Marketers make promises to customers to generate demand. Delivering on those promises becomes a moment of truth in a customer relationship and can have a positive or negative impact on the perception of your brand. You may have great marketing communications and a superior product, but the buying experience stands between you and the customer. And that buying experience is heavily influenced by your supply-chain capabilities.
If you deliver an order late, if you can't meet a rush order request or a channel partner fails to properly educate your customer, your brand invariably suffers. In an era of ever-increasing customer demands and impatience, it is your supply chain that often represents a critical opportunity for you to build or destroy your brand. As stated by Jan Twombly, a principal at Boston-based business consultancy The Rhythm of Business: "Supply operations are forever directly related to demand; and managers can't treat them as separate."
However, few marketing and brand executives truly understand their company's supply chain. It is often regarded as either a nuisance or irrelevant. That is until something goes wrong or a promise cannot be met. Suddenly, your supply chain's shortcomings become the center of attention. Should we blame the people who make the promise or the people who cannot fulfill it? It is critical for marketing and supply-chain executives to jointly recognize where the supply chain can be leveraged to enhance a brand and where it cannot.
Building Brand Equity
Consider the different experiences of Kmart and Cisco Systems. Kmart's supply chain became a serious brand liability, while Cisco turned its capabilities into a core element of its brand image.
A central aspect of Kmart's marketing strategy was to issue circulars promoting sale items. The mailers drove store traffic and invariably increased sales of other items. However, the marketing efforts were not tied into supply-chain operations. As a result, there were frequent shortages of promoted items. Customers came in to buy the sale item, were frustrated that it wasn't there, and left the store. After several similar experiences, customers began ignoring the circulars altogether. Lack of coordination between marketing and the supply chain generated a brand nightmare.
By contrast, Cisco Systems' supply chain is central to its brand and marketing strategy. "One of the main objectives of our Cisco Service Parts business strategy is to use advanced supply-chain management tools as a source of competitive advantage ... Our primary expectation is a significant improvement in customer service and satisfaction resulting from better positioning of our critical inventory assets," Jim Reily, director of global product services, said in an interview last year. He went on to say that "a streamlined supply chain and more responsive customer service operations will be essential for Cisco as it goes forward with plans to expand its market share..." Cisco's web site echoes this sentiment: "Taking orders is only one part of serving customer needs. Businesses must fulfill the promise they make to customers by delivering products and information upon request."
Poor supply-chain performance drives customers away. An enthusiastic customer can be lost as a result of a single bad buying experience; and a prospective customer can be turned away from your product by a poor or inadequate buying experience. By contrast, think of all of the businesses and consumers who value Dell's consistency and service enough to pay a little more for their commodity computer. Consider how Grainger added inventory and distribution centers to its service parts network to better serve its customers. These companies consistently deliver on their brand promises by employing world-class supply chains. It is time for brand and marketing executives to pay more attention to their supply chains. They must be accountable for aligning the brand promise with their company's supply-chain capability because it powerfully impacts the customer experience and brand perception.
Consider HRE Wheels, a luxury brand in the custom automotive wheel business. When new management took over the business six years ago, the market was growing at 30 percent annually, but HRE had no revenue growth and faced mounting losses. Determined to establish HRE's brand as the image and service leader for custom wheels, management quickly set out to improve the buying experience by leveraging channel partners and establishing consistent quality and service levels.
By selling the majority of its wheels direct, HRE was inadvertently making it hard for its customers to buy.
Well informed consumers who worked on their own cars could navigate numerous wheel configuration options, make proper measurements, order and mount the wheels themselves. However, this represented a small subset of the custom wheel market. Many of HRE's current Porsche, Ferrari, and BMW drivers wanted help with these tasks and were accustomed to having other people handle these details for them.
"Distributors are now key members of our supply chain. They are critical to getting our wheels to the end customer," says Evan Kinsella, HRE Wheels President and CEO. Kinsella adds that this process wasn't simple. "We had a strategy to leverage the highest quality and service oriented shops we could find. In our case, it wasn't as easy as signing up some large chain. These stores didn't cater to our target clientele. We had to find the right partners. We had to build a network one store at a time across the U.S."
However, transforming the distribution model only solved one problem. HRE faced an even bigger brand challenge by regularly missing delivery dates. This operational failure irritated its customers and was not a recipe for positive word-of-mouth publicity or repeat purchases. "The industry had labeled us a company that didn't live up to its promises," says Kinsella.
Whereas missed delivery dates and backlogs were an irritant to consumers buying direct, these issues represented the threat of canceled orders and lost business to the automotive aftermarket shops. To make their customers happy, shop owners must set expectations properly and meet them consistently. For HRE Wheels, becoming the image and performance leader in its category was insufficient. Improving HRE's on-time delivery record was critical to more than just its end consumers. It was also critical in HRE's efforts to convince dealers to push its products and expand its market reach.
Kinsella adds, "We had to develop a production process starting with our suppliers that could consistently deliver quality product on time. We met with our key suppliers to improve quality and develop ordering programs that would minimize the risk of stock-outs of critical materials. First we had to get it right internally. Then we had to broadcast the message and deliver on the promise."
The results speak for themselves. Over the past six years, HRE Wheels has grown sixfold and far outpaced its competitors. It now delivers custom wheels two weeks faster, and consistently meets its promised delivery dates. Its reputation with distributors and consumers is unparalleled for both product quality and service. HRE's brand success is now well recognized. However, most people don't realize that HRE would not have succeeded without entirely transforming its supply chain.
Look at Your Supply Chain
One promise that is expected of every brand is delivering the right product, to the right place, at the right time. Your supply-chain capabilities can make or break your ability to fulfill that promise. As a result, your supply chain powerfully impacts your brand, positively or negatively.
When you think about your brand promise, make sure you spend as much time fulfilling the buying experience as you do on the image, marketing communications, and product engineering. This requires both knowledge of your supply chain and the leadership to shape it to meet your brand needs. It's time you begin using your supply chain to support and build your brand. It can reveal hidden assets and ensure that your brand is not undermined by fulfillment deficiencies.
|1. What aspects of your supply chain have the most influence on your brand promise and your customers' buying experience?|
2. Is your brand promise aligned with your current supply-chain capabilities?
3. How can you ensure that marketing executives know your supply chain's capabilities and limitations while supply-chain executives know the brand promise and their role in fulfilling it?
Bret Kinsella is a director at Sapient where he leads supply-chain consulting services. Sapient is a business and technology consultancy serving global 2000 clients across the consumer products, retail, automotive, technology, energy, government, financial services and manufacturing industries.
Joseph Benson is a brand strategist with more than 25 years of experience designing and implementing brand and marketing strategies for financial services, healthcare, high technology, entertainment, universities and retail clients, such as Chase/JP Morgan, Staples, Morningstar, The American Cancer Society, Lucent Technologies, Schroders, L.L. Bean, Bain, Verizon, Avon, Disney and Nickelodeon.
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