Published 30. Aug. 2018
Competing on Customer Experience
The Driving Force Behind Supply Chain Innovation
2018 Supply Chain Market Research
“Amazon.com is a very interesting retail concept, but wait till you see what Walmart is gearing up to do… IBM is already generating more revenue, and certainly more profit, than all of the top Internet companies combined.”
The year was 1999 and Louis V. Gerstner Jr., IBM’s Chairman at the time, spoke those words at a meeting with analysts and investors. He also pointed out that in the previous year IBM’s Internet sales were five times greater than Amazon’s.
Fast forward to today and Amazon is the dominant e-commerce leader. According to e-commerce analytics provider One Click Retail, Amazon’s e-commerce sales accounted for an estimated 44 percent of total e-commerce sales in the U.S. for 2017. IBM doesn’t even crack the Top 10 list, while Walmart was expected to capture just 3.6 percent of total e-commerce sales last year.
“Nokia: One Billion Customers—Can Anyone Catch the Cell Phone King?” That was the cover story of the November 12, 2007 issue of Forbes magazine, featuring a smiling photo of Nokia’s then-CEO, Olli-Pekka Kallasvuo, holding a soon-to-be-outdated Nokia phone to his ear. In the article, he was quoted as saying: “We have the widest portfolio in the industry and the deepest understanding of it, as opposed to having one or two hit products at a time.” – Forbes
We now know the answer to the cover story’s question: Apple and Samsung not only caught Nokia, they forced it out of the cellphone business.
There are many other examples of companies that were once industry leaders, but today are either laggards or out of business completely; companies such as Kodak, Lotus Software, Polaroid, Tower Records, BlackBerry, Circuit City and Blockbuster.
Therefore, it’s not surprising that “Disrupt Yourself Before Someone Else Does” has become a new business mantra, and why there’s a lot of discussion today about the importance of innovation and improving customer experience.
Where does supply chain management — its people, processes, and technologies — fit into this conversation?
The most important lesson learned from companies that have been disrupted is the danger of becoming too complacent with the status quo. Simply put, past performance is no guarantee of future results; the people, processes, technologies, and other factors that made you successful up to this point are not necessarily going to be the same as what enables you to achieve new levels of success moving forward.
One trend that is disrupting the status quo and serving as a catalyst for innovation is companies placing customers at the center of their supply chains. Competing on price is taking a back seat to competing on customer experience, which for Innovators and Above Average Performance companies is already the main driving force for supply chain innovation. It is important, however, to strike the right balance between delivering an enhanced customer experience and doing it profitably.
True supply chain innovation doesn’t have to be completely new or disruptive. As defined by MIT, supply chain innovation is the combining and application of a mix of inventions, existing processes, and technologies in a new way that achieves a desirable change in cost, quality, cash and/or service.
Success at supply chain innovation requires taking the middle path, between irrational bliss (chasing the next new shiny technology without a defined objective) and stubborn complacency (completely dismissing new technologies and competitors and believing that “the way we’ve always done things” will continue to deliver success).
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