How To Develop a Customer-Driven Supply Chain Strategy

Allison Champion
7 min read
January 20, 2022
Modified: September 26, 2022

Standard supply chain operations take a linear approach, which involves warehouse distribution centers sending inventory to big box stores or retailers, where it is then sold to consumers. With this process, inventory volume is typically fairly simple to predict and track from start to finish. 

Alternatively, a customer-driven supply chain strategy adapts to a customer’s shopping journey and meets them where they are. This means planning and storing inventory based on consumers’ shopping patterns, and providing them with convenient delivery options, both aspects that fluctuate in an ecommerce environment. The customer experience continues to evolve, and in order to meet expectations, brands need to consider a customized approach. 

Legacy, linear supply chains are not built for ecommerce success. In 2022 and beyond, brands that focus on customizing operations based on consumer demand will significantly increase customer satisfaction. Here are five ways to meet this demand and reap the benefits of a customer-centric supply chain strategy.

1. Optimize Delivery Without Additional Cost to the Customer

The first question for most customers shopping online is: how fast can I get it? Two-day shipping is no longer a competitive advantage. Once a perk, it is now the standard as shipping times continue to decrease. Today’s customers expect speedy delivery, without added expense.

As the speed of commerce continues to increase, same-day delivery is the next frontier. Though fast fulfillment is expected, shoppers don’t want to pay a premium for the service. 81% of customers reported that they wouldn’t pay more than $5 for same-day delivery. 

Retailers are also adding additional delivery options, like offering same-day pickup in stores, to help meet expectations. Customers who do not want to wait and/or pay extra for faster shipping can purchase items online which will be ready on the same day. 

Optimizing delivery is made possible by setting up warehousing and fulfillment centers closer to the customer base to meet ecommerce fulfillment needs. This creates efficiencies across the supply chain, particularly within the last mile logistics process, allowing customers to get their merchandise quickly and at no extra cost to them.

2. Tailor Delivery Preferences for Every Shipment

To dive further into a customer-centric strategy, companies must meet each customer’s specific delivery preferences and needs with every shipment. Customers may choose a different method with every purchase, and companies must be prepared to adapt. The personalized experience is what differentiates a brand and creates a memorable experience shoppers want to repeat. 

Real-time visibility and access to data are key in developing a customer-centric supply chain. A growing number of companies are investing in the technology and platforms needed to centralize data and tailor experiences through tracking measurements and a personalized customer experience. Customers can choose when, where, and how they receive their deliveries now to best accommodate their schedules and lifestyles. They can also follow their deliveries through an app, tracking code, or by receiving smartphone notifications. 

Furthermore, customer analytics offer brands the insight they need to know and understand their customers, and allow them to apply specific fulfillment methods to fit those needs. When companies lack the data and flexibility to cater to customer expectations, they risk losing them to a competitor that can.

3. Stay Agile as Market Demands Change

As we’ve seen over the past decade, and more recently during the past two years of the pandemic, supply chain agility is key to success. Pivoting to meet customer demand is a challenge when there are unforeseen barriers that can cause delays. Though a global pandemic or natural disaster isn’t part of supply chain forecasting, there are ways to strategize contingencies and innovative ways to address these concerns. 

To improve agility across the supply chain, companies are evaluating the efficiencies of their supply chains and bringing inventory closer to their main audience base. Micro-fulfillment centers are becoming a key way for retailers to be more agile. Essentially, this approach combines the speed and convenience of a localized picking and packing solution with the efficiency of an automated warehouse. It makes the fulfillment process more systematic and offers an answer to meeting consumer demand, which is why micro-fulfillment trends have begun to gain traction.

Robotics is another way warehouses are becoming more agile. Machine automation allows the picking process to run methodically while still integrating the human component of packing and shipping. Although, some companies are exploring the idea of automation across the entire picking, packing, shipping process as a way to meet rising demand.

4. Solidify Trustworthiness Among Suppliers and Customers

Earning trust involves optimizing traceability and on-time delivery through transparent, technology-driven measures across the entire supply chain. Customers stay loyal to brands they can trust to be consistently reliable . 

When there are delivery delays or problems with shipments that are not swiftly resolved or continue to occur, it quickly prompts customers to look elsewhere for what they need. With as many options as customers have with ecommerce shopping in today’s world, all it takes is one mistake to make them consider another avenue. 

