In both the physical and online retail space, customer experience is crucial for fostering good will and repeat business. Customer experience expert Sven Esser (@SvenEsser) explains, “The objective of enabling a positive customer experience is to increase customer loyalty and satisfaction, which can help generate sustainable growth.”[1] What is often overlooked in the pursuit of better customer experiences is how those experiences can be affected by supply chain operations. Thomas Wieberneit (@twieberneit), another customer experience expert, explains, “There are a couple of lessons that the pandemic taught us. … The most important one is that there is a need to not only look at the demand side but to also look at the supply chain when one wants to improve the customer experience, especially when the customer intention is a purchase.”[2] Supply chain expert Richard Howells (@howellsrichard) explains the same idea by noting, “There is no point in having a great order experience if your supply chain processes are not designed to deliver on the promise.”[3]

Customer Experience and Supply Chain Management

For some people, the relationship between supply chain management (SCM) and customer experience (CX) may not be evident. Esser observes, “You might think Supply Chain Management is a very different topic than [customer experience]. However, the relationship between CX and SCM is symbiotic.” Knowledgeable retail and supply chain professionals fully understand this symbiotic relationship. Jim Tompkins (@jimtompkins), Chairman of Tompkins International and Tompkins Ventures, explains, “Customer experience today involves the entire shopping journey (or buying process). Each transaction starts with ‘thinking’ and ends with ‘receiving’ or ‘returning.’ … The six consumer needs, as identified by Google, include: Surprise Me, Help Me, Reassure Me, Educate Me, Impress Me and Thrill Me. Most of these, if not all, require supply chain involvement along the journey, combined with other corporate units. Supply chain is a critical success factor throughout the customer journey because product availability, delivery times, and service quality are all highly valuable to customers.”[4]

Erik Mumford (@EMumford), a self-proclaimed supply chain enthusiast, explains, “One thing people don’t really talk about or understand is that logistics is a huge part of the customer experience, which is a huge part of today’s marketing.”[5] Unfortunately, supply chain snarls have resulted in many unhappy customers as their purchasing experiences have been disrupted. Bill Hobbs (@hobbs_bill), Founder of Mt. Aventine Ventures, agrees with Tomkins that great customer experience involves the entire shopping journey. He writes, “A seamless customer experience begins long before a shopper buys your product in a store or receives their online order. Their experience, positive or negative, hinges on the strength of your company’s supply chain. A disruption at any point in sourcing, production, or logistics can result in out-of-stock merchandise or delayed deliveries — and, ultimately, a disappointing customer experience.”[6] Jay Fraze, Director of Supply Chain Management Services at Global Lifecycle Management, asserts, “For supply chains, customer experience is the new differentiator.”[7]

Improving CX by Improving SCM

Common sense tells us that the symbiotic relationship between CX and SCM means that, if you improve supply chain management, customer experience is also improved. Below are some of the ways experts suggest supply chains can be strengthened to deliver exceptional customer experiences.

• Manage customer expectations. Despite your best efforts, you have little control over many of the factors that can disrupt your supply chain. If you’re honest with your customers up front about challenges you are facing, you are more likely to encounter understanding (if somewhat disappointed) rather than angry customers. In other words, don’t over-promise and under-deliver. Several years ago, Gartner research concluded that “the return on investment (ROI) of meeting customer expectations, and making their interactions effortless, is high.”[8] Their research also concluded that trying to exceed customer expectations didn’t have the same return. Said another way: A good experience is good enough in most cases.

