Author: Lincoln Payne, SVP Business Development
There’s A Different Way To Approach Customer Service and Claims Using A More Sentient Supply Chain
We’ve all heard the old adage that “the customer is always right.” Companies exist to serve customers and what’s in the best interest of the customer is usually also in the best interest of the product or service provider. However, this phrase takes on an ironic twist in the fast-moving consumer goods (FMCG) space where manufacturers process, ship and collect cash based on orders received from their retail business customers. There is a significant amount of risk in knowing whether your customer is right, or wrong, when it comes to their placing claims against an order.
With order management processes such as promotions, order changes and refunds, the final tally of the right product, at the right price, delivered in the right quantity and to the right place are subject to multiple variables beyond just a simple 1-1-1 transaction between the supplier and the retailer, and then between the retailer and their end consumer. At OmPrompt we help some of the world’s largest brands who, despite their size and scale, are often directed by both their larger and smaller customers when it comes to fulfilling the ‘perfect order,’ a goal which should lead to a perfect invoice and a perfect payment cycle…and an OTIF metric that others envy.
Based on third-party research we’ve conducted among FMCG companies, we know that there is a real risk and cost to not knowing what your customers know (or think they know) about orders they have placed with your company. In the case of one large Global 2000 consumer goods company, the Head of Supply Chain noted that, “We found that customers were taking advantage of our inability to defend different issues with facts, which we could not get from separate and unconnected systems…some brands and individuals had higher claims than others, and we needed more detail.”
And while it’s easy to see how large buyers like Wal Mart/Asda could leverage their scale to muscle their suppliers for concessions, the phenomenon of customers having superior knowledge of their orders (or the perception that they do) is not an uncommon occurrence at smaller retailers as well. In some cases the supplier simply lacks such information but since “the customer is always right” it then becomes incumbent on the supplier or distributor to prove otherwise. For example, corner grocers or smaller convenience stores often lack the systems, data and standards that serve to check the claims of order discrepancies of any kind. This is especially true in developing markets, where as one global logistics managers notes, “smaller country markets are not standardized,” which in the aggregate affects the FMCG company a great deal.
Moreover, the botching of a single order is more pervasive than anyone would like to admit, and the big-picture risks and costs can be significant. According to Gartner, 80% of customer service time is on non-value added, non-customer facing activities, yet 89% of CEOs believe their businesses will compete “mostly on customer experience.” And, just over three quarters of industry executives see “faster order fulfilment times” as a lead customer demand in the future, according to a 2017 study by Accenture. Clearly there are gaps between ambition and reality.
Supply chain leaders face pain points in the order management function, including excessive manual processing and a lack of visibility and access to required data, particularly from 3rd parties. Similarly, customer service departments at FMCG companies face related pain points that include data gaps (e.g. stock levels), incorrect information on late or incorrect deliveries/returns, reactive customer issue resolution and the various issues noted above that drive greater complexity – e.g. discounting, refunds, double orders, etc.
And yet, as the digital world takes hold, and everyone grows accustomed to having their own personal super computer (a.k.a., the smart phone), “customers expect companies they deal with to know more about them than ever before,” according to that same Accenture study. Today the top 3,000 global consumer product makers deal with millions of orders manually each year, and yet 50%+ of companies handle these transactions with a combination of e-mail, spreadsheets and paper. But now it is actually possible to know more about your customers’ orders than they do, so that when ‘xyz’ retailer seeks a claim or invokes some penalty or discount, the supplier can actually determine in real time if that claim has merit…or assess how much merit when the case is not so cut and dry.
For example, one European product company using OmPrompt’s Sentient Supply Chain Platform documented how it “saved several million pounds in defense costs,” along with a tremendous amount of time and effort dealing with bad orders. In another case, a large retail goods provider was able to “reduce our claims bounce back by 35% in 18 months.” The level of speed and accuracy through automation is what drives those results, especially considering that the cost to fix a single order can be well over $100 per instance; which can really add up when you’re processing hundreds of thousands of orders per month.
At OmPrompt we’re passionate about and experienced in figuring out where and how technology can change the game by introducing sentience into the myriad and complex business processes that make up supply chains more sentient. A sentient supply chain can see and sense information relationships that point to the “so what?” insights that make your business work. We help our clients proactively manage their customer order processing, fulfillment and settlement by providing a more complete view of the entire supply chain than previously possible, so that they know more about their customers’ transactions than their customers do. That makes for happier customers, better cash flow, and a more profitable business.