This post is part 2 of a 4-part series on the customer centric supply chain. Read the rest of this series here.
In today’s fast-changing world, different types of customers can be distinguished, all coming with their own preferences and buying habits. When building a successful value strategy, an organization should make sure to bear this in mind. At the same time, companies strive to keep their business running as efficiently as possible while leveraging internal strengths and capabilities. This two-fold ambition demands carefully balancing an inside-out with an outside-in perspective to effectively create lasting customer value.
Inside-out vs outside-in
Following the inside-out approach, companies ask themselves what strengths and capabilities they possess in order to develop an offer that will bring maximum value to a specific customer segment. Via internal discussions, company employees rank different success factors or competencies in terms of the internally perceived relative importance for the customer. Based on the total scoring, the organization shapes its value strategy accordingly.
A second approach to implementing a strong value strategy is focused on the outside-in perspective. By conducting detailed customer research, a company can capture relevant insights into what target groups actually want and value, but also why they may decide to stop using certain products and services. This ultimately results in a business plan that is aligned with customer needs.
Adopting a blended approach
What approach delivers the best results? Often it is a combination of both. Organizations that solely look at the internal perspective run the risk of losing track of what customers actually value and may be perceived as less innovative. On the other hand, only adopting an outside-in approach can take the focus off what internal strengths the company possesses to really make a difference for its customers, and simultaneously run an efficient business.
A dual approach helps companies to align their internal capabilities with the voice of the customer in order to ultimately deliver product offers to the right customer segments in the most efficient way. It helps a company focus on the right target groups and as such also makes clear for which customers the organization should not market an offering.
Example: implementing a paint company’s value strategy
We assisted a paint company in formulating and implementing a sustainable value strategy that clearly includes the voice of the customer. First, we asked team members what they believed to be crucial for their clients when choosing for the company’s products. Reliable delivery and product range scored highest from an internal point of view. Next to that, we conducted market interviews to understand the client’s perception on the company’s performance relative to its competitors. The visual below illustrates the result from both exercises.
For some capabilities the company may ask itself if it should do more to at least stay at par with the competition, like for product flexibility. For others, like reliable delivery, they seem to overestimate the value for the customer. But overall, the alignment between the success factors and what the customer values turns out to be quite good. By adopting a dual approach to strategy implementation, the organization maximizes its chance to create lasting, optimal value for both itself and its customers.
Coming up next
In the upcoming post, we will investigate the importance of customer and employee journeys. Stay tuned!
About the authors
Tom De Visscher is Partner at Chronion. Tom is a supply chain expert with focus on strategy alignment and process & organizational redesign.
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