in the data. Trust in the results of algorithms. Trust in the security of information. At its core, this trust is built on creating understanding and empathy. The pandemic and concurrent societal and geopolitical disruptions have brought a lot into focus for customers. People’s values have shifted. Friendships have changed. Work is changing. Social and environmental concerns are causing both B2C and B2B customers to reassess who they want to do business with, and how. Customers want more control, as well as more understanding, flexibility and empathy from the organizations with whom they do business. (Break Out of the Customer Management Industrial Complex With Gartner’s CX CORE Model).
For many supply chains, this means a new approach to understanding and managing customer relationships. Most supply chains lack deep customer empathy. A fresh approach to customer engagement is needed that balances customer empathy with the very real short term financial goals of the organization. This is not an easy task. It requires the organization (both within supply chain and across the enterprise) to work together to achieve a level of customer centricity they are likely not used to. When I pose the question about their level of customer centricity to clients, I often get answers such as “we have a CRM system” or “we run an annual customer survey.” Technology alone is not the answer to these challenges. Neither is a single customer survey. Multiple changes are needed.
Companies should start by convening a cross-functional, customer-experience steering committee to make the business case that a shift is needed from inside-out operational efficiency to outside-in architecting of experience. From there, upgrade your ability to sense where a customer or buying group is in their relationship with you by using persona development, customer journey mapping, and customer analytics to identify current customer perceptions and uncover opportunities to improve. For more details see Overcome 3 Key Barriers to Improve Supply Chain Customer Experience.
The supply chain in now in the driver’s seat for value creation. The path to value creation is paved by the customer. Your supply chain needs to develop deep customer understanding and empathy as a key enabler to success.
Senior Director Analyst
Gartner Supply Chain
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