I read a Playbook posted on the BusinessWeek website titled “Playbook: Customer Loyalty Do’s and Don’ts.” I found it a good refresher of tips to remember. I have listed some of the tips below that I found most helpful:

Ben McConnell, co-author of Creating Customer Evangelists: How Loyal Customers Become a Volunteer Sales Force

• Do find ways to bring customers together regularly, whether it’s through a quarterly or yearly conference, party, or meeting. The ones who’ll show up are probably the evangelists, and they love to meet other evangelists. Meeting one another under your party banner will help reinforce their feelings of emotional attachment. Plus, it gives them something new to tell others.
• Don’t allow even one employee to be grumpy or haughty toward customers. Evangelists are just as, if not more, loyal to your people than they are to your product, service, or brand. An employee with a bad attitude toward customers is like a virus that spreads bad word of mouth, and the years spent cultivating a good reputation can be lost in months or weeks.

Glen Urban, professor at MIT Sloan School of Management and author of Don’t Just Relate—Advocate! A Blueprint for Profit in the Era of Customer Power

• Do remember that loyalty is built over time through a collection of positive experiences.
• Don’t assume that the lack of complaints is equal to a satisfied customer base.

Frederick Reichheld, a fellow at Bain & Co., founder of that firm’s Loyalty consulting practice, which strives to help clients improve customer, employee, and investor loyalty, and author of The Ultimate Question: Driving Good Profits and True Growth

• Do keep the following in the mind: Customers who become promoters must first believe that a company offers superior value in terms of price, features, quality, functionality, ease of use, and all the other practical factors. Additionally, they must feel good about their relationship with the company—they must believe the company understands and values them, listens to them, and shares their underlying principles. A company able to combine these factors will create promoters, customers who eagerly recommend a company or service to family members, friends, and colleagues.

It has been my experience that the most loyal customers have an evangelist in their organization for our software product. If there isn’t at least one person who is evangelizing the use of the product throughout their company, then there is likely lower user adoption and lower customer loyalty. Being in Professional Services at a software company I am always on the lookout at my customers for who is or who can be the evangelist in the customer’s organization. If one does not exist it is certainly worth the time and the effort to nurture and cultivate the relationship with the customer to grow one.

I love the reminder of not allowing even one employee to be “grumpy or haughty” towards customers. Fortunately I do not typically have to deal with my co-workers being grumpy or haughty toward my customer. However, I do need to remember that whomever I bring in from my organization to speak with the customer I should educate them on who they are talking to, what their concerns are, and not to give generic advice to the customer, but rather make it as specific and unique to that customer as possible. Everyone from my company who speaks to the customer represents the whole of the company.

Customer loyalty is built on a collection of positive experiences. I personally believe first impressions are very important and this includes building a relationship face to face. In this day of internet and web meetings, etc. it is too easy to be cost conscious and not travel to customers because everything can be done over the phone. But can you share a meal over the phone? Can you look at the person’s personal photos on their desk and inquire about their family? A great relationship is built by some face to face interaction and lots of positive experiences.

“Don’t assume the lack of complaints is equal to a satisfied customer base.” Isn’t that the truth! I personally find that if a customer is too quiet over too long a period of time that they may no longer be utilizing our product as broadly as before. Most very active customers are asking for regular interaction. So if you haven’t heard from someone in a long time it may be a good time to reach out and check in. Or even worse, maybe your biggest supporter is no longer with the company.

The last tip is really important. A customer may be interested in your product if it is superior and offers superior value, but if your company is difficult to do business with, the company may not choose your product. You must not only listen to your customers, but action on what they tell you. I have heard from customers in the past that they get frustrated when they fill out surveys or provide feedback or questions and no one ever follows up. If you don’t action on your customer’s input it will certainly breed dissatisfaction.

Do you have any other tips on how to maintain customer loyalty?

