3 Rs of Supply Chain Competitiveness

With the advent of big data and a myriad of web-based customer interaction tools, establishing relationships with customers has a higher focus than ever. However, there is a supply chain path to establishing strong customer relationships and one that cannot be ignored or all of the effort on the "front end" of the business will be wasted. Almost 20 years ago, I heard about the 3Rs of supply chain competitiveness developed by Donald Bowersox, then a professor at Michigan State University. Here's my short take on them.

 

The 3 Rs are responsiveness, reliability and relationship and in that order.

 

Responsiveness is the foundation. From a supply chain perspective, it's what you do to capture the customer. This is where I see a lot of companies spend a considerable amount of their energy. When that new opportunity exists, sales wants operations to go through supply chain "gymnastics" to get the customer what they need and when they need it. Supply chain agility is at the core of responsiveness. If every time this exercise crushes your margins or impacts other customers you are serving, you need to reassess your supply chain's agility.

 

Reliability is the next step. It is about the consistency that you need to exhibit in your supply chain operations to keep the customer. Despite spending all of that energy to capture the customer, you can lose them if you are not reliable. Of the 3 Rs, it gets the least credit, but is the "marathon" of supply chain performance. You can serve a customer well 1,000 times, but if you screw up the 1,001st time, you can lose them. Culturally, there has been a shift away from loyalty to more of a "what have you done for me lately" mentality, which makes reliability more important than ever. Sadly, reliability doesn't get a lot of "air time" until you are not reliable and start losing customers. Another challenge is that the definition of reliability continues to go up. Now it is defined by compete and on-time deliveries with shorter lead times, and a greater mix of products and value-added services. When was the last time you evaluated your reliability metrics or rewarded the organization for setting new records for customer reliability?

 

Relationship is the "holy grail" because you "own" the customer. It's about achieving the unique position where the customer starts with you, because they perceive your unique differentiation or understanding and ability to deliver to their needs. It's not until you achieve the relationship level that you move from supplier to collaborator. Now, even if you are highly reliable, you may never get to establishing a relationship. Relationships are not about delivering products, they are about delivering all of the elements that the customer needs to get the value they want from the products they are buying. For example, I have seen several retailers start selling a lot more appliances because of the installation services they bundled as part of their selling process. These retailers took one of the greatest blocking points for consumers buying appliances right off the table. In this example, the challenge for the supply chain organizations was to go beyond the ability to just deliver an appliance, but offer the complete set of services to deliver a working appliance for each customer. If there was ever a place for the sales and supply chain sides of the business to come together, "relationship" is it.

 

With so much energy being put building strong customer relationships, it's time to pull out the supply chain basics so we don't lose perspective. The 3R story is pretty simple, it's all about "get'em", "keep'em" and "own'em" in that order. How agile, how comprehensively consistent and how customer unique is your supply chain? Let me know.

http://blogs.dcvelocity.com/bestpractices/2014/05/3-rs-of-supply-chain-competitiveness.html