Managing customer service levels to meet the “Amazon effect”
Posted by Sam Pearson on March 2, 2017
As consumers, we’ve become used to the “Amazon effect.” We order products online, tailored to our preferences, and receive them when and where we choose. Inevitably, these consumer-driven practices are now influencing B2B markets and industrial customers are demanding faster delivery of products and higher levels of service.
The good news is that by learning from Amazon and other service-oriented retailers, manufacturers and distributors have tremendous opportunities to differentiate on service and build customer loyalty. The bad news is there are significant challenges in most supply chains that impede the ability to produce and deliver industrial inventory at warp speed.
Historically, industrial products have had long lead times for distribution, but the “Amazon effect” is causing disruption in traditionally static networks. So how do producers compress distribution times and improve service levels in a “need it now” business world?
Have more than one way to get it there
Manufacturers can look at alternate networks and examine distribution costs vs. service levels. Many of Amazon’s vendors ship directly, instead of sending everything to an Amazon warehouse for shipping. To save time, deliver faster, and satisfy customers, producers must tweak their distribution and supply chain networks for optimal performance. Doing so will help routinely meet higher customer expectations.
Predict demand better
Leveraging advanced analytics and third party data will allow producers to better predict customer demand. For example, when it’s going to be really cold in Minnesota, third party weather data is used to pre-position inventory of cold weather supplies, such as snow blowers and generators. Similarly, manufacturers can use third party data to predict demand, or assess weaknesses in the supply chain that might affect delivery. Better demand prediction helps orders be filled in a timely manner.
Have visibility into current inventory
Many companies are struggling with whether to partner with third-party resellers, and how to do it effectively. The “Amazon effect” is causing producers to rethink their channel studies and their relationships with potential third party resellers. Omni-channel distribution may be the right approach, as in the case of major clothing retailers. When that retail giant fills an order, its full inventory is visible in a complete array of ways. They know what stores have which shirts and in what sizes. Manufacturers need to take their cue from this model. If a custom order comes in for something and associates can see that the same product could be delivered to the customer in half the time with a tweak as ordered, it should be offered. But managers need to be able to see the data to make the offer.
These days, the consumer side offers valuable lessons for B2B manufacturing and distribution. To increase customer satisfaction and retention, manufacturers must deliver the products customers want faster and make the whole process easier.