Some companies invest in the Account Management model to perform this function.  But in order to do it right the Account Manager would only be able to handle a minimal number of accounts as they would be very deep into each account. The Account Manager would also have to be very skilled in many areas. One software company I worked at tried this model and the customer’s loved it for a while.  It worked fairly effectively until the model could no longer scale. Many customers became very reliant on their Account Manager and most times that customer was not generating any additional revenue for the software company. So, as the number of customers increased the number of non-billable heads had to increase until such time when it did not make financial sense to keep increasing the non-billable headcount. Then the Account Manager role went away and the relationship with customer went back to being more tactical. Customers had to pay for services if they wanted this kind of help. This led to some customer dissatisfaction but not loss of too many customers

At my current organization the best resources to provide this type of guidance to customers are typically billable consultants or pre-sales consultants. Both roles are expected to be revenue generating. In my role , I view my organization as performing a customer service role. I think it would be ideal to have resources on my team with deep expertise who can manage a handful of accounts (4-6) and could build the type of relationship where they understand the customer needs very well and can provide proactive guidance on how to solve those problems. The challenge is of course scalability and  I would say that my team has this relationship with some customers but not all.  However, if billable or revenue generating work should arise that would take first priority over non-revenue generating work. It therefore becomes very difficult to maintain on-going strategic relationships with customers who don’t generate any incremental revenue. That is the dilemma.  I am constantly trying to figure out a way to maintain strong, strategic relationships with my customers even if they are not generating incremental revenue.

If you are a customer, what do you expect of a software vendor in terms of what it means to have a strategic relationship?

If you are a from a software vendor, have you cracked the code on how to provide cost effective advice and guidance as suggested above?

I am always open to new opinions and best practices.  Please pass on your feedback and perhaps I can find a way to be able to strategically support all customers.

I read a lot of books.    I typically have a few books “in the queue” but occasionally I’ll run out of reading material and have to wait for my next trip to the city to buy more.   When I travel, I’ll bring the book I’m currently reading and one or two more just in case I run out during the trip.  I’ll often re-read books I’ve enjoyed so I tend not to sell or give away books I’ve already read. As a result, my book shelves are stuffed way beyond their capacity.

So, when the Kindle came out a few years ago, I watched with interest.  There were still a few bugs to work out, so I waited.  The Kindle was also kind of expensive and…oh yeah…it wasn’t available to us cave-dwelling Canadians.  The Kindle 3 was announced in July.  It had some nice new features and a great price and was available north of the border, so I decided that I would treat myself for my birthday and ordered one on August 17th.

When I placed my order, Amazon couldn’t tell me when my new Kindle would ship.  Hmmm.   Yesterday, a couple of days into September, Amazon STILL couldn’t tell me when my Kindle will ship…not online anyway.  What’s going on?  Do they honestly not know when they can ship my product?  Is the date so bad that they are afraid I’ll go elsewhere?   Those among you that have been involved in supply chain, customer service or sales, know that the only thing worse than not shipping a product on the date a customer wants it is not being able to tell the customer when they can expect it.  

So what is the cause of the delay?  Bad Forecast?  Supply issues?  We just don’t know and likely won’t know until Amazon tells us (if they ever do). Regardless of the cause, what is stopping Amazon with providing me with a delivery date?  We all know that there are supply chain analytics available that can be used to identify an expected ship date.  Perhaps, being new to the brand owner /  manufacturing side of things, Amazon might not yet be aware of what is possible with good supply chain software.

Desperate for Amazon to tell me where the heck my Kindle is, I broke down and called customer service and finally got an answer that it should ship likely on September 10th.  Why that date wasn’t or couldn’t be provided online when I checked the status, I don’t know.

As someone who understands the complexity of the supply chain, I know that sometimes we can’t ship when a customer wants a product.  However, as a customer, I want to know when you CAN ship my product.  Amazon, you gotta give your customers any insight you can….and don’t make them work for it!

It begins with what he believes defines the customer experience value chain:

“Network of internal and partner processes, people and capabilities that translate innovation into customer value while delivering an unrivaled customer experience”

While closely formulated from Forrester’s definition, loosely defined as “activities through which companies create value, competitive advantage, and superior customer experiences”, what I find unique and interesting about Cisco’s definition is the specific attention and promotion of “people” and their “capabilities”. Perhaps this resonates so much with me because I have long believed that collaboration is the next supply chain “optimizer”, and collaboration is decisively a purpose-driven human activity. To be more precise, it is the unifying of actions taken by uniquely capable people for a common good (more on this later).

Angel identified four legs required to support the creation of strategic advantage; Customer Focus, Agility, Collaboration and Sustainability. At first glance, you might find these to be obvious and perhaps not so unique – and indeed, many companies are talking about these elements in one form or another. What is different about Angel’s message, for one, is the maturity and execution of the model. For example, I’ve never met a company who would say they are “not customer focused”; however, most continue to govern themselves according to traditional, and very operationally focused, metrics (e.g. cost, quality, delivery and speed). Cisco, on the other hand, measures their customer focus by focusing on perfect product launch, perfect order, order-to-invoice cycle time and last but not least “moment of truth customer satisfaction measurements” – thus, redefining their balanced scorecard to align with its customer focus.

