Transforming the B2B Supply Chain – a Whitepaper by Coreen Head


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I have written many times in the past about the need for organisations who desire to become more Customer Centric to acknowledge the need for TRANSFORMATION. Transforming a business culturally, behaviorally and systemically is an enormous, long term challenge for the majority of companies all around the world. To truly transform, individuals and companies need to constantly learn from others – others who are further ahead on the journey as well as external partners who have the skills and capability to help them achieve their goals.

The whitepaper you are about to read is an excellent example of the expert capability that exists. Customer Experiences are delivered ‘end to end customer journeys’ – cross functional teams within organisations along with external partners combine to deliver the journey that brings the proposition of the business to life. The supply chain is a core part of the end to end journey – transforming it is just as great a challenge as any other. Fortunately, experts like OmPrompt exist to help improve the supply chain experience by taking cost out whilst at the same time putting the experience back in.

I hope you enjoy reading this excellent document of three parts crafted by OmPrompt’s Coreen Head….


 

PART 1: The rules of competition are changing. Are you ready?

It is not the strongest of the species that survives, or the most intelligent. But the one most responsive to change, Charles Darwin

These Days, it’s All About Competitive Advantage. Success in the marketplace today requires much more than innovative products and a strong brand identity. Customers are more demanding, products are often cloned or imitated and markets have become “commoditised.” To really stand out from the crowd and succeed, companies need a unique competitive advantage – one that can only be gained through the strength of the relationships forged in their key accounts.

70% of consumers are willing to spend an average of 13% more with companies providing excellent customer service

The Balance of Power is Shifting. Historically, typical supplier/ customer relationships were “at arm’s length.” There was usually very limited connectivity between the two parties, other than those activities necessary to complete a transaction, e.g., the placing of orders, the generation of invoices and so on. The commonly-held view was that information is power; and therefore information was kept within the business and certainly not shared with suppliers or customers. Brand owners held the power. They were the ones who decided what processes their customers had to follow. As such, power in the distribution channel was often held by the supplier, rather than the customer base. In many markets, where the client base was fragmented, the purchasing power of any one single customer was generally very low. Today, however, that power has shifted down the channel to the retailer, and increasingly even beyond, to the end shopper/consumer.

So, Why the Change? This fundamental shift is partly a result of a general decline in brand loyalty and the commoditisation of markets. This, in turn, is leading to a growing recognition that in order to remain competitive, companies have to evolve to embrace a much more customer-centric approach. Ideally this approach should be considered at every stage: from designing the supply chain, all the way though to delivery, invoicing and repeat business. The implication is that companies have to move away from the ‘one-size-fits all’ mind-set when it comes to supply chain design and, instead, recognise that valuable accounts will require customised solutions that meet their specific needs.

Redesigning Your Supply Chain with Customers in Mind. One significant outcome of this tailored approach to supply chain design is that stronger customer relationships can be forged – precisely because by redesigning the customer supply chain with your customers in mind, value can be added and enhanced at every stage of the process. This approach also allows both parties to reduce transaction costs ( Transaction costs, such as the costs of placing orders, and all the myriad of activities that are involved when companies do business with each other, are often hidden and not easily quantifiable) through the adoption of modern B2B solutions such as Customer Automation Management. Today’s technology has made it possible to connect supply chains end-to-end. The availability of Softwareas-a-Service (SaaS) over the web also means that the costs of communication across networks are relatively low.

The True Barriers to Change. Be warned though, the barriers to improving supply chain collaboration and reducing transaction costs are not actually to do with technology itself – but rather to do with the “mindsets” of people who are opposed to change…

By redesigning the customer supply chain with your customers in mind, value can be added and enhanced at every stage of the process.


 

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PART 2: What’s Your Competitive Advantage?

If you don’t have a competitive advantage, don’t compete, Jack Welch

What’s YOUR Competitive Advantage? Question: Is it even possible to gain, and then maintain, a competitive advantage in B2B supply chains today? Surely the market is so mature and saturated that there is very little left to differentiate your offering over another’s? Answer: YES, it is possible! But first it’s important to understand how the industry is changing. As fortune 500 companies around the world continue to get bigger through acquisitions, mergers and international expansion, their requirements to continually grow revenue and improve efficiency have become more imperative than ever before. Even amidst the downturn, these companies have continued to aggressively pursue supply chain optimisation in order to maximise the performance per-head and improve customer service.