• Establish a digital supply network (DSN). William Kammerer and Piyush Sampat, principals at Deloitte Consulting, explain, “With a DSN, the inflexible, sequential nature of the traditional retail supply chain is replaced by a multidimensional model that can orchestrate inventory and fulfillment decisions dynamically across the entire network to intelligently optimize service quality and cost. The combination of humans, machines, data-driven analytics, and predictive insights creates a closed loop of learning. Data mining of weather reports and periodicals for local events can inform the DSN of unexpected demand, for example, allowing it to respond by increasing orders for batteries and building materials in advance of a hurricane or repositioning hot dogs and ground beef for sporting event weekends.”[9]

• Leverage advanced technologies. Fraze writes, “Consider which disruptive technologies most enhance the customer experience (while helping you to manage costs).” Tomkins adds, “Technology today plays a highly important role, as supply chains must react faster, increase delivery speed, and focus on customer needs and wants more than ever before. Digital commerce reinvention — not just supply chain — requires that the right strategies, people, processes, and technologies all be in place to deliver both sales and operating margins.”

• Improve supply chain visibility. Hobbs writes, “Lack of transparency can cause a domino effect of problems. … If you don’t have a clear picture of each stage, from submitting purchase orders for parts to coordinating shipments and final deliveries, you may miss potential obstacles that negatively affect customer experience.” For years, experts have been insisting that supply chains need better visibility. Generally, they have been referring to visibility on the supply side rather than the demand side. To improve customer experience, the demand side can’t be ignored. The staff at Project 44 explains, “With an increase in customer expectations, shoppers now demand more visibility in their deliveries. With 93% of consumers wanting to receive updates on their shipments, visibility isn’t just a consumer demand, but an expectation. They expect to never wonder ‘Where is my Order?’ (WISMO), and they certainly do not want to call customer service or a delivery company to ask.”[10]

• Implement an on-going risk management process. According to Hobbs, “Supply chain risk management must be part of your ongoing planning processes. You won’t have control over all circumstances, but you can establish contingency plans to minimize the impact on your supply chain and customer experience.”

Concluding Thoughts

Tomkins concludes, “The supply chain must do more than stock and ship products. Today’s customers expect the logistics behind their orders to be flawless. Both the order and return processes must be as seamless as possible and available when, where, and how the customer wants. They depend on the seller to meet — and even anticipate — their needs.” He adds, “Delivering an amazing CX requires the supply chain to prepare, operate and delight the customer at every touchpoint throughout that entire journey. This is enabled by the collaboration of demand-supply planning and management. Two critical success factors today for the supply chain are agility and flexibility. Agility to react quickly and flexibility to adapt as demands and needs change.” Hobbs agrees, he concludes, “Because change is a constant, you need to integrate flexibility into each aspect of your supply chain. … Set your processes up to pivot with challenges, instead of breaking down, so you can consistently provide a quality customer experience.” The late Sam Walton, founder of Walmart, insisted, “There’s only one boss; the customer.” Great customer experiences, backed by a great supply chain, helps keep the boss happy.

Footnotes
[1] Paul Greenberg and Sven Esser, “The supply chain: Critical to customer experience,” ZDNet, 20 January 2022.
[2] Thomas Wieberneit, “The impact of the supply chain on the customer experience,” Customer Think, 23 April 2022.
[3] Richard Howells, “Why A Great Customer Experience Requires A Great Supply Chain,” Forbes, 23 January 2020.
[4] Cory Comer, “Digital Commerce Reinvention: Improving Supply Chain & Customer Experience,” RateLinx.
[5] Kim Davis, “How changes in logistics and the supply chain will impact customer experience,” MarTech, 22 October 2020.
[6] Bill Hobbs, “Great Customer Experience Requires a Resilient Supply Chain,” Inc., 7 October 2020.
[7] Jay Fraze, “For Supply Chains, Customer Experience Is the New Differentiator,” SupplyChainBrain, 3 October 2019.
[8] Gartner, “Three Customer Experience Myths, According to Gartner Analysts,” SupplyChainBrain, 2 October 2018.
[9] William Kammerer and Piyush Sampat, “To Improve Retail CX, Rethink the Supply Chain,” The Wall Street Journal, 13 June 2019.
[10] Staff, “Keeping Customer Experience on Track with Supply Chain Visibility,” Project 44 Blog.