Enhanced competitiveness in the business environment requires entities to adopt a customer-focus in their operations. Increased competition, for instance, presents a challenge for entities to acquire new customers. This challenge enhances the role that processes that aim to retain existing customers play in driving and sustaining an entity’s performance (Baird & Gonzalez-Wertz, 2011).
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Supply chain management (SCM) and customer relationship management (CRM) provides an organization with tools to enhance customer value thus increase customer satisfaction. In subsequent sections, this paper discusses how SCM and CRM can help Premier One, a large pet food distributor, to enhance its business outcomes.
Effective SCM approaches enable an entity to offer enhanced value to its customers. By definition, SCM involves the integration of supply chain structures and processes to ensure an efficient and effective flow of goods, services and information throughout the supply chain (Sridharan, Caines & Patterson, 2005). Such an effective and efficient flow of goods, services, and information enable the entity to deliver the value demanded by the customers. A supply chain embodies all aspects and facilities that contribute to the transformation of goods and services from the suppliers, through the entity, to the entity’s customers (Sridharan, Caines & Patterson, 2005). Premier One can benefit in various ways by establishing effective SCM processes.
Firstly, by establishing strong collaboration with its suppliers, Premier One will reduce the need to maintain high stock levels thus reduce costs associated with warehousing (Simatupang & Sridharan, 2008). Such collaboration leads to the development of supplier relationships that allow for real-time placement and tracking of orders. Accordingly, Premier One will be able to meet the demand for its products even without maintaining high stock levels; high stock levels increase the costs of storage for the entity.
Secondly, SCM approaches that allow effective communication with the customers will help Premier One to better its service provision through the feedback it receives from customers (Sridharan, Caines & Patterson, 2005). Additionally, effective communication with customers will avert delays in the delivery of customer orders since customers will have the ability to confirm their orders without going through bureaucratic processes. Thirdly, Premier One can share customer feedback with its suppliers to enhance the suppliers’ capability to develop products that cater to customer needs such as packaging and nutrition value of the pet foods (Simatupang & Sridharan, 2008).
CRM refers to processes that enable an entity to develop and maintain strong relationships with customers. Thus, CRM is a component of SCM. CRM approaches aim to acquire a better knowledge of the firm’s customers thus allow the firm to provide specific services to such customers to better their satisfaction (Lambert, 2010). Premier One can benefit from CRM approaches that help it to learn its customers’ spending habits thus allow it to offer appropriate incentives that enhance its sales. Such incentives include offering discounts to new customers and existing customers for their loyalty.
Through effective CRM approaches, Premier One can also acquire customer information that enables it to target market communications appropriately to achieve an enhanced effect. For instance, by learning characteristics of customers who purchase various brands of pet food it trades in, the entity can choose the appropriate media that would be more effective in reaching such a target market. Accordingly, effective CRM approaches will help Premier One to provide incentives that are relevant to its customers thus enhance customer satisfaction.
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The enhanced competition requires entities to develop a customer-centered approach to doing business. Such a requirement for a customer-centered approach highlights the value that SCM and CRM practices offer to an entity. By adopting effective SCM and CRM approaches, Premier One will benefit in various ways. The use of effective SCM and CRM methods will eliminate the need to maintain high stock levels, enhance its service delivery capabilities and ensure the provision of customer-relevant services. By adopting SCM and CRM, Premier One will thus benefit from cost savings that arise from collaboration with suppliers and enhance its revenues from repeat purchases that arise from a greater level of customer satisfaction.
Baird, C. H. & Gonzalez-Wertz, C. (2011). How top performers achieve customer-focused market leadership. Strategy & Leadership, 39(1), 16-23.
Lambert, D. M. (2010). Customer relationship management as a business process. Journal of Business & Industrial Marketing, 25(1), 4-17, Web.
Simatupang, T. M. & Sridharan, R. (2008). Design for supply chain collaboration. Business Process Management Journal, 14(3), 401-418, Web.
Sridharan, U. V., Caines, W. R. & Patterson, C. C. (2005). Implementation of supply chain management and its impact on the value of firms. Supply Chain Management: An International Journal, 10(4), 313-318, Web.