Benefits of redesigning your supply chain with customers in mind:

  • Stronger customer relationships
  • Reduced transaction costs
  • Sustainable competitive advantage

Retailers are Benefiting from Technology. But are Suppliers? Many of the leading global companies have already embraced advanced supply chain processes such as vendor managed inventory and are also starting to benefit from new technologies to improve performance such as electronic product codes, e-invoicing and XML messaging. But for the suppliers that ‘sell-to’ and ‘sell-through’ these large organisations, the result has been anything but beneficial… In fact, these suppliers are now being faced with more customisation and diversity, and they are struggling to comply with the unique support services requested by their largest accounts. Ultimately, no two customers approach supply chain optimisation in the same way, and consequently, suppliers are forced to support a wide variety of different order, forecasting, fulfilment and logistics processes with an even wider array of technology standards for visibility, collaboration and security.

Suppliers – faced with more customisation and diversity – are struggling to comply with the unique requests from their largest accounts

How to Use Technology to Your Advantage. The good news is that there is a better way to give your customers what they want, without taking on more nonvalue added activities in the order to cash supply chain, freeing up your people to do what they are best at… serving your customers! An increasing number of suppliers are enlisting the help of specialised managed service providers and new cloudbased technology platforms, to wage war against complexity. Typically they look at several attributes to help them gain a competitive advantage.

But there’s good news… A way to free up your people to do what they’re best at: Serving your customers!

The 3 Core Attributes of a Competitive Supply Chain Network.

  • Agility
  • Accuracy
  • Responsiveness

Agility, accuracy and responsiveness have become the core attributes of a competitive supply chain network. A high performing, responsive supply chain that focuses on continuous improvement leads directly to competitive advantage. Suppliers, who are engaged in developing these core supply chain competencies, consistently outperform their competitors, and provide a solid foundation for customer relationship development, trust and growth – at least in my experience. What enables this competitive advantage. is typically the supplier’s ability to focus on their customers’ demand for more personalisation by embracing the most robust and adaptable B2B supply chain solutions possible. However, this requires suppliers to embrace diversity and complexity!

Suppliers, who develop these competencies, consistently outperform their competitors, and provide a solid foundation for customer relationship development, trust and growth.

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Delighting Customers: A Dramatic Shift. Re-designing your business around your customers’ requirements represents a dramatic shift in the design of supply chains worldwide. Suppliers are now moving away from a ‘’push’’ supply chain, built around the needs of the assembly line, to a new “customer-centric, demanddriven model” that interlinks cross-departmental lifecycles, and manages demand proactively, rather than merely reactively responding to it. Creating global supply chain networks that embrace operational innovation is the way forward. ONLY those suppliers who can utilise technologies to overcome the challenges of customisation will be able to delight customers by servicing their unique needs in a consistent manner. These leaders will not only enhance customer satisfaction, but also differentiate themselves in the marketplace and continue to grow revenue.

ONLY those suppliers who can utilise technologies to overcome the challenges of customisation will be able to delight customers.


 

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PART 3: Tips to improve your order-to-cash Supply Chain

To improve is to change; to be perfect is to change often, Winston Churchill

15 Tips for Improving Your Order-to-Cash Supply Chain. When pursuing order-to-cash improvements, many companies try to focus on the speed at which they are reimbursed (receivables). Instead, they should focus on setting long-term goals and improving customer relationships across the various departmental lifecycles. Here are 15 tips explain how companies can transform the B2B supply chain using non-traditional tactics.