A significant portion of Angel’s presentation was spent on the Flexibility/Agility leg. What caught my eye most is a theme I am seeing across multiple manufacturing segments, and is becoming a key requirement for many looking to improve their supply chain management and S&OP processes: the growing gap between Demand Chain and Supply Chain. Today, it is not uncommon to see completely disjoint demand side planning (S&OP) and detailed supply chain planning solutions, and yet, it is in between the two where a significant amount of efficiency and performance can be lost. I believe the gap is widening at a steady rate, and this is what is driving the need for new and innovative solutions to “collaborate and effect change in real time”.

So we’re back to Collaboration – the third leg. In my humble opinion, it will be in this area where excellence will be won or lost. You might look at collaboration as the combination of people + processes + technology/tools, but I was very impressed to see a slight variant of this long standing equation. In Angel’s vision, it is “culture” + process + technology/tools. I admit never having thought about it as a cultural challenge, but having worked with many large organizations on this problem, I’ve come to realize how unique a problem this is… collaboration amongst peers and employees is often challenging enough across departments. The type of collaboration Angel is talking about is inter-enterprise – which means that on a given day, you may very well be collaborating with a complete stranger living on a different continent. Indeed, there are cultural implications to achieving this level of maturity.

Again, I might say there is nothing new about promoting collaboration as a key to success; however, it is what Cisco is doing about it that distinguishes them from the rest. They are leveraging many of their own technologies to produce what they call an “Integrated Workforce Experience” (IWE) platform capable of bringing teams together to collaborate and solve ‘moment of truth’ problems that occur in the gap between demand chain and supply chain planning. Unlike social networking platforms, such as Facebook, MySpace and the like, which use friends, family and fun as a hook, I believe platforms like IWE will motivate productive usage and involvement through content, context, and consequence.

Finally, we have Sustainability, which is extremely topical these days as we watch in horror the catastrophe still hemorrhaging under the Gulf of Mexico. Here, we heard some common themes on creating efficiencies and innovations in product design, educating and increasing employee involvement, and a particularly catchy tag line: “Don’t just ‘comply’, lead, innovate, differentiate”. The one resonating message around sustainability, more of a lesson really, is the reminder that sustainability should not be viewed as a factor for competitive advantage, but rather, the one common flag around which everyone can unite and learn from one another. Industry collaboration will be the key to effecting a meaningful and lasting change.

Does Angel’s vision align with yours? Do you see effective collaboration as an emerging competency that will distinguish your company’s performance?

By the way, if you missed the presentation, grab a soda and sandwich and watch the replay of this presentation by registering here.

As part of the 2010 CSCO Summit, the free-to-attend virtual event taking place on June 15th and 16th, 2010, John and Angel will co-present the track entitled, “Creating the Next Generation Value Chain to Deliver Customer Value,” on June 15th, 2010 at 9:00 EST (14:00 GMT).

Attendees will learn about Cisco’s supply chain transformation from a cost-centre to a competitive advantage. In response to rapidly shifting business demands, Cisco has focused on integrating previously siloed back-to-front end operations into a single global operations group that covers the extended value network, from downstream suppliers through to upstream customers.  This session will provide critical insights on the lessons learned and the key focus areas to consider.

The CSCO Summit, a two-day event consisting of an agenda of 11 presentations, brings together an influential group of global supply chain, operations and procurement leaders to learn and share best practices around the critical factors driving strategic supply chain and operational agendas across multiple industry sectors. 

To register for this free event, please visit:
http://cscosummit.raptureworld.co.uk/register

The obvious first approach is to fix the situation with the late supply, but a lot of times this cannot be accomplished.   Many different strategies are in place at some manufacturers to mitigate this type of situation, such as: vendor managed inventory, lean manufacturing, schedule sharing with suppliers etc. but, regardless, I have seen at many of the customers I have worked with a lot of late and past due end product demand.
So when late supply, and therefore late end product demand is inevitable, what is the best way to deal with this situation and reduce inventory?  From my point of view, to effectively plan and reduce inventory, there are some key capabilities required:

1. Ability to identify the gating components and determine when they will be available.  Required here is a tool to easily identify gating components as well as an effective way to collaborate with and get reliable commitment dates from suppliers.
2. Visibility into the gating components far enough in the future to reschedule the end product demand so that purchase orders and production orders on other components can be delayed in time to realize inventory savings.
3. Capability to determine if the rescheduling of demand is worth the inventory savings given the administrative effort involved, as well as the change and disruption at the suppliers.  This implies an ability to simulate the change and calculate the potential inventory savings as well as the amount of rescheduling that will need to be executed.

