A Well-Run Supply Chain = Happy Customers

Most retailers struggle to live up to the high expectations of modern consumers. This is because competition in the retail space—especially online—is fiercer than ever before.

One area where many retailers fall short is in their order fulfilment. Since there are so many online stores available, customers can actively compare the different shipping options between the different retailers. And when you're running an online store, you're competing against the whole world.

In the United States, Amazon has made customers used to getting same-day or next-day delivery. When a business "only" offers two-day shipping, the American consumer expects the delivery charges to be free. And the rest of the world is quickly catching up to these high expectations.

Almost two-thirds of online shoppers compare different online retailers and choose the one that offers faster and cheaper delivery. More than 80% said they would think twice about shopping at a webstore if they had a negative experience with an order delivery.

A third of customers report leaving a bad review or comment on social media if they had a bad shipping or delivery experience. Which means every negative shipping experience can potentially damage your future prospects in the market.

The fact is that customers are getting more sophisticated in their demands from retailers. They are always looking for a better deal—often on your competitor's website. It's not good enough to run an effective marketing department and make sales. You have to deliver on what you promised.

Which means you have to offer delivery terms that match and preferably exceed those of your competitors. Your supply chain has to be in good shape if you want to keep your customers happy.

Different ways of Improving Delivery Times

When you look at the current market expectations, is it any wonder that retailers scramble for ways to fix problems in their supply chains? There are several ways that business managers are actively working on cutting down on delivery times and increase customer satisfaction:

• About half of the managers surveyed say their focus is on getting more production out of their current systems.
• A third of the managers try to attain better delivery times by hiring better staff.
• A further third are investigating a change in their current fulfilment technology—which would include upgrading their warehousing software.
• About a quarter are actively starting to implement alternative order fulfilment technologies.
• And about a fifth of the managers surveyed are investing in automated goods-to-person picking technologies.

All of these ventures describe different ways managers strive to improve the supply chain. So what is the supply chain, and what effect can a well-run supply chain have on a business?

What is the Supply Chain?

When a shopper clicks on the buy button on a web store or purchases something in a physical store, they don’t usually think about the complex processes running behind the scenes to make their transaction work.

The product in their hands had to go from raw materials to finished product, had to be shipped to warehouses and then packed out onto shelves. All of these activities describe the supply chain. When we talk about “supply chain” we mean all of the cogs in the machine that delivers products to customers. It is the whole process of transforming raw materials into goods that customers can buy.

The supply chain includes the following activities:

• Procuring raw materials.
• Manufacturing basic components from these raw materials.
• Assembling everything into completed products.
• Marketing the finished products.
• Selling the products to customers.
• Delivering products to customers.

All of these processes have to come together in an effective supply chain for the consumer to  get the goods they want to buy.

If anything goes along the length of the chain, things can quickly go off the rails—which happens more often than the average consumer might think. So why is supply management so hard?

Why is Supply Chain Management so Hard?

Running an effective supply chain isn’t easy. It is a complex tangle of strategic decisions and tasks where the needs of various competing stakeholders need to be juggled.

Running an effective supply chain means constantly making decisions. You have to make choices with regards to sourcing raw materials or which products to sell. You need to research suppliers and find out if they can provide the right product, in the right amounts, for the right price point.

Once you have finished products in your possession, you need to decide on appropriate warehousing and storage options. You also need to decide how you’re going to get these products into the hands of actual consumers—which means deciding on the right marketing efforts. Then there's the logistics of physically dispatching and delivering the products.

When you source products and raw materials from different sources, then ship these products to customers, it’s inevitable that some goods will get lost or held up. Waste and unproductivity in one part of the supply chain will soon affect other parts of the chain and decrease profitability.

The complex nature of supply chains means that a lot can go wrong. What seems like small problems and inefficiencies now, can balloon into major issues down the line. Even the best laid plans fail. Problems can afflict the supply chain at any time, such as:

• Rising costs—which includes higher custom charges and rising fuel prices
• Difficulties with maintaining multiple channels at once, such as running physical stores while keeping an active online presence.
• Natural disasters wreaking havoc on links in the supply chain.
• Errors in data or tracking.
• Staffing problems and shortages, for example of truck drivers.
• Product scarcity and resultant inventory shrinkage.

Any disruption up or down the chain will cause problems downstream and have many unforeseen consequences. If your supply chain freezes, your whole business will grind to a halt. If these problems persist or occur regularly, it could shut your whole business down.

