Importance of customer satisfaction in supply chain

Jonas Mehrhoff
Jonas Mehrhoff
May 17, 2022
5 min read

Note on the authors

Heiner Murmann is the founder and CEO of Orkestra SCS, a logistics, technology and services company. In addition, Heiner serves as Executive Chairman for Evolution Time Critical and President of The Five Inc., and as an Advisory Board Member for both Metro Supply Chain Group and Black & McDonald Limited. Notably, Heiner previously held various senior executive roles at DB Schenker, one of the top three global logistics companies, as a Member of the Board of Management responsible for Air and Ocean Freight, and as CEO of the Region Americas.

Arnold da Silva, Senior Ocean Freight Advisor for Orkestra SCS, is head of an ocean freight consulting company where he actively advises global shippers on ocean freight strategy and execution. With 40 years of experience in the ocean freight industry, Arnold served as Executive Vice President for Ocean Freight Region Americas for DB Schenker. Arnold's passion is to conceptualize and implement innovative ocean freight solutions that transform one’s supply chain and promote a shipper's success.

The performance of a supply chain has a profound impact on the profitability of a company and customer satisfaction. It can make or break a company. No other segment within a company has this impact on profitability and customer satisfaction. The success of a company and especially a B2C company hinges on customer satisfaction particularly in this modern age where the market has easy access to find out which companies are providing customer satisfaction and which companies are not.

Customer demand is at an all-time high not just in terms of cost-saving and effectiveness, but also in service expectations. A company’s reputation can be ruined very easily if there is a lack of customer satisfaction. The epitome of customer satisfaction in supply chain is its ability to deliver the product to the customer at the correct place, at the correct time, in the correct quantity, and at the correct price.

Ways of achieving customer satisfaction

Customers are loyal to brands that deliver consistently, and satisfaction ranks high among their requirements. Customers may even be willing to pay a premium to achieve that satisfaction.

52%of customers were willing to pay more if they knew they would receive excellent customer service. 83% said they were willing to switch brands/companies because of bad customer service experience.

- A survey of 1000 consumers by Shep Hyken

Supply chains are integral in the running of a company whether B2B or B2C. Supply chains have several links, each carrying over functions from one link to the other and like any chain, a supply chain is also only as strong as its weakest link. Every link in the chain must perform optimally to deliver value to the customer.

Even if you have a super-efficient ocean freight or air freight movement leg, if your last mile operation is not optimized or does not perform as expected or does not provide the visibility a customer requires, the whole operation will be a failure in the eyes of a customer.

Two important elements of customer satisfaction are cost-saving, and timely delivery. An efficient supply chain operation must be able to achieve both, to provide customer satisfaction. Using an integrated supply chain platform that harnesses the power and capabilities of supply chain analytics, companies can improve delivery times, proactively manage inventory, reduce costs, all of which will contribute to customer satisfaction and increased sales.

Understanding the customer to provide satisfaction

Apart from using technology and tools to ensure customer satisfaction, a vital requirement in achieving customer satisfaction in supply chain is the age-old tried and tested method of “understanding your customer’s requirement”. Companies need to understand what and how their customers think, be agile enough to react timeously and handle the customer’s requirements efficiently. It is also important to understand who your customer is, whether they are big retailers, small to medium companies or individuals being served via e-commerce and Omni-channels.

Great customer service leads to customer satisfaction, but many companies do not realise the importance or the connection between customer service and supply chain. There is a misconception that customer satisfaction in supply chain is mainly related to delivery. It is important to understand that supply chain encompasses procurement, manufacturing, logistics, quality, safety, and sustainability, all of which have a customer satisfaction aspect.

Complete customer satisfaction can only occur once the customer has received the goods that they ordered, within the promised time and cost.

By integrating efficient customer service into their logistics and supply chain operations, companies can achieve high customer satisfaction and even exceed customer expectations.

Customer satisfaction comes from knowing that the company

  • Has the requisite knowledge to procure the correct product, ensuring quality and safety of use
  • Can be depended on to ensure the quality of the product
  • Is empathetic enough to explain any issues faced in the fulfilment of the order which naturally requires trained customer service personnel
  • Understands the requirements of the customer from the time of order placement till delivery

Factors within a supply chain influencing customer satisfaction

Factors within a supply chain influencing customer satisfaction

There are a few important factors in a supply chain that are critical to look at and influences customer satisfaction:

  • Responsiveness relates to the timely communication with the customer whether it is to communicate about a problem or communicate about successful delivery. Responsiveness is critical in supply chain to ensure customer satisfaction. The successful management of a supply chain will influence customer satisfaction and value.
  • Innovation and digitisation greatly improve the various processes involved in managing a supply chain and adds value to the timely delivery of the product ordered by the customer.
  • Integration of various stakeholders such as upstream and downstream suppliers in the supply chain allows the effective management of a customer’s expectation leading to customer satisfaction.
  • Supply chain analytics can identify any historical problems in meeting customer expectations and set corrective measures to improve future deliveries. Analytics also allows the company to establish high standards of performance to address the customer’s expectations adequately.
  • Adopting a customer-centric culture as one of the core values and KPIs in employee performance, companies can ensure customer satisfaction.
  • End to end visibility plays a great role in enhancing customer satisfaction value as the customer can see for themselves the status of their shipments and that the company is genuine in its efforts to provide quality service and customer satisfaction.

Key take away

One of the key objectives of supply chain management is to create a happy and satisfied customer journey and experience incorporating all the processes mentioned above, seamlessly. A customer-centric supply chain will provide the customer with the visibility required at all stages of the process.

Effective collaboration with all stakeholders in the supply chain such as suppliers, manufacturers, hauliers, warehouses, freight forwarders, carriers, and integration of analytics from all these stakeholders is vital in managing and meeting customer expectations. The needs and demands of the customers are constantly changing and to achieve the required customer satisfaction, supply chains must be agile, sustainable, and responsive especially in the current dynamic and competitive supply chain landscape.

Technology like digital supply chain platforms plays a very important role in ensuring that all stakeholders in the chain are aligned and all analytics are integrated. Through collaboration and integration, companies can create significant value for their customers and respond to their needs in time, which will lead to enhanced customer satisfaction.

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Importance of customer satisfaction in supply chain

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