Market-Driven

Be Part of the Solution

by Lora Cecere on December 6, 2013 · 0 comments

Nine out of ten companies are stuck. They are not stuck in a good way like a label to a case. And, it is not in a minor way, like food on a plate that cannot be easily removed for  the dishwasher. Instead, they are stuck in a way that cannot be easily be undone. It is like gum on your shoe or a car in a snow storm.

Henry Ford once said,  “If I had asked my customers what they wanted, they would have said, a faster horse.”  There is a reason why man-less vehicles are being innovated by Google, and not Ford. It is the same reason that Amazon and Tesla are growing rapidly.  It is about new and differentiated business models. The shift requires holistic thinking.

I was talking to a client yesterday about the evolution of technologies for the extended supply chain. She stated, “We are having the same conversation over-and-over again. I left supply chain and went to Europe for four years, and thought it would change. But, guess what? It is the same conversation. We are not making progress.” My sentiment is the same.

Today, I want you to imagine what our world could look like if we had an effective extended supply chain.

What would this look like?

The ends of the supply chain are weak. Supply chain leaders are in the middle. Yet, we are asking the transactional buyers and sellers of goods and services to plot the path forward for value chains. I think that this is a mistake. The vision is too limited.

The new vision will not come from sales talking to procurement buyers. Please let me repeat, “The ends of the supply chain are weak.” They are too functional in orientation. Buyers and sellers are focused on transactional enablement. Customer Relationship Management (CRM) and Supplier Relationship Management (SRM) systems were not designed