Countless organizations spanning multiple industries have adopted digital transformation. From marketing to sales to customer experience, each department has developed and implemented its own version of digitization. However, digital transformation in supply chain markets has seen a somewhat slower adoption rate. According to a 2017 McKinsey report, the average supply chain had a digitization rate of 43%, compared to over 70% of companies that have fully adopted digital transformation initiatives.
To help us break down the ways digital transformation can and will affect supply chain management strategies and the customer journey, we recently spoke to John Kinsella, a Partner at Red Banks Consulting.
The State of Digital Transformation in Supply Chain Management
Organizations have much to gain by digitizing their supply chain operations. According to the McKinsey report, “companies that aggressively digitize their supply chains can expect to boost annual growth of earning...by 3.2 percent—the largest increase from digitizing any business area.”
In late 2019, Logistics Management predicted that “half of all manufacturing supply chains will have invested in supply chain resiliency and artificial intelligence” by the end of 2021.
In 2020, Supply Chain Brain reported that we can “expect to see organizations continue to invest in the foundational elements of digital transformation: data management and advanced analytics. By getting a firmer grasp on data cleanliness, accessibility, and the analytics needed to build algorithms, supply chains will see progress in the wide scale implementation of digital transformations.”
With the adoption of digitizing supply chain processes comes the need for a new and improved digital omnichannel in supply chain management, especially when managing the customer experience.
Improving the Customer Journey with a Digital Omnichannel
In a recent webinar with DiCentral, Kinsella explained how “brands are no longer in complete control of the customer journey.” Brands can focus their efforts on influencing the customer journey for a great experience. Accordingly, organizations need to focus on changing and rethinking how they engage with the consumer, especially since over 80% of buyers are willing to pay more for a product or service if it means getting a better customer experience.
To that end, acknowledging the emotions of the customer when they’re shopping and creating a frictionless shopping path are the two primary keys for omnichannel success.
Understanding and Responding to Consumer Emotions
Identifying your customers’ emotions can be tricky. Kinsella illustrates the customer journey like l an “Emotional EKG,” and it looks like this:
The clearer your customers’ “Emotional EKGs," the easier it will be to identify and address any dips (i.e., negative emotions) in their experience. “Meeting a customer’s emotional needs is a real differentiator,” Kinsella says. If you want your brand to stand apart from the crowd, make your customer emotional experience a priority.
Developing an Emotional EKG requires tools, though, and the digital transformations occurring in the supply chain industry can provide you with them. Here’s an example that illustrates the buying journey a customer goes on when buying a couch and how technology can help streamline their shopping experience:
Digital transformation is about adopting new tools and technologies, but it’s also about reevaluating your business practices, identifying areas that need improvement, and using new technologies to improve your company.
To get started, outline your customer journey (like the one above) and use it to identify customer actions. This process helps uncover various areas of friction (if any) consumers encounter along the way, and identify the necessary tools or support they need to achieve success.
Create a Frictionless Customer Experience
According to Kinsella, frictionless commerce means providing the following services:
- Ease of search and navigation
- Robust product descriptions (catalog)
- Shopping guides and recommendations
- Inventory update
- Intuitive checkout
- Delivery tracking
Each of these services speaks to a specific pain point a customer can experience in their shopping journey.
- Ease of search guarantees that each shopper can find exactly what they’re looking for in as few steps as possible.
- Robust product descriptions help customers purchase your product or service with complete confidence that it will meet their needs.
- Shopping guides and recommendations can direct a customer towards a solution, especially when they’re not sure what they need.
- Inventory updates will provide the kind of visibility that customers crave and remove any risk that they’ll purchase a product you can’t immediately provide.
- An intuitive checkout minimizes the roadblocks and friction a customer experiences during the process of adding an item to their cart and checking out.
- Delivery tracking will show customers exactly what stage of transport their purchase is in, providing them with the confidence that they will receive their product in a timely fashion (which is especially important during COVID-19).
“Digital technology can make customer experiences better,” McKinsey says. When supply chain managers are given more control, they can provide customers with unprecedented transparency, which will improve their customer journey. That same article from McKinsey cites “track-and-trace systems that send detailed updates about orders throughout the lead time” as an example of how digital transformation in supply chain management can play a crucial role in providing the kind of transparency customer’s crave.
Learn How to Launch and Manage Digital Growth
It takes time to develop, launch, and expand your digital omnichannel services. You’re going to need to prepare your team and back-end operations to equip them with the tools and insight necessary to support your evolving supply chain management strategy.
Kinsella says managing the supply chain during digital growth and transformation should include the following steps:
- Identify the capabilities and processes that need improvement.
- Train or retrain your internal team to use new technologies or outsource your new digital services to an external team of experts (which can be more cost-efficient than training from an internal source).
- Ensure launch readiness by doing test runs and practicing with the new tools.
- Slowly implement your digital omnichannel services, so you don’t overwhelm your business processes.
- Leverage best practices. You don’t need to reinvent the wheel, so learn from your peers (and competitors) to ensure that you’re getting the most mileage out of each new tool you adopt.
To learn more about how digital transformation can affect the supply chain, download the full webinar with John Kinsella. The webinar will walk you through a five-step action plan highlighting how a digital omnichannel can enhance your integration of new digital assets and contribute to a cleaner and superior customer journey.