In his session “The Digital Tipping Point” at the American Aerospace & Defense Summit in 2016, Matthew Cordner, Director, Global ERP and Business Intelligence at Textron Inc., told the audience that, “For many companies in mature markets, excellent product performance is no longer a differentiator, it merely earns you the right to compete.” What differentiates a company, he argues, is their ability to provide superior insight and agility.
Cordner provided Netflix and Dell as examples. Though these companies did not sell especially superior products to what was already on the market, it was innovation in their supply chains that allowed them to be successful. Netflix, which began by delivering rental DVD’s to customers, improved on the Blockbuster model by selling the same product but getting it to customers faster and more conveniently. They were able to collect tremendous amounts of data that allowed them to not only to go digital and recommend content to viewers but also produce that content and capture more value from their products.
Similarly, Cordner says of Dell’s famous distribution network, “Dell didn’t become Dell by making great computers, they really weren’t that differentiated; Dell became Dell by making a huge commitment to information technology. They took the information from your brain into a website, that was really a very sophisticated bill of materials configurator. When you hit the button to order your computer, it ordered it to an assembly line somewhere in Round Rock, Texas. All the parts you wanted that you entered into the website weren’t owned by Dell, they were owned by the suppliers. They took the money out of your account, got the supplies, built the computer and paid the suppliers 30 days later. They not only did not have inventory in that process, they generated working capital or negative inventory.”
Cordner argues that it was this use of analytics and ability to serve the customer in the manner in which was most convenient that allowed both of these companies to be successful.
This ties into the broader trend towards a customer-centric supply chain. With big data, increasingly sophisticated segmentation, the ‘Amazon effect’, and the omnichannel experience, customer expectations are higher than ever. In order to compete, companies need to focus on the end consumer and map the supply chain backward from there. To do this effectively, organizations need to: utilize data, choose metrics carefully, and align teams around those metrics.
Read on for more insights on creating a customer-centric supply chain from Volkswagen and Adidas here.
