“Everything at Amazon starts with the customer, and we work backwards from there.” Todd Walker, spokesperson
Back in the March 2018 issue of SCMR, Michigan State’s Steve Melnyk co-authored an article titled Serving Up An Experience. Melnyk and his co-authors argued that “the next generation of supply chains will be tasked with delivering an experience as well as a product.” They defined the experiential supply chain as one where “the customer is involved in the design, development, delivery and implementation of a good or service, and not just the consumption of a product.”
The article was one of seven that Melnyk has co-authored on the future of supply chain management, with more to come. In truth, I was fascinated by the idea, but was stymied to explain how a customer experience translated into a different kind of supply chain design or supply chain processes. Take two of the examples from the article: The new Starbucks Reserve Roasteries like the one I visited in downtown Chicago over the holidays, and MTailor, an online clothier that allows customers to use a smartphone app to custom design and order shirts. I got that ordering a custom, made-to-measure shirt was a different experience from buying off the rack at JCPenney. What I couldn’t quite understand was why the actual supply chain processes would be different: Afterall, Starbucks still has to source coffee beans and MTailor still has to source cloth, buttons and thread.
My recent trip to Amazon’s robotic fulfillment center in North Haven, Connecticut got me to thinking that Melnyk was on to something. In a 2016 letter to shareholders, Jeff Bezos wrote that an obsession with customers was central to Amazon’s approach to, well, everything. Staying in Day 1 – Bezo’s term for the vitality that comes with a startup - “requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight. A customer-obsessed culture best creates the conditions where all of that can happen.”
The flow of goods through Amazon’s network – heck, the network itself – is designed around speed and accuracy, two essential ingredients to a customer experience. DCs are being located closer and closer to markets to make good on delivery promises – the 855,000 square foot North Haven facility is less than an hour’s drive from a similarly-sized facility near Hartford – and are stocked with millions of SKUs and items. I was astounded by the 4,000 or so associates working in the two facilities to get millions of items out the door each day at peak. More importantly were the number of quality control checks in the processes to ensure that an order was filled accurately.
Amazon may be the most visible and disciplined proponent of the experiential supply chain today, but it’s not alone. Going back through my files, I came across an article I published in January 2013 on Gilt, an early proponent of flash sales. Gilt’s supply chain leader at the time explained that every process in the building was focused on picking, packing and shipping the perfect order. “Everything we do is about the customer experience,” he told me then. Apparently, it took a few years for the importance of that sentence to sink in.
Other companies are jumping onto the customer experience, according to a recent Wall Street Journal article that declared that “businesses from Mastercard to TGI Fridays appoint chief experience officers to examine how customers interact with their products.” The acronym for chief experience officer, by the way, is CXO.
I asked Melnyk for his thoughts on the changing face of customer experience. Here’s an abbreviated version of what he wrote back:
There’s no question but that it’s an exciting time in supply chain management. There’s also no question but that supply chains have to make the leap from being focused on cost to, like Amazon, being focused on the customer. As Melnyk wrote, “we will see if companies and their supply chains are ready to survive and thrive in this new, more demanding environment.”