  1. Differentiate your organisation. Not on price, but on the quality and reliability of the service you provide, and the actionable data you can bring to the table.
  2. Take away the “noise”. Remove the manual, repetitive tasks by automating the non-value-added processes across your supply chain, and release your staff to do what they are best at… serving your customers!
  3. Focus on long-term customer relationships. In a world with diverse and interconnected supply chains, a short-term focus on collections can inhibit quality customer relationships that will be important in the years to come. Focus on understanding your customers and your strategy will be well-aligned with a long-term view of success.
  4. Reduce error rates. Find ways of improving accuracy by automating parts/all of every element of in your order-tocash supply chain. Fewer errors will result in happier customers and less frustrated staff.
  5. Make it easy to do business with you. For all types of customers, large and small, allow them to place orders through the various channels that suit their business, around the clock, and provide a consistent experience in all channels.
  6. Make it easy for customers to pay you. Paper invoices can be difficult to process and pay within 30-day payment terms. A well-oiled supply chain machine – where order errors are eliminated, and deliveries are always on-timeand-in-full – will aid customer satisfaction, and help reduce payment discrepancies.
  7. Provide incentives for on-time payment. Discounts—whether fixed or dynamic—provide incentives to speed up payment for those customers efficient enough to choose their payment date. Some customers may offer shorter payment terms in exchange for more efficient payment methods.
  8. Tailor collections activities for individual customers. Some customers are at the mercy of the consumer market, while others must account for project timelines or seasonal variations. Some are behind because of lost invoices, and others are challenged by cash flow. For strategic or high-value customers, knowing the source of their difficulties can help tailor collections activities and address delinquencies without jeopardizing the relationship.
  9. Encourage communication. Collections and dispute resolution may involve multiple documents and conversations to exchange information. A centralised system that is accessible both to you and your customers can help promote information sharing.
  10. Do more to help your customers! You may not want to go quite as far as offering refunds to customers, but even the most dissatisfied customers respond well to helpful suggestions for improvement. Take the next step to offer value by meeting with customers and using the actionable data that exists in your business today – leverage this use of technology, to become partners in the continuous improvement war.
  11. Improve your product availability and provide rapid delivery. Invest in your distribution network and service capabilities to support the local needs. Utilise the new trends in load sharing, backhaul utilisation and online transportation auctions.
  12. Standardise collections and dispute resolution. Many parties may be involved in collections and dispute resolution, and varied processes or approaches among employees can create repetition, confusion, and poor customer service. If you can institutionalise the knowledge and processes for each customer, you can build a streamlined process focused on normalising the diverse data streams that exist in isolation today.
  13. Stay ahead of the game with pre-sales credit analysis. Identify potential problems early so you can either turn away the business or adjust your terms accordingly.
  14. Avoid delays with accurate billing and documentation. Discrepancies between invoiced prices and purchase orders require reconciliation, and customers look to you for resolution. Avoid these delays by ensuring accuracy before distributing invoices.
  15. Regain control of the end-to-end customer experience. All of these tips are a means to an end. Having complete visibility and control of the process will allow your employees to get a sense of the bigger picture which, in turn, enables them to find ways of improving the individual customer experience process – one customer at a time.

Implementing these types of customer-driven initiatives will enable end users to maintain high confidence levels in the authenticity of the technology they are utilising.

Overcoming Barriers to Change. Once you have decided that customer experience is a priority, automating your back office processes can improve the whole order to cash supply chain, and start enabling positive change. Overcoming resistance to change is another challenge in and of itself. However, choosing the right technology partner can help your business embrace, rather than dread, change. If done correctly, there is potential to strike the right balance between what customers want and what businesses need, in order to stay profitable.


About OmPrompt

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As the pioneer of customer automation management, OmPrompt helps a growing number of the world’s leading brands eliminate gaps in the order-to-cash process that have traditionally required manual workarounds. OmPrompt has innovative ways of automating repetitive manual work in the customer management cycle, enabling clients to free resource, manage by exception, remove restrictions, and eliminate risks to their businesses. Our intelligent, cloud-based solutions are delivered as a service, co-exist with EDI-based solutions, are quick to deploy, easy to extend, and offer an exceptionally fast ROI.

About the Author

coreen head

Coreen Head is the Client Development Director at OmPrompt, who believes that great customer experience is the most important competitive advantage that companies can maintain today. As such, she dedicates her time to educating brands on ways to embrace personalisation and ultimately create world-class order-to-cash (O2C) supply chains. Click here to connect with Coreen on LinkedIn.

You can read the OmPromt blog here.

You can download the full whitepaper here.

 

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