I would like to know your thoughts on this subject. If this situation is applicable to your manufacturing operations, how do you deal with it? What tools or applications do you have that assist you in effectively managing late supply against customer satisfaction and inventory levels?

Here is more about it:

“Using Segmentation Strategies for Better Demand and Supply Balancing in the Mid-Market”, presented by:

• Jeff Range, VP, global operations and customer service, March Networks,
• Nari Viswanathan, VP and principal analyst, supply chain planning practice, Aberdeen Group, and
• Trevor Miles, director, industry and applications marketing, Kinaxis.

Mid-market OEM’s are faced with unique challenges in today’s world of outsourcing. An effective balance between demand and supply in this environment is crucial, yet difficult to achieve. Learn how March Networks has used product segmentation processes and systems to overcome some of the supply chain challenges presented by outsourcing.

This 60-minute webcast presentation will be held on March 3, 2010, at 1:00 pm EST.

• Customer side equations will take prominence over rest of value chain
• Supply chains will get more integrated with marketing and service chains
• Speed and responsiveness will be key drivers for spend on new initiatives
• Cost will continue to play critical role in decision making
• Asset Management will gain more prominence and will help in accelerating “green” initiatives

I responded to Atul in the following manner:

We too are experiencing that prospects and customers are focusing a lot more attention on customer satisfaction as it pertains to on-time delivery of orders, but also to the enquiry-to quote and quote-to-order processes.

I couldn’t agree more with your third point about speed and responsiveness. Overall the trend we are observing is that consumer behaviour is pervading B2B transactions with ever shorter lead times. Coupled with the adoption of Lean and postponement strategies, companies have to be very responsive to changing demand, blurring the lines between planning and execution. These are the business drivers for your third point about agility and responsiveness.

Cost will always be a driver in supply chain management. If we adopt any of the Lean concepts it should be the elimination of waste. All too often I come across situations where the information and decision lead time exceeds the physical lead time to manufacture and/or deliver the order.

But this got me thinking about several other reports and observations that have come across my desk over the past 12 months.

First and foremost must be the article by Dan Gilmore at Supply Chain Digest highlighting the work done by Supply Chain Digest’s research arm CSCO (Chief Supply Chain Officer) Insights.  There is an excellent report titled ”Next Generation Supply Chain Management: Integrating Planning and Execution” available from this link. (Subscription required).  In the article, Dan Gilmore observes that “For many years, analysts and others have offered separate models of ‘supply chain planning’ and ‘supply chain execution’ processes, and the technology vendors were generally organized in that sense as well. You can find many diagrams that show hierarchical planning processes with no connection at all to execution, for example. The report argues, and the research supports, that this gap must be closed from a process perspective to meet the challenges of today’s supply chains.” I added the bolding because this is the key to being able to provide the speed and responsiveness to which Atul at Infosys refers.  Not only that, but also managing to contain if not reduce supply chain costs will depend on being able to reduce this gap between planning and execution.

Traditionally we have used inventory to buffer against what we would like to happen (the plan) and what actually happens (execution).  But this is no longer possible.  As the graphic below illustrates, as long ago as 2004 postpone strategies had pushed much of the inventory up the supply chain to the suppliers.  They too have adopted Lean and postponement strategies, leading to even lower inventories.  And then there is the effect of the recent recession.  Nearly all the OEM’s I speak to are struggling to secure supply of components, clearly indicating reduced inventory levels in the suppliers. I wish I had equivalent inventory figures for 2009.  Anyone willing to provide these figures?

Then there is the excellent blog written by Lora Cecere recently titled “Tackling the Black Hole in the Center of Your Supply Chain” in which she states “We now know that fixed data integration, one-dimensional rules mapping, and traditional master data techniques from ERP to Supply Chain Optimization are insufficient.  As a result, plans are created and consumed in isolation, and transactional systems hum along with little– to no — guided intelligence.”  So as the speed of business has increased – some would describe this as volatility – the supply chain systems have not kept up.

