Logistics: the direct route to customers' hearts

It was an "ah-ha!" moment. A trek to central Pennsylvania in the spring of 1991 brought us to the headquarters of AMP, a global player in the electronic components and connectors market. While researching a story on logistics benchmarking, AMP's name had come up time and again as the company everybody wanted to benchmark their own operations against. We wanted to see it for ourselves.

The facility in Harrisburg, the logistics team members, and the operation's leadership were impressive. It was clear after just a couple of hours that there was good reason why so many companies were looking to emulate AMP's operations. It was also clear that much of what the company was doing wasn't particularly groundbreaking or innovative. Essentially, AMP was doing what many others were doing; it was just doing it better.

The one exception was something that caught our attention when we looked at the company's organization chart. Rather than having customer service report to sales and marketing, AMP had taken the unusual step of placing customer service under the logistics division.

It made immediate sense. The logistics operation is one of the most "customer-facing" functions of any company. Why not put the customer service folks under the logistics umbrella?

Certainly, it seemed to be working for AMP. For instance, we learned that it was company practice to have customer service reps ride along on sales calls so they could talk directly with customers about their operations and how AMP could better serve their needs. As you might expect, most of those "sales calls" turned into discussions about the way AMP filled the customer's orders—you know, logistics stuff. But no one on the sales side seemed to mind. In fact, as one AMP executive commented, the salespeople seemed to like it. They even thought it might be helping boost sales.

That trip to Harrisburg was brought to mind earlier this month when we read the very fine story filed by DC Velocity Associate Managing Editor Susan Lacefield from the 2010 Annual Global Conference of the Council of Supply Chain Management Professionals.

Summarizing a session on customer engagement, Susan noted that when it comes to the supply chain's interactions with customers, there's no such thing as standard practice among companies. In some organizations, those interactions "begin and end with making sure that the products are delivered when and where the customer wants them," she wrote. In others, the logistics team makes it a practice to stay in close contact with customers and may even serve in an informal advisory role. As an example, she cited Avery Dennison, whose "supply chain managers don't just focus on getting product to the customer, they also serve as an extension of the sales force." What a concept.

Like AMP before it, Avery Dennison sends its supply chain specialists along on sales calls to find out what logistics-related challenges its customers face and how the company can help. As one of the world's largest makers of pressure-sensitive labels, Avery Dennison "is both bigger and more supply chain-savvy than many of its customers," Susan wrote. If a customer is struggling with stocking issues, the Avery Dennison specialist might offer a quick lesson on the basics of inventory management. And often as not, that leads into a discussion of the customer's options—including, but not limited to, any services Avery Dennison happens to offer that would help solve the problem.

If that sounds a lot like what we observed at AMP nearly two decades ago, that's because it is. Two different times; two different places, but the lesson is the same: Used strategically, logistics and supply chain is a powerful competitive weapon—one whose value can indeed be measured in bottom-line results.