This post is part 1 of a 4-part series on the customer centric supply chain. Find the overview of all articles in this series below.
Making strategy explicit contributes to consistency and offers direction within your organization. It creates focus and can motivate people as they are working towards a common goal. In a fast-changing business environment, companies should try formulating a strategy that aligns their internal capabilities with the products and services they deliver. On top, they should always include the voice of the customer. This will ultimately result in an offer that delights customers and creates real value for them.
Value strategies & critical success factors
How can coherence between an organization’s products and services, and its internal capabilities be achieved? Business advisors Treacy & Wiersema [1] link this to strategic value levers. According to their well-established model, three value disciplines can be leveraged to ultimately create maximum value for the customer:
Product leadership: focus on delivering the best product
Operational excellence: focus on cost efficiency
Customer intimacy: focus on delivering the best total solution
Each of these disciplines are characterized by a set of critical success factors (CSF): competences that make an organization prioritize different elements of their offering. CSF are typically linked to either price, product, broader service, or experience.
[1] Treacy, M. & Wiersema, F. (1995). The Discipline of market leaders. USA: Addison-Wesley. 224p.
Order winners, order qualifiers & non-issues
A company must assess to what extent each factor contributes to its success to decide which value strategy to pursue. E.g.: Is it winning in the market thanks to excellent value for money or is success driven by delivering consistent high quality?
A reliable and efficient way to do this, is by evaluating whether each CSF can be classified as an order winner, an order qualifier, or a non-issue.
Order winners: the capabilities that distinguish a company from the competition.
Order qualifiers: the abilities needed to get an entry ticket to the market. Minimum standards need to be met to convince customers.
Non-issues: the CSF that are considered not relevant in a certain market because they are not valued by the customer at all.
Example in the chemical industry
For one of our customers, we categorized CSF for two different value propositions.
For the commodity products sold to broad audience, the chemical company defined value for money, quality compliance, reliable delivery, and swift customer service as order winners. This resulted in a value strategy focused on operational excellence where automation and cost efficiency are key.
For their specialized products, only sold to a selected group of clients, competences like reliable delivery or quality compliance were merely perceived as order qualifiers. The identified order winners for this top product segment are innovation, excellent technical support and having close customer relationships. This specific set of CSF ultimately shaped a strategy linked to the product leadership discipline.
Coming up next
In the upcoming posts, we will further dive into the customer centric supply chain, explore why it is crucial nowadays and how to achieve it. Navigate to the next articles in this series:
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.
Do you want to know more about Supply Chain Management, contact us.
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