And most of the information is now external to your organization.  Companies have being trying desperately to get point-of-sale information to get early trend analysis of sales.  At the same time, many brand owners have largely outsourced manufacturing, not only lengthening the physical supply of goods, but also the time and effort it takes to make a decision.  All of these factors are only making the gaps between planning and execution even wider.  But the business need is to close this gap; to respond to demand changes quickly and effectively.  As Lora Cecere, states, the solutions from the 1990’s have not kept pace with the business needs.  Throwing more ERP at the problem isn’t the solution.  At their heart, all ERP systems are essentially accounting packages.  They deal with your data – financial and operational – but provide very little help in dealing with the majority of the information, which now exists outside of your organization.

What are your thoughts?  Do you experience this gap?  Are your systems able to cope.  Will your next breakthrough in performance come from learning to plan better, or learning to respond to plan variance?  In other words, closing this gap between planning and execution.  Robust debate encouraged.

In my first post to this blog, I want to point out three table stake capabilities that ERP vendors have failed to provide. I’ve been with Kinaxis for four weeks and have been immersing myself in the world of supply chain and S&OP trying to figure out what really drives organizations to improve their supply chain. In talking to my colleagues, which include some of the world’s most knowledgeable supply chain experts who work side by side with some of the world’s best run manufacturing companies, I’ve learned that customer service is at the top of the list.

In these volatile, post-recessionary times, manufacturers need to know when a customer order is at risk, and then they need to figure out fast how to course correct. Unfortunately the solutions in place – at one extreme, error prone manual spreadsheets, or at the other extreme, multi-million dollar ERP modules – can’t offer the following capabilities:

1. SPEED.  When a customer calls you with a potential order, how long does it take you to get back to them with a promise date?  Increasingly, customers will want feedback in a matter of minutes – not hours or days. If you’re saying to yourself “That’s impossible.” Well, it is possible.

2. RESPONSIBILITY ASSIGNMENT.   When an unexpected event puts orders at risk, do you know who to call? How many steps are required to understand and rectify the situation? Being responsive to keep a customer order ship date on time requires an immediate response whether that be to an internal resource or external supplier.

3. ONE VIEW. As you rely more heavily on outsourced manufacturing and suppliers, it becomes increasingly difficult to see and coordinate your supply chain from beginning to end. A ‘twenty-ten’ supply chain solution must be able to provide visibility across sites and suppliers.

The last capability might not stand up to the argument that it cannot be found elsewhere because given enough time and money, anything is possible. However, most manufacturers don’t have enough time and money to continue down the ERP path. Business leaders have realized that now it’s time for something different. It’s going to be an interesting decade.

Unfortunately, we are finding it difficult to find the right type of person.  There do seem to be several candidates out there, however we are looking for a mix of deep supply chain skills as well as technical proficiency - perhaps that is difficult?  Or perhaps candidates should be marketing themselves a little better? 

• I think it is important for candidates to list specific business accomplishments at each job and not just general job duties. 
• I also find it helpful to have the candidates list which business problems/processes they have been working on.  It is easy to say inventory reduction of X, but how did you accomplish it (VMI, supplier visibility, etc.)? 
• Some SCM candidates under emphasize their technical skills as well.  These skills should be brought to the forefront, because most SCM business problems require some type of technology to assist in solving the problem.
• Industry expertise is nice, but not required.  We work with many different types of industries and find that 90% of supply chain business problems are consistent across industries, with minimal uniqueness per industry.  However, exposure to different industries is nice to know.  For consulting, exposure to different industries adds credibility when working with different customers. 
• Location of candidates is also not that important, however they should be close to a major airport.  A challenge is that many of the candidates I see do not want to travel.  That is understandable, but if they aren’t willing to relocate or travel, it will be difficult to find a match in certain geographies.
• Some people mention they are looking for entry level jobs and those are hard to come by in the consulting world and in private industry.  Customers do not want to pay top dollar for someone who doesn’t know more than they do.  However there are some entry level jobs I would hire.  I think the key for entry level jobs is to be very flexible.  Willing to live anywhere, relocate on your own and willing to travel.  We can have more junior people learn on bigger projects and then grow from there.  Entry level candidates really need to demonstrate drive and ambition.

I would love to hire some high quality SCM professionals with deep skills and technical proficiency with a willingness to travel and solve lots of different business problems for lots of different companies.  The key is having the candidate indicate on their resume they have all the right skills so the resume is not passed over.