Building Efficient Supply Chains: A Customer Success Story with Salesforce
Alexander Sbaite
December 18th | 2 min read
Responsive vs. Reactive Supply Chains
The terms «responsive» and «reactive» often come up when discussing approaches to supply chain and operations. Both approaches have their merits and potential trade-offs. Striking the right balance between efficiency and responsiveness is crucial for supply chain leaders to optimize operations, enhance customer satisfaction, and achieve overall success in today’s dynamic business environment.
Efficient Supply Chains: Reactive Approach
Being reactive in a supply chain context means addressing issues as they arise, which often means not considering the broader impact on operations. It involves responding to customer demands or changes in the market after they occur, often leading to fire-fighting and temporary solutions. This approach can result in disruptions, inefficiencies, and increased costs, ultimately compromising the overall performance of the supply chain.
Efficient Supply Chains: Responsive Approach
On the other hand, being responsive means actively adapting your operations in the face of various factors such as shifts in customer demand, market conditions, technological advancements, regulatory changes. In other words, the main focus is to meet customer demands. However, it’s important to note that being responsive alone is not enough. Prioritizing customer needs without considering efficiency can lead to excessive spending on supply management. Therefore, it is essential for companies to strike a balance by actively monitoring customer needs, market trends, and internal processes. This allows them to align operations with demand, streamline processes, and optimize resources efficiently, ultimately meeting customer expectations while maintaining cost-effectiveness.
To illustrate this, let’s examine a recent case study with one of our clients. This particular client had developed a home-grown order entry system, incorporating various data points such as client credit status, inventory data, profitability calculations, and inventory offloading needs. The system even allowed for grouping items into families to facilitate upselling and product substitution. While this seemed appealing, there was a glaring issue – no integration with the operations’ execution.
On the surface, the company could swiftly take orders, giving the impression of an efficient order entry process. They saw this as a way to prioritize customer preferences and provide exceptional service, “a customer centric approach”. However, they failed to recognize that this practice was not only inefficient from a cost perspective, but it also disrupted their operations.
Let’s take a closer look.
When a client called to make last-minute changes to their order, the company would comply without enforcing any cut-off time. This sometimes meant they would be sending out a truck with only one box inside in order to make sure the customer received their product when they needed it.
The lack of a clear cut-off time meant that the established routes, loading sequences, and picking processes were constantly disrupted. As a result, productivity suffered, leading to delays, errors, and frustration among other clients whose orders were impacted by the prioritization of one customer’s last-minute changes.
Without a robust connection between order entry and fulfillment, the systems failed to reinforce a streamlined process and logical business decisions. In other words, the efficiency of order entry was masking significant inefficiencies between sales promises and operational realities, and the increased costs incurred during fulfillment.
To address this challenge, LIDD designed a Salesforce-integrated solution that transformed the order entry process. This solution provided a comprehensive 360-degree view of each account, including pricing information, contract terms, cut-off times, credit statuses, available-to-promise inventory, profitability, and delivery status. With this integrated solution, the order entry and customer service teams could quickly respond to client needs while maintaining a strong connection with operations. This ensured that order fulfillment was executed under optimal conditions, considering both service and efficiency.
Can a supply chain be efficient & responsive?
The answer to this is yes. Efficiency is crucial for minimizing costs and waste, while responsiveness allows for quick adaptation to customer demands. Striking a balance between the two is essential for business success. Many may view a reactive approach as a competitive advantage: “We listen to our clients, we are flexible on our deliveries, we want to make them happy, this is why they do business with us”. However, simply accommodating every client demand without considering operational implications can lead to disruptions, inefficiencies, and increased costs. True customer service goes beyond meeting immediate needs; it requires consistency and reliability in the service and products provided. By integrating sales and operations through a comprehensive solution like the one we were able to provide with Salesforce, companies can achieve responsiveness and create a supply chain that excels in both service and efficiency.
For more information about how Salesforce and LIDD can transform your business operations, get in touch with a LIDD expert today.