Supply chain: differentiated services

Supply chain: differentiated services

Supply chain: differentiated services 1024 579 Citwell UK

Supply chain directions are evolving. Yesterday, they aimed to provide all customers with the basic level of service that is on-time delivery. Increasingly, reflections with marketing departments are pushing towards differentiated models.

The perfect order

A click or an email from the customer and hop, the order is entered in the preferred ERP. The management of the credit passes like an email to the post office, the availability of the stock is validated among the hundreds other orders of the same day, the reliable delays of planning make it possible to confirm a date of delivery to the customer, the carriers post a full availability, the warehouse receives its order and starts the wave of preparation, and the truck full part to make his tour to deliver the customer in due time, with a dematerialized delivery voucher to the key. OTIF, check!

Exercise is not so easy every day: the specific needs of customers add complexity. Some will want a reserved stock, others a recorded stock. We will have urgent orders, modifications or cancellations. Your customers will also issue specific requests related to packaging or product labeling. The volume, the range of products, the reliability of the data, the systems are also grains of sand that prevent this process from running round.

Economically, we cannot serve all customers with the same level of service

In short, as soon as a customer asks you for flexibility or a little extra service, it generates disorder. This disruption has a cost, and it is not even guaranteed that this effort is profitable! Should we say yes to all your customers? Or, should Pareto’s law guide decisions? One thing is certain, you will not be able to serve all your customers with the same level of service, it would be too expensive for you.

A CEO of a leading industry in his market (thanks to him) explains to his salespeople that “saying yes to a customer is to make the figure”, and that “say no is to make the margin”. This principle must find its place in the segmentation of customers. It is no longer enough to categorize customers according to their size or even their activity, because their real needs will be very differentiated according to their purchasing / supply behavior and their level of maturity in the supply chain.

The service policies of the customer promise

The construction of the customer promise and its service policies is done jointly with the marketing, sales, supply chain and industrial departments. It defines differentiated service levels by customer segment, based on their actual need.

This agreement (SLA) can reorganize the entire supply chain to find the best balance between cost and level of service to the customer.

Olivier Gonot,
Senior manager – Citwell