Best Practices for SCM, CRM

Consultancy identifies key supply chain initiatives, success factors for customer relationship management

Chapel Hill, NC  February 10, 2003  Top-performing companies are focusing on key productivity initiatives that enable them to excel across the entire supply chain and provide exceptional delivery performance, while also approaching customer relationship management (CRM) as a process rather than merely as a project, according to new benchmarking studies from consulting firm Best Practices.

The consultancy's supply chain-related research findings, based on interviews, surveys and research with more than 100 high-tech and manufacturing companies, revealed that top enterprises follow most or all of five key productivity initiatives: collaborative planning, forecasting and replenishment (CPFR); available-to-promise (ATP); vendor managed inventory (VMI); build-to-order (BTO); and supply base management (SBM).

These supply chain systems can achieve across-the-board success by improving once mutually exclusive dimensions such as high on-time delivery and short lead times versus low finished goods inventory, according to the research.

In addition, through exceptional cost management, performance can be enhanced without undue spending on supply chain systems, applications or procurement personnel. In fact, the research showed that annual supply chain expenditures are typically less than 10 percent of company revenue.

"Each of the top companies we studied showed an uncanny knack for performing exceedingly well across over 20 dimensions of supply chain performance," said Keith Symmers, vice president and head of supply chain research at Best Practices. "The common denominators were extensive employment of performance initiatives (VMI, BTO, etc.), and sophisticated use of Internet and other communication tools to streamline the flow and performance across the entire supply chain  from suppliers to customers."

Meanwhile, on the sell-side of the supply and demand chain, Best Practices found that top companies are most likely to be successful with CRM when they develop a long-term customer-focused strategy rather than viewing customer relationship management as an isolated project.

These leading companies have managed to avoid long-term CRM pitfalls by utilizing the proper management and measurement tools, according to the consultancy's study entitled "Countdown to Customer Focus: A Step-By-Step Guide to CRM Implementation."

"CRM initiatives must be carefully planned and consistently supported in order to drive customer retention, cost reduction and higher profitability," the consultancy reported. "Many companies proclaim that customer relationships are critical to lasting marketplace success. Yet few companies have successfully shaped their marketing, sales and delivery systems to optimize return on customer relationship investments."

"Simply following CRM initiative steps is not going to reveal the potential that lies in your customers," said Symmers. "Managing customer-focused initiatives for long-term success is the key to maintaining profitable customer relationships."

The study was based on interviews and surveys with CRM team leaders at 32 of the world's most profitable companies.

The consultancy emphasizes the need to stay focused on concrete economic returns to ensure success for new CRM initiatives. Many CRM teams have stumbled on the way to theoretical results, Best Practices asserted. On the other hand, building a high-impact implementation plan and continuously communicating benefits can help a CRM team succeed.

Key best practices cited in the study include identifying points in a company's business strategy where CRM can deliver maximum value, and then highlighting these opportunities through internal "marketing" of customer-focused programs. The consultants also recommend prioritizing customer-centric programs based on potential for early wins and immediate positive impact on business, and then dedicating resources necessary to ensure success before executing a staged implementation to all parts of the business.