'Redesign Chinese supply chains with customers at the core'

10 August 2020 Consultancy.asia 2 min. read

According to an international report by Accenture, Chinese companies are falling behind in the way how they place customers at the heart of their supply chains.

Traditionally, supply chains are seen as a supportive process, tasked with facilitating the delivery of products and services. The focus of supply chains has been to drive efficiencies and scale, enabling companies to gain a competitive cost advantage. However, over the years, the role of supply chains has increasingly shifted beyond efficiency towards value creation.

As per a new report by Accenture, based on a global survey of 900 senior executives across 10 geographies, companies with top performing supply chains are now seeing not just bottom-line improvements, but also top-line growth. Leaders have been found to enjoy 13% higher revenue growth than laggards, and similarly, higher sales margins.

Customer value propositions prioritized for supply chain investments

One of the keys of capturing more value is building a ‘customer centric’ supply chain, which basically means five things. First, companies base their supply chain strategy on what the customer values. Second, they build their supply chain ‘inside out’, which enables greater flexibility and transparency all geared at meeting (changing) customer demands. Third, they ensure that supply chains can support the growing need for tailoring and personalising delivery models. 

Fourth, customer centric supply chains enable companies to moves into longer-term relationships with consumers, versus just a sale. Providing connected customer experiences or product-as-a-service models are good examples of this – the aim is to provide products as managed services, which enables greater control and monitoring of the products for the companies, and better service and experience for their customers.

“A customer-centric supply chain is essential to the well-being of companies,” said Jane Pan, managing director and Greater China lead for supply chain and operations at Accenture Strategy & Consulting.

Average daily share price of Masters vs. Others

Meanwhile, in the background, embracing customer centricity as a design principle helps companies better align their innovation to actual demands, and thus opportunities.

However, the Accenture report warns that as it stands, just 12% of Chinese companies were on the right path to building customer-centric supply chains. For one part understandable, said Marcello Tamietti, managing director and Strategy & Consulting lead for Accenture Greater China. “The Covid-19 health crisis has placed focus on delivering all essential goods and services quickly, safely and securely.”

But, “now companies must double down on building more customer-centric supply chains that meet increasing and evolving customer experience demands. This will be key to growth as economies rebound.”

According to a recent study by McKinsey & Company, regional variations are emerging in Asia's supply chain market in the manufacturing industry.