Leveraging Relationship Management Tools to Stay One Step Ahead of the Supply Chain Crunch
The coronavirus pandemic has strained supply chains in unprecedented ways and has shed light on what happens to a marketplace when high demand meets limited supply. A recent report stated that customer shopping behavior will be permanently changed (by the pandemic) in ways that will further emphasize digital channels and put customers entirely in control to shop how they want and when they want. The supply chain will have to adjust to these permanent shifts and behaviors, and new relationship models between retailers and suppliers will need to be developed.
These new models must be aligned across vision, collaboration and workflows, and will perform best when supported by the latest evolution and methods of relationship management. Examples include 360-degree evaluations between retailer and supplier, clear and intentional collaboration on go-to-market strategies, and evolving incentive structures.
As retailers and suppliers navigate the supply chain crunch together, they should keep the following tips top of mind:
1. Play the long-term game.
Re-establishing the supply/demand imbalance may take more than a year in some instances. Take lumber as an example. During this period of crunch, the supply/demand imbalance is causing prices to spike. Companies should prioritize managing and nurturing customer relationships; resist the temptation to inflate short-term profits by further driving up prices to customers.
2. Strategically manage the inventory you have.
Depending on the company and type of business, this might mean prioritizing high-value customers and distribution based on end-user needs or managing allocations based on some other criteria. To do this, deep customer knowledge and understanding, as well as proactive management, is absolutely necessary. To the extent possible, work with customers to minimize exacerbating the problem by discouraging binge buying and hoarding. While competitive issues are a challenge, aim to manage supply/demand pressures by coordinating at a “higher level” across customers or by a defined business segment (e.g., geography) rather than the traditional customer-by-customer approach.
3. Focus on your relationships.
If the shortfall in the supply is systemwide, then it's likely to impact all players to some extent. At the customer level, however, this fact doesn't make it any easier to deal with and it's important to keep that in perspective. Engagement with suppliers to develop a deeper, collaborative approach — which entails ensuring your business objectives and incentives are aligned — can help to ensure that you get at least your fair share of the supply. It may also make it possible to steal share that would otherwise go to competitors.
4. Utilize listening tools.
In order to adapt to the sudden change in customer shopping and buying behaviors, customer feedback and "listening tools" are more important than ever. These tools allow you to probe into the nature of these shifts, understand how they're impacting your customers, and get ahead of any long-term effect on your business. The best companies, armed with customer feedback, actively realign and develop value-added services to assist their customers in making transitions to a “new normal.” Customer feedback and data should help drive decisions on new designs, touchpoints, and ways of doing business (e.g., pricing models), which not only can salvage a profitable fiscal year, but also can set a business up to be successful for years to come.
A last but highly important reminder: remember your employees, as they're the ones who are going to take the brunt of customer displeasure about supply issues. One of the most underleveraged sources of customer intelligence is one’s own employees. Tapping into their understanding of the customer landscape and issues can help identify alternative approaches to address the supply chain shortfall (e.g., what reasonable substitutes might exist to address customer demand) and can help cement the relationship with employees by making them a part of the solution.
While the supply chain crunch has been challenging to navigate, it's not insurmountable, and new winners and losers will be minted based on their approach to this challenge. The winners are staying one step ahead by prioritizing long-term thinking, adopting new relationship models and, importantly, listening to (and acting) on the insights of customer and employees.
Giles Whiting is chief operating officer at Forsta, a leading experience and research technology company.
Related story: 5 Ways COVID-19 is Transforming Supply Chain Management
Giles Whiting is chief operating officer at Forsta, a leading experience and research technology company. He has decades of first-hand experience partnering with companies to improve their customers’ experiences by leveraging data-driven insights.