Which means you need capable managers to keep everything running smoothly and effectively.  There is rarely a dull moment when everything runs according to plan, and they have to be prepared for any number of challenges.

A supply chain that runs like a well-oiled machine is a major competitive advantage in the crowded retail space. An efficient supply chain is bound to make your customers happy.

Efficient Supply Chain = Happy Customers

It probably comes as no surprise that effective supply chain management will cause an increase in your customer satisfaction. When you make it easier for customers to buy products from you, they will be happier.

When your supply chain is running like a well-oiled machine, you will be able to supply and dispatch goods to your customers when they need it. And while they’re waiting for their package to arrive, they’ll be able to track the progress of their orders. Which means they will be a lot less likely to phone up your customer support.

In other words, supply management bears a lot of responsibility when it comes to customer relations. When things run smoothly in the supply chains, you eliminate a lot of potential problems for your customers—which will take a lot of pressure off your already overstressed customer service teams.

This also applies to returns. When customers know that they are able to return goods in an easy and cost-effective manner, they will be less hesitant to buy from you. In fact, online surveys indicate that customers are 70% more likely to shop from you again if they were able to successfully return something they bought earlier.

An efficient supply chain will allow you to get the product a customer just bought into their hands as quickly as possible. Which means their overall interaction with your business will be better—and they will be more likely to recommend you to other customers. They will start to champion your brand and recommend your services to everyone they encounter.

Happy customers create good word-of-mouth, great referrals, and ultimately business growth.

Efficient Supply Chain = Happy Suppliers

Managing your Supply Chain isn’t just about keeping customers happy. It will also help you maintain good relations with your suppliers.

Your success is dependent on your suppliers giving you the right stock, in the right amounts, at the right time, when your customers need it. If you don’t have suppliers, you’re out of business.

Bad relationships with suppliers can cause all kinds of complications. It will make it impossible for you to live up to your customers’ expectations. When the relationship with your suppliers goes sour, your customers will suffer the consequences and be inconvenienced.

You are in a business partnership with your suppliers. Which means you have to keep those communications lines open. Which is why you have to communicate clearly to your suppliers what you need from them.

This also means that you won't be able to keep your suppliers happy if you don't run an efficient supply chain on your end. If your business is constantly operating on the edge of chaos, you won’t be able to warn suppliers ahead of time when you need to restock on crucial products.

Every step of the way you, you also have to ensure that your current suppliers are able to fulfil your needs. This is part of running a profitable business. You have to keep track of their performance to ensure continued quality, reliability, and security.

Maintaining good relationships with your suppliers is crucial to your success. If you build goodwill and loyalty over a long time with your suppliers, your customers will get better service, will experience better reliability, and will ultimately receive better quality products.

So maintaining good relationships with them must be one of your highest priorities.

Good Communication is Key

Good supply chain management depends on consistency. All the parts of your supply chain need to run reliably. This is impossible without effective communication with all partners and stakeholders up and down the chain.

When things are running smoothly, it's easy to allocate the right supplies at the right time, perform accurate forecasting of customer demand, implement accurate inventory management, run an organised warehouse, and offer timely and accurate delivery of goods.

But when something goes wrong, you need to be able to make the necessary accommodations to the supply chain to compensate for any bottlenecks upstream.

Good communication is key. You need the help of your suppliers and logistics partners to solve any problems and keep the supply chain on track. When everyone has an early warning, you can work together to make the course corrections that will prevent any major delays.

All of the relevant stakeholders up and down the supply chain need to be informed of the status of the chain. In this way, if there are complications somewhere upstream in the chain, they will be able to make the necessary corrections and prevent a slump in productivity downstream.

This is why it's important for a supply chain manager to maintain good channels of communication with all stakeholders, suppliers, and customers. The communication also has to be clear and consistent at all times, because misunderstandings lead to confusion, drops in productivity, and lower profitability.

Conclusion

In a crowded eCommerce and retail space, a well-run supply chain will differentiate you in the market. It is a highly effective way to create value both for your business and customers

But managing a supply chain isn’t for the faint of heart. It requires diligence, hard work and an eye for detail. You must be able to make good, strategic decisions and keep abreast with industry trends and customer expectations. And in a post-Covid world the importance of supply chain flexibility becomes even more clear.

Good customer service is virtually impossible without effective supply chain management. But if you put in the work to build an efficient supply chain, your customers will be happy, your suppliers will be happy, and productivity and profits will soar.