Blockchain has become an important part of the supply chain strategy to provide traceability across the full distribution process up to the final delivery. This technology can be used by both customers and companies that need to address concerns right away. By being able to locate exactly where a delivery is en route, companies can confirm timelines and give customers real-time information.

Additionally, when it comes to trustworthiness, the largest demographic of customers today value sustainability and green logistics in supply chain management. They take into account how products are acquired and/or manufactured and the process through which they’re delivered, including everything from packaging materials to the types of vehicles used to deliver products to a customer’s front door. 

Approximately 77% of Americans consider the environmental impact of the products they buy, and 76% would switch their preferred packaged goods brand if they were offsetting carbon emissions. As with customization, sustainability is no longer simply a nice-to-have offering but rather one of the deciding factors considered when buying from a brand. 

5. Strategize New Ways to Innovate

Companies must constantly strategize new ways to delight and attract customers and introduce products and services to market. The industry changes so quickly that just when companies think they’ve been caught up to speed, it changes again. How then can companies continually increase convenience and accessibility for customers?

Smart devices changed the game for ecommerce shopping, allowing customers to shop, place, and track their orders for delivery all within minutes. Also, coordinating easy returns through pre-paid postage and convenient drop-off locations is another way that has helped companies gain a strategic advantage. Technology will continue to support the advantages of being customer-centric. 

Inter-connected devices will soon evolve to dedicated vending machines, drone deliveries, and several other innovative ways companies will try to optimize the customer experience. As new technology emerges, companies will have to adjust their supply chain to make sure it aligns and works well for their audience base. It’s a balance of adapting as fast as customers demand it and ensuring data security protocols are in place.

Benefits of Being Customer Centric in Order Fulfillment

Putting customers first is not a novel concept. However, applying this mindset to the supply chain model makes the fundamental structure more flexible. Companies must constantly adapt to changing demand. Essentially, it improves the customer experience and keeps companies competitive.

Transactional ease

The easier and more convenient it is for a customer to make a transaction, the greater likelihood they will complete a purchase. When there are barriers, however small, to the checkout and tracking process, it deters customers from shopping from the same retailer again. Using automation and machine learning to choose the best fulfillment solution for the customer is key.

Delivery assurance

Offering delivery assurance through tracking technology and automated alerts provides transparency for the customer. It alleviates the burden and lets them know when their delivery will arrive or is ready to be picked up. Plus, it also limits service complaints and poor brand associations.

Shipping and delivery options

A customer-centric approach also gives the customers the option of choosing the delivery method most suitable to them. Whether it’s scheduling it for curbside pickup or two-day delivery, customers can choose what’s most convenient for them. Removing barriers to purchase helps decrease the number of abandoned online shopping carts.

Increased company value

Developing a customer-driven supply chain strategy doesn’t deter customers by adding additional costs. In-store or curbside pickup from online purchases is a free service, as is two-day or same-day delivery, when a brand can implement it affordably. This meets customers’ expectations without increasing costs for them, improving the value of the company in the minds of shoppers.

Implementing a customer-centric supply chain delivers a competitive edge, although it, too, will soon become part of the norm of operations. Streamlining operations and automating systems improve efficiencies, and data analysis helps forecast growth. 

Combining these as part of an omnichannel strategy helps companies retain and attract customers. The more retailers can understand their customers’ buying journey and align it with their logistics in a seamless way, the greater the outcome will be. Customization is key for ecommerce fulfillment, which means there are many routes to choose from whether it be through custom branded packaging or fast, free shipping. 

Learn about how Flowspace’s flexible fulfillment solutions can help you implement a customer-driven supply chain strategy. Let’s start a conversation today.

 

Author Bio

Allison Champion leads marketing communication at Flowspace, where she works to develop content that addresses the unique challenges facing modern brands in omnichannel ecommerce. She has more than a decade of experience in content development and marketing.

Sources:

  1. Supply Chain Quarterly. The four characteristics of a customer-centric supply chain. https://www.supplychainquarterly.com/articles/4062-the-four-characteristics-of-a-customer-centric-supply-chain.
  2. Deloitte. The Customer-Driven Supply Chain. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/process-and-operations/us-operations-digital-supply-networks-retail-customer-driven-supply-chain.pdf
  3. RetailWire. Retailers don’t have to choose between profitability and customer satisfaction. https://www.retailwire.com/discussion/retailers-dont-have-to-choose-between-profitability-and-customer-satisfaction/