Executive Summary As growth slows, manufacturing companies struggle with rising complexity and increasing levels of demand error. The question is “Could companies decrease complexity and improve growth by building outside-in processes that are customer-centric?” We believe the answer to this question is a resounding “YES!” However, there is a problem. Across the industry there is no common definition of customer-centric supply chains. There is no clear and accepted methodology to build this core competency. As a result, most companies have forged their own paths. In this study, 80% of those surveyed have a customer-centric strategy; yet over half (54%) state that there is room for improvement to drive performance changes in their supply chain. Companies struggle to drive alignment and build constancy of purpose. The goal of this report is to fill this gap. State of the Industry Today 46% of respondents rate their supply chain as performing well on the delivery of a customer-centric supply chain strategy. The definition of a customer-centric supply chain used for this research is: one that is aligned with order management, product strategies and distribution processes to deliver/adapt to against customer segmentation strategies.

1. Customer-Centric Study
Summary Charts
August-October 2016

2. Supply Chain Insights LLC Copyright © 2016, p. 2
Agenda
 Study Overview
 Supply Chain Organization
 Customer-Centric Supply Chain
 Order Management

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Study Overview

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Most Respondents Are Manufacturers, Primarily in Process
Industries with $4.5B Average Revenue

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The Most Common Industries Represented Are
CPG and Food & Beverage

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Nearly All Work in a Supply Chain Role,
Nearly Half Are Director or Higher,
and About Half Are Based in the Americas

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Agenda
 Study Overview
 Supply Chain Organization
 Customer-Centric Supply Chain
 Order Management

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Most Have a Supply Chain Organization, with an Average of
Seven Functions Reporting into It

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The Most Common Supply Challenges Include Needing
Improvement, Being Cautious, and Functioning Inside-out

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Top Elements of Business Pain Include Demand/Supply
Volatility, Alignment, Supply Chain Visibility and Data Access

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Agenda
 Study Overview
 Supply Chain Organization
 Customer-Centric Supply Chain
 Order Management

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Distributors Are the Most Common Customer Type, but
Bricks & Mortar Retailers Are More Often the Primary

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“Customer-Centric” Means Meeting Customer Needs,
Driving Customer Value, Improving Customer Satisfaction
and Being Flexible

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Less Than Half Rate Their Supply Chain Overall
as Being “Customer-Centric”

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Respondents Credit Service, Partnership, Satisfaction, and
Adaptability for Their Success at Being “Customer-Centric”

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Respondents Blame Culture, Cost, Silos, and a Lack of
Planning for Their Difficulties Being “Customer-Centric”

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A Majority Report Having a Strategy for Developing a
Customer-Centric Supply Chain for Customers

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Respondents Have Three Customer Types on Average and a
Customer-Centric Strategy for Two on Average

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Three-Quarters Have a Customer-Centric Strategy for Their
Primary Customer and Over Half Report They Are
Customer-Centric

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Supply Chains Are More Customer-Centric for Primary
Customers Than Other Customers

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Most Important Elements to Becoming Customer-Centric
Include Executive Team Understanding, Product Quality,
and Sales-Operations Alignment

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Sales-Operations Alignment and New Product Launch
Reliability Are Important but Low-Performing Elements
Towards Becoming Customer-Centric

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Greatest Performance Gaps in Elements to Being Customer-
Centric Are Extended Network Visibility, Item Complexity, and
Sales-Operations Alignment

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Most Common Customer-Centric Practices Are Scorecards
and Customized Products/Services

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Scorecards Are the Most Common Practice, but Customized
Products/Service and CPFR Are Most Important

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Cost-to-Serve Analysis Is the Primary Customer-Centric
Policy That Is Important but Under-Performing

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Greatest Performance Gaps for Customer-Centric Practices
Is for Cost-to-Serve Analysis

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Agenda
 Study Overview
 Supply Chain Organization
 Customer-Centric Supply Chain
 Order Management

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68%
48%
45%
43%
41%
36%
16%
11%
29%
4%
21%
13%
18%
5%
2%
2%
Phone, email, fax or postal mail
Spreadsheets
EDI / XML - with MINIMAL intervention
Enterprise Web Portals
EDI / XML - with MANUAL intervention
Vendor Managed Inventory (VMI)
ERP plus Value-Added Networks (VANS)
Business Networks or Industry Process Hub
Customer Order Types for Primary Customer:
Use and Most Common
Use
Most Common
3 on average
EDI/XML (electronic
data interchange):
66% use
50% most common
Top Three Order Types Are Phone/Email/Fax/Mail,
EDI/XML, and Spreadsheets
_________________________________________
Source: Supply Chain Insights LLC, Customer-
Centric Supply Chain Study (Aug-Oct, 2016)
Base: Manufacturers, Distributors, 3PLs who sell
physical products (n=56)
Q25. Which of the following types of customer
orders does your company typically process for
your primary type of customer? Please select all
that apply. Q26. Which ONE of these customer
order types is most common at your company?

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Most Common Order Type for Primary Customer Is
Phone/Email/Fax/Mail

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While Nearly Half Use Spreadsheets to Process Order, They
Are Only Used for Six Percent of Orders on Average

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Average Order Cycle Time Is Eight Days for Most Common Order
Type for Primary Customer – a Decrease for Half of Respondents

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Order Cycle Times Decrease Due to Improved Planning,
Efficiency, and Requirements and Increase Primarily Due to
Order Rates

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An Average of Two Order Characteristics Get Discounts,
Primarily Full Truckloads and Full Pallets