Material Handling, Up Close and Personal

“New Economy Ideas Bite the Dust Faster Than Usual.”

This USA Today headline caught my attention as I flew back to Cleveland after hosting the logistics track of this year’s Supply Chain Expo. The words “collaboration” and “value chain” were still echoing in my skull as I read:

“Nineteen percent [of survey respondents] gave up on customer relationship management (CRM), using technology to track customers’ buying habits.” It went on to cite a Forrester Research study reporting that typical CRM project costs run between $60 million and $130 million, “often with no improvement in customer satisfaction.”

This news came as quite a letdown after spending the last few days hearing supply chain software companies and their customers cheer about their successes. What’s the truth?

Turns out, the USA Today story neglected to report what drove those costs so high. I ordered the report myself and found this little nugget:

“... scattered responsibility for the customer experience and an unsettled CRM market will drive three-year costs to $60 million to $130 million — unless firms understand what drives their CRM expenses and adopt a corporate plan.”

In other words, companies need to coordinate their technology spending! A CRM system is useless without a parallel emphasis on supply chain management systems. Those are what take orders out of your ERP systems, break them down by SKU, assign and guide the warehouse people and material handling systems, update ERP, schedule transportation, send advance ship notices to customers, and maintain an accurate record of all that just took place.

Did the kind of people responsible for designing this intricate balance of logistics processes have any input into the CRM projects cited in the Forrester study? Probably not. But if you want to measure customer buying habits, you should know that one of those habits is to return to suppliers supported by responsive supply chains. Failure to recognize this will continue to inspire the headline writers at USA Today.

MHM refuses to participate in that kind of technology-bashing hysteria. CRM is not a fad. Neither are SCM, WMS or TMS. All that’s needed to convert these from acronyms to business tools is an enterprise-wide focus on the customer. (See Retail Distribution.)

Take your customer, for example. What does that customer want? Quality product? Sure, but that’s a gimme. Quality has reached commodity status. Timely service? Another commodity. Your competitor is already delivering that.

Today’s customers value information more highly than any product. They also want your advice on how to better serve their customers. In short, they want 24/7 hand-holding.

Why’s a material handling magazine that made its reputation on lift trucks and conveyors getting all mushy about customer relationship management? Why else would we spend the last 50-plus years writing about the timely handling of goods if not to inspire readers to make a difference with their customer service? CRM’s just one of the new weapons being used to hit a constantly moving target: satisfaction.

The leaders in the retail world are going after that target with a weapon of their own: collaborative planning, forecasting and replenishment (CPFR). It’s a mix of technologies and practices designed to streamline the flow of goods, reducing distribution costs and inventory while improving in-stock positions and sales. Nearly half of the retailers and manufacturers surveyed by AMR Research expect to be capable of the real-time collaborative data flows needed to make these things happen within two years.

What are your plans for the next two years? We hope they involve your customers.

Tom Andel

chief editor

tandel@penton.com