Defining value from the customer perspective in logistics and supply chain management

Dear reader, In the world of logistics and supply chain management (LSCM), everything begins and ends with the customer. This principle is so fundamental that it influences every decision we make, every process we design and every service we provide. Unlike many other industries where management often defines the value proposition, in LSCM it is the end customer who pulls the strings. This shift in perspective requires a deep understanding of what the customer really values - whether it's speed, reliability, cost efficiency or a combination of these factors.

Understanding the customer's definition of value Before we begin to align our services with our customers' expectations, we must first understand what our customers value. This is not a one size fits all approach. Different customers have different needs and expectations based on their industry, their specific business models and even their unique corporate culture.

For example, an e-commerce company might prioritise speed and reliability above all else because they promise their customers fast delivery. Conversely, a manufacturing company might prioritise cost efficiency and reliability to ensure their supply chain runs smoothly and without unnecessary costs.

As logisticians and consultants, our first job is to engage with our customers, ask the right questions and actively respond to their needs. This involves more than just sending out surveys or holding meetings. It's about building real relationships where customers feel heard and understood. Only then can we begin to define value from their perspective.

Aligning services and processes with customer values Once we have a clear understanding of what our customers value, the next step is to align our services and processes accordingly. This alignment is not a static, one-off adjustment, but a continuous, dynamic process. The market is evolving, customer expectations are changing and we need to be flexible enough to adapt.

Speed: For customers who value speed, we need to ensure that our logistics processes are optimised for fast turnaround times. This may mean investing in technology that improves real-time tracking, rationalising warehousing to reduce delays or choosing transport options that guarantee the fastest delivery.

Reliability: Customers who value reliability expect consistency and dependability in their supply chain. To fulfil this expectation, we must implement robust quality control measures, maintain transparent communication channels and have contingency plans in place to respond quickly to any disruptions.

Cost efficiency: Cost-sensitive customers require us to focus on minimising costs without compromising on quality. This may mean negotiating better rates with carriers, optimising inventory levels to reduce storage costs or implementing lean management practices to eliminate waste.

The role of technology and innovation In today's fast-paced world, technology and innovation play a critical role in aligning logistics services with customers' values. Advanced analytics, artificial intelligence and machine learning can provide deeper insights into customer behaviour and preferences, enabling us to predict trends and proactively address potential issues.

For example, we can use predictive analytics to anticipate fluctuations in demand and adjust our inventory and transport plans accordingly. Similarly, AI-driven route optimisation can increase delivery speed and reliability while reducing costs.

Warehouse and distribution centre automation can significantly improve efficiency and accuracy, meeting customer demand for speed and reliability.

Continuous improvement and feedback loops To ensure that we consistently meet and exceed customer expectations, we must establish continuous improvement and feedback loops. By regularly soliciting and responding to feedback from our customers, we demonstrate that we are committed to delivering the value they define.

This may include quarterly business reviews, customer satisfaction surveys or even informal meetings. Crucially, we create a culture of openness and responsiveness where customer feedback feeds directly into our operational strategies.

Conclusion In logistics and supply chain management, defining value from the customer's perspective is not just a best practice, it's a necessity. By understanding exactly what our customers value and continually aligning our services and processes with those values, we can build strong, lasting relationships that foster mutual success.

As logisticians and consultants, it is our job to build a bridge between our businesses and our customers, ensuring that every decision we make is guided by a clear understanding of what is truly important to our customers. In this way, we not only increase customer satisfaction, but also ensure innovation and efficiency in our own processes.

Your Thomas Hellmuth-Sander