Building Brand Love
How supply chain efficiency supports brand strategy
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Much like a good theater tech crew, your supply chain operates out of view but can have a tremendous impact on what happens onstage. Maximizing supply chain efficiency can ripple all the way up to your customers' unboxing process and create a lasting brand impression.
Supply chains are more than just cost centers to be efficiently fine-tuned on their own—they must match the objectives of brand strategies, measured to perform as part of brand support and designed to stay flexible and adjust to changes in consumer behavior. An efficient supply chain makes the best use of resources while supporting the many promises that companies make to customers.
A new paradigm is emerging as convenience, selection, and speed grow increasingly important to customers, says Brittain Ladd, founder and CEO of Six-Page Consulting. Their embrace of online shopping has created new brands with supporting supply chains that continue to raise expectations for how to provide better customer service.
Take Casper, an e-commerce mattress provider. The brand reengineered the mattress supply chain, packaging mattresses as parcels and shipping them directly to customers. More efficient sourcing, processing, and delivery without the retail store infrastructure underpin the entire brand experience.
What Do Brands Need From Their Supply Chains?
Companies may have many brands and many products, but specific products come and go while brands remain in the customer's mind as longer-term experiences or feelings. Each brand has different combinations and levels of quality, choice, user experience, and delivery expectations that the supply chain must support.
Here are the top five ways a supply chain can support the brand experience.
Let's start with the brand promise of delivery time and available time windows. Companies are pressured to match Amazon's two-day delivery speeds—if not one-day or same-day delivery—and ever-tighter delivery windows. Customers want this speed not just for instant gratification, but also to try to efficiently manage their daily lives.
You only need to be as fast as your customers demand if factors other than the fastest delivery are more important to them. Torre Crupie, principal at supply chain consultancy LogistiPoint, cites this example: A company designs and manufactures bridesmaid dresses. Given the wedding planning cycle, the company focuses on providing online choices and flexible local fitting and sizing services. The company then transmits design choices for overseas production and shipping by air freight to deliver in plenty of time for the big day.
Choice can refer to providing customers with a wide range of products, options, and customizations, including a variety of sizes, colors, features, and accessories.
While enticing to customers, however, choice can be a supply chain burden when it creates a huge number of SKUs. Companies need to have clear start-up and exit plan conditions for their products. Supply chain efficiency may be compromised if poorly performing SKUs take up valuable space or sap resources that are better used for new product introductions or stronger-selling products.
3. User Experience
The way that products and services are presented to the customer, both during the shopping experience and during unpacking, setup, and even returns, is key to good branding.
The user experience may involve personal concierge services to help guide customers through feature options, ordering, and use of products. Efficient user experiences stem from information systems that deliver timely, accurate information when and where suppliers, customers, and supply chain partners need it.
Some companies focus on providing the best or most personalized products using the finest materials and ingredients. This isn't necessarily the right fit for every company, though. Quality, similar to the delivery speed, only needs to match the level of customer promise.
As other supply chain factors become more important, it can be easy to forget about the role of cost in customer decision-making. However, with the great number of choices available today and the ease of switching brand allegience, lower cost can still beat out a competitor, even if small compromises are made on other attributes. Without efficiency, costs rise and threaten competitiveness. It's crucial for companies to look beyond just facilities, transportation, and labor costs; less obvious influences such as information delays and poor supplier and service partner coordination can be just as costly.
How Can You Achieve Supply Chain Efficiency?
Brick-and-mortar retailers used to be able to strictly govern their supply chain growth based on fairly predictable forecasts. But e-commerce products and service companies can quickly develop social media buzz and create a base of customers that overwhelms growth predictions. These are good problems to have, but can also lead to rapid supply chain growth challenges that may not focus on long-term efficiency.
Crupie of LogistiPoint describes a distribution-focused hierarchy: The key base-level requirement of a supply chain is to get orders out the door on time and accurately. Once you've mastered that, then companies can begin to tackle efficiency and cost.
Balance Internal Capacity and Outsourcing
Collaboration with service and capacity providers is becoming as important as products, since service-sensitive customers view these providers as an extension of brands. Balancing internal capacity and outsourcing provides the ability to efficiently scale and flex resources without committing to costly supply chain infrastructure investments.
Partnering isn't just for small, growing companies. Just look at the partnership between Kohl's and Amazon that allows customers to return items they purchased online through Amazon to a Kohl's store.
Emerging brands scaling their business often need experienced guides to efficiently apply forecasting, inventory management, and order fulfillment practices during critical learning periods. Otherwise, they can find themselves choked by logistical concerns, such as an excess of SKUs that aren't selling while other strong-selling SKUs are out of stock.
Supply chain efficiency considers the process of quickly recognizing changes in supply chain assumptions and forecasts, then adjusting to the new realities by refocusing resources in the most efficient way to achieve brand promises. Today, that means order fulfillment must concentrate more on flexibility and agility rather than raw speed. It is difficult to handle every size and shape efficiently, so it is important to apply mechanization and processes to families of like products.
Perfection is never attainable and disruptions will happen. The key is having contingency plans in place that can quickly recognize potential disruptions to the smooth-flowing system and adjust resources. Companies sometimes overlook this form of efficient supply chain processes, but it is often more critical than squeezing out small picking and packing efficiencies.
Each company highlighted in this article has invested heavily in information technology, particularly customer-facing applications that provide visibility to products and order status. On the back end, these companies do the same with internal and supplier-facing capabilities, expecting suppliers to have the same philosophy regarding quick, accurate information availability.
"Efficiency today tends to revolve around turnaround time and service level, but also needs to clearly focus on the cost to serve," says Randy Moore, principal at LogistiPoint.
Customers are more plugged-in and expect up-to-date delivery information, creating an increasing need for better user experiences regarding transparency and tracking. That requires more efficient information systems that quickly tap into information from a variety of sources—not just internal ERP and warehouse management systems (WMS), but also supplier databases, transportation providers, and other partners.
An efficient flow of information must consider all the devices customers use, but primarily focuses on the smartphone. The smartphone is always at hand and always on for either direct requests or push notifications based on desired updates or need-to-know types of information. Dan Beard, chair of the Chicagoland WERCouncil, has participated in multiple WMS implementations. He believes that a WMS and identification technology are musts for accurate and efficient operations.
Cloud-based systems with mobile apps are a good starting point for improving operations efficiency, as these systems do not require heavy infrastructure investments. Many of these systems also offer Advance Shipment Notices and other Electronic Data Interchange messages, enabling smaller, growing operations to communicate efficiently with mid-sized and large suppliers and partners. Companies looking to efficiently process large volumes may need much higher levels of hardware and software infrastructure.
The goal is to gain supply chain efficiencies by concentrating on the basics of flow to reduce delays and enhance internal and external coordination. Suppliers, service partners, and customers want visibility without lengthy communication processes. Efficient supply chain flows are all about optimizing resources and coordinating supply and demand to support brand promises.
That leaves customers with a positive impression long after curtain call.