The fast evolution of technology combined with changes in customer demographics and expectations are forcing businesses to more swiftly and frequently adapt the way they operate. In today’s marketplace, customers are better informed and less loyal. When customer priorities shift, businesses must be prepared to shift with them. Otherwise, a business that is winning the battle for customers today can easily find itself on the losing side tomorrow.
Yet, in the latest PwC Global Operations Survey, 63% of operations leaders said that understanding what customers value is a challenge for their companies’ operations. In addition, 61% said it is difficult for their operations to change direction when markets, customer needs or enterprise strategies change. Combining these two data points highlights a major challenge – how to translate customer expectations into a tangible operations strategy.
Companies that have successfully tackled this challenge put customers at the center of their operations strategy. These companies have discovered that when you reorient your company’s operating model around customer needs, your operations teams can define the assets and capabilities (policies, processes, technology, data, and ways of working) to then make the timely decisions and appropriate trade-offs required when change inevitably arrives.
There are four keys to translating customer expectations into an operations strategy:
- Understand customer habits. If you understand what customers want and are willing to pay for, (for example, by measuring choices across discrete trade-offs, e.g., conjoint analysis) you can make the right strategic and operational choices for your business. This customer data may already exist across your organization – waiting for you to analyze and convert it into actionable insights. Once you have a firm grasp on what customers value today, and what they aspire to in the future, you can begin to define a sustainable operations strategy.
- Coordinate across functions. The ability to efficiently execute on what customers care about requires coordination across functions. This includes departments beyond the traditional operations functions such as marketing and customer support. Frankly, there’s rarely enough time to spend days or weeks discussing interdepartmental conflicts. Decisions that used to require months of analysis must now be made in a matter of weeks. It’s critical to update your operations model and foster an environment that embraces collaboration and avoids complex processes that ultimately slow down response time.
- Keep an eye on profitability. Business leaders must understand not only what the customer values, but also the value each customer represents to their bottom line. Often when companies embark on transforming their operations, they look to immediately incorporate new supply chains, new technology or new products and services. However, operations should be tailored to deliver the greatest value to the best customers for the least cost. While a quick overhaul is tempting, keeping costs aligned with your business strategy will foster longer-term advantage.
- Build in flexibility. Historically, supply chains were built to do one or two things very efficiently at high scale. This has changed in many industries, particularly consumer goods and retail. In the midst of uncertainty, it is key to develop increasingly flexible supply chains that can adapt to unanticipated changes in demand and supply quickly. To accomplish this, flexibility should be designed into the supply chain where it is most needed. For example, in recent years, companies have been using advanced analytics to better predict and proactively address how inventory flow issues impact customers.
Although designing more flexible and adaptive supply chains may seem like a daunting effort, the rewards greatly outweigh the risks. Companies that proactively make customers the center of their operations strategy can move from being victims of customer impulses to champions in their respective industries.
Where do your customers fit into your operations strategy?
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