Customers count speed of service as a key reason why they do business with certain companies. They hate delays and waiting for service and look for companies that serve them faster. This is evident from the success of drive-through oil changes, drive-through fast food and other quick turnaround businesses. We can also look at new trends in online car purchasing and home financing.
Therefore, in order to succeed, companies must reduce the processing time between search, selection, order entry and order fulfillment. Delays at any step of the process are unacceptable.
Why do delays occur?
Often they are due to excessive handoffs. Consider the case of a stainless steel producer that wanted to improve its on-time delivery record. The company identified unnecessary handoffs as delaying the production process. For example, each order was entered into the system three times during Customer Service, Operations and Production Control. This repetition caused significant delays and errors.
To solve the handoff problem, companies are investing billions of dollars in integrated systems, which is exactly what the stainless steel producer did. They decided that one possible solution was an integrated system for most of its business operations: accepting orders, triggering receivables, sending orders to production, sending requisitions to the warehouse, updating inventory, updating accounting and replenishing stock with suppliers.
What does this trend mean for e-business?
e-Business applications must cut the time customers wait for service. Customers now penalize companies that infringe on their time through delays, mistakes, or inconveniences. If companies don’t expedite processes, customers will go to someone who does it faster.
It is very important that managers understand and diagnose the cause behind service delays. They need to analyze if an integrated system can speedup service. If so, they need to strategize, design and implement such systems as soon as possible.
Customers dislike poor service and inconvenience and hence look for solutions that increase the value of their time. Today customers with more money and less time usually avoid difficult, slow business experiences that involve dealing with intermediaries. They are embracing 24-hours-a-day, seven-days-a-week self-service systems in which they look for information and merchandise without the aid of sales personnel.
Self-service is rapidly forcing change on a huge sector of business, the intermediary or middlemen. E.g. real estate, insurance, travel and car purchase to auctions, parts sourcing, and retailing, very few intermediaries are left standing when buyers and sellers realize they can meet directly online. They are finding fresh opportunities on the Web, and they all will have to change how they do business.
e-Commerce is a big enabler of self-service and market leaders are giving customers the means to serve themselves whenever possible. For instance, the customers of Gateway Computer can assess their needs, then configure order and pay for new systems – in addition to getting limited technical support –without ever having to talk to a person.
Another example of self-service is online-trading. Companies such as E*TRADE and eSchwab make it easy for customers to trade by themselves without the help of a broker. Round-the-clock availability gives customers access to their account anywhere, anytime.
Before self-service can become a reality, a new infrastructure must be built and new protocols must be designed to streamline the process. Integration of processes will be essential for serving the customer well.
In the last decade, there has been an interesting shift toward convenient integrated solutions. A good example is the Microsoft Office Suite. The Microsoft office product has made significant contribution in the Microsoft’s Revenue since customers love its integrated functionality. In fact, core design objective in many of their products is seamless integration.
This trend can be observed in retailing. Customers are increasingly demanding one-stop, all-under-one-roof solutions. In response, the retail industry has created various models: One-stop life-needs providers (e.g., Wal-Mart), one-stop life-style providers (e.g., The Gap) and one-stop life-path providers (e.g., Toys “R” Us).
The trend of life-needs integration can be observed in the success of the Wal-Mart superstore, which is marketed as an integrated retailer for the busy, price-sensitive shopper. Wal-Mart’s execution of one-stop shopping has increased customer loyalty, the number of items sold per transaction and the average transaction size.
An example of lifestyle integration trend is Gap in the apparel retailing business. The Gap provides a great illustration of a company that has effectively marketed an image to its customers. Gap mannequins are outfitted with three or four layers of shirts, blue jeans, a belt, a baseball cap, sun glasses, socks, shoes, gloves, and a knapsack.
Toys are a model of life path integration. Consider the strategy of Toys “R” Us, a life-path retailer for kids that sells to parents. The Toys “R” Us marketing strategy is three-pronged: baby goods at Babies “R” Us, kids’ clothes at Kids “R” Us and toys at Toys “R” Us.
What does this trend mean e-business?
Consumers don’t need another retailer of another electronic distribution channel. They want integrated-service offering businesses that solve their one-stop shopping needs.
As the speed of service increases, the expectations for customer service grow higher. Making customer service easy and solution oriented is probably one of the most important trends in business today. The customer service process must be friendly and easy to use. Companies must present customers with single points of contact rather than shuffling them from one department to another department.
What does this trend mean e-business? To achieve business objective, companies need to adopt integrated applications that address the entire customer relationship, rather than focusing on departmental solutions that address only one part of the customer account relationship. These integrated applications will be critical not only within a company but also with their partners.
The need to attract, acquire, leverage and retain customers is still of primary concern to most businesses. Revenue growth through customer acquisition and retention remains a major competitive requirement.
To improve customer retention, companies are developing and managing customer relationships via better sales/service integration and new technology. Managers must realize that customers in modern era have diversified tastes and demands. The sales and service message needs to be tailored to each customer.
Most customers view sales and service as separate functions. A sale occurs during sales cycle and service is an after-sales activity. However, the latest trend requires firms to sell to customers while serving them. You can see it at your local bank when the teller tries to sell you a new product while making a product. In other words, the bank is trying to become an integrated sale and service environment.
What does this trend mean e-business?
New organizational models need to be developed to further narrow the gap between sales and service. For instance telephone call centers must blur the lines between sales and service. Look at Home Depot which attracts prospective customers by giving them easy access to information about products and services before they buy. The success of Home Depot illustrates that customers want fast, accurate, consistent information.
The hectic schedules and multiple responsibilities of today’s consumers are forcing retailers to produce innovative products and services. Today, companies bring service to the customer rather than waiting for the customer to come to them. To deliver the right product to the customer, companies must streamline their supply chain. The simple view of the integrated supply chain is as follows: Take an order, give an accurate promise date, manufacture the right goods, allocate properly, ship efficiently and do all of this in a cost-efficient manner while maintaining a minimal finished goods inventory.
e-Commerce enabled supply chain management has been growing in popularity for the past couple of years. All the software companies are gearing up to support it and the consulting firms are preaching it.
Contract manufacturing has its roots in the high-tech industry. For example, management at Sun MicroSystems decided to focus on designing hardware and software and subcontracting or purchasing virtually all the workstation’s components. By relying on suppliers, Sun was able to introduce four major new product generations in its first five years of operation, doubling the price-performance ratio with each successive year.
The trend toward specialization (marketing versus manufacturing) means that companies have to focus on what they do best. The goal: Move from a capital/asset (or manufacturing) intensive company to a knowledge (and marketing) intensive firm.
What does this trend mean e-business? To achieve better asset utilization, technology is being used to enable organizations to segregate marketing from manufacturing by quickly developing contract partnerships and distributing manufacturing globally.
Process visibility implies that business customers need to have access to order status, product information, pricing and availability. Providing visibility to products and services helps create additional demand. Consider the example of United Parcel Service (UPS) tracking system. Customers can use the internet to track air and ground parcels anytime, anywhere and anyplace. Sophisticated information systems allow shippers to call any time of the day or night and find out exactly where their packages are.
What does this trend mean for e-business? Companies must strive to build internal applications and processes that open the black box and make internal operations more transparent. Increasing visibility can have a significant impact on creating demand as well as on retaining customers.
To survive, firms are turning toward business process outsourcing (BPO), which is defined as the delegation of one or more business processes to an external provider to improve overall business performance in a particular area. For example, gas and electric companies are outsourcing their cost centers – human resources and purchasing functions – so they can concentrate on their core competence, making and selling energy.
The market trends that drive the adoption of BPO include pressure to increase earning and reduce costs and an increased need to create and maintain a competitive edge. Traditionally, outsourcing has been used as a cost-control technique to move cost-centers such as data processing, payroll processing and systems development to outside specialists.
What does this trend mean for e-business?
Outsourcing lays the foundation for creating the virtual enterprise, the core of the e-business concept. It is clear that a single organization working alone is no longer a justifiable business model.
To continually grow, deliver better service, or reduce prices, an enterprise must become a learning organization that can prosper in a fast-paced, demanding business environment. For this purpose, the management must develop an organization that is capable of innovating constantly and learning continuously which is only possible by retaining employees. Management must use exceptional incentives to motivate employees, including paying very high commissions and cash rewards given to outstanding employees.
What does this trend mean for e-business? Supporting and sustaining a culture that can succeed and innovate is not only a requirement but also a prerequisite for doing e-business. The old ways of command and control over knowledge workers will not work well in the future.