Customer or Capital: Who is King?

Scottsdale, Ariz. -- Dressed in familiar brown shorts and collared shirt, the United Parcel Service carrier walked briskly on stage and delivered custom-made TaylorMade-adidas golf clubs to a lucky attendee at AMR Research's executive conference here. Just yesterday, less than 24 hours ago, the winner was fitted for these clubs. Now that's real-time business. Sure, customer relationship-management (CRM) software helps companies walk in lock-step with customers' desires, identifying products and services that beat up on the competition. And then there's supply chain-management (SCM) software that makes delivery of these products and services possible. But these enterprise software strategies represent very different ways a company sees itself. In other words, is customer or capital king? Joanie Rufo, research director of customer management services at AMR Research, squared off with her AMR counterpart Kevin O'Marah, vice president and research fellow on supply chain and product lifecycle management (PLM) strategies. Not surprisingly, Rufo believes companies should be driven by customers and make concerted efforts to understand customer desires. Only by taking this approach can companies close the gap between what they're delivering and what customers are truly expecting. "This is next generation CRM," says Rufo, adding, "It's about how companies become a demand-driven organization and build a CRM strategy that has to do with really working to meet your customers needs -- and market leadership positions are done from that." Citing TaylorMade-adidas, Rufo says the company's understanding of its passionate end-users and fragmented retail-outlet customers led to the decision to build 24-hour custom-made clubs. Even Mark Leposky, vice president of global operations at TaylorMade-Adidas, admits his warehouses used to be filled with tired golf clubs. Simply put, Taylor Made-Adidas wasn't delivering on what customers wanted. But now, everyone wins, including the mom-and-pop outlets that have the opportunity to drive revenue by offering club-fitting services. "Just look at TaylorMade's revenue growth, market share, market leadership," Rufo says. "Customer is king." That's all well and good, but TaylorMade-adidas would have looked silly today if UPS didn't show up with the goods, counters O'Marah. Customer demand, he says, must be tempered and even led by supply chain realities. One only needs to look last year's ill-fated dot-coms, such as Webvan, he says. They're prime examples of companies whose fixed assets, amortization, long-term debt and other realities of capital weren't in tune with the buzz about serving the customer. "It's easy to sell $10 million worth of business," says O'Marah. "What's hard is delivering it for $10 million. You have to be like a parent and know when to say no." The only way to know what you can and can't deliver is to take an in-depth supply chain approach, using technology that provides real-time information and visibility into every facet of the production and movement of products, says O'Marah. This product-centric view with an eye toward shareholder equity "is the whole reason why we're here," he says. "We're here to make money." Indeed, giant corporations have the wherewithal and resources to champion both CRM and SCM initiatives using the best vendors. But smaller companies facing a strategic quantum shift such as e-business often must look to a partnership with a single enterprise software partner, such as SCM vendor i2 Technologies or CRM vendor Siebel Systems or ERP vendor SAP. The single enterprise software vendor makes integration easier, as opposed to patching together software from a myriad of niche vendors whose offerings are spread out to nearly every function of the enterprise. This means companies must make a choice, which is difficult considering enterprise software vendors are continually infringing on each other's space and promising to do everything. To be sure, there's no right answer. For TaylorMade-adidas, tackling the supply chain represented a bigger challenge than understanding customers. Two years ago, the company signed a major contract with i2 Technologies to fix its time-to-market woes -- not necessarily to get to the 24-hour custom club. Only by crunching its supply chain and weeding out inefficiencies did the company realize it could be more responsive to shifts in market demand. Now TaylorMade-adidas is working with i2 to develop and integrate outwardly facing demand chain software. "But it all comes down to the supply chain," says Rob McClellan, global e-marketing manager at TaylorMade-adidas. "You have to have a product to sell." Tom Kaneshige also writes for Line56.com