It has become a universally accepted truth that the coronavirus pandemic has accelerated customer expectations for buying online. Many distributors report a dramatic shift toward customer orders placed on e-commerce platforms. This trend has confirmed what many have said for several years: distributors must invest in modern e-commerce platforms to remain a viable source for meeting customer expectations. But is doing so enough? Is there a more vital lesson that many distributors are missing? Will distribution miss a critical opportunity for locking in unbreakable customer loyalty if they remain blind to the bigger picture?
A recent article by Michael Schrage In the MIT Sloane Management Review titled, “Data, Not Digitalization, Transforms the Post-Pandemic Supply Chain” is a must-read. Schrage argues that the pandemic caused a fundamental shift in customer procurement and supply chain priorities. Ongoing plans for the digital transformation of supply chain practices take a back seat to more urgent needs. Worker safety and meeting delivery commitments are now top priorities. Moreover, procurement professionals found that the data they had was not the data they needed. A critical new requirement is emerging: customers want data that provides real-time visibility to every action taken by suppliers.
Schrage explains that procurement plans changed overnight, and he uses a quote attributed to Mike Tyson to make his point: “Everybody has a plan until they get punched in the mouth.” As he explains: “Too many managers believed that moving legacy processes, data, and analytics to the cloud would automatically enhance transparency and visibility. They got punched in the mouth.” For customers, digitizing buying processes (online shopping) is not enough. Customers want data.
For distributors, this point bears unpacking. Building an e-commerce platform for enabling online purchases is not enough. E-commerce platforms enable socially distant and safe buying practices that customers prefer. But shopping online does not provide the visibility and data that customers need to ensure that they can remain operating. As the COVID-19 crisis eases, customers want to monitor their supply chain with new visibility levels and the data to track, measure and predict performance. Customers will not trust supply chain partners to monitor their delivery performance. Seeing is believing. In the coming post-pandemic world, customers want to take charge of their future. They want data.
Schrage concludes by offering five questions asked of supply chain leaders. His questions are addressed to distribution’s customers. I list the five questions below and suggest that distributors answer the questions, then read Schrage’s summary of what he learned. Then, go one step further and meet with customers and facilitate a conversation about their answers and your partnership opportunities. Combined, these questions provide an invaluable tool for distributors to fully understand how COVID-19 has changed procurement priorities, and what leading and innovative distributors can do in response.
The five questions from “Data, Not Digitalization, Transforms the Post-Pandemic Supply Chain” are:
- Do data governance policies and processes make visibility simpler, easier and more accessible throughout the enterprise?
- (How) do you measure visibility?
- Are you as transparent as your best customers want you to be?
- (How) are you championing visibility culture inside and outside the organization?
- How will our visibility/transparency commitment facilitate AI/machine learning/automation adoption?
Sharp-eyed readers may notice that Michael Schrage’s insights are offered several times in NAW’s Innovate to Dominate: The 12th Edition in the Facing the Forces of Change® Series. On the best practices for building an innovation ecosystem, we offered his advice that “Running a truly innovative company means constantly improving your innovation culture and process. Running a successful innovation ecosystem, however, demands more. Successful innovation ecosystems make people outside the company measurably smarter, richer, and more innovative.”
The most consequential post-pandemic innovations may emerge by combining Schrage’s insights about post-pandemic supply chain expectations with game-changing ecosystem partnerships. Providing data and visibility may become table stakes. Real competitive advantage may result by collaborating with an AI partner to offer predictive analytics tailored to every customer’s supply chain requirements. Doing so would require distributor customer teams to embed with customers across their entire organization from procurement to operations to sales and marketing. Unbreakable customer loyalty requires more than a passive e-commerce platform; it requires proactive and strategic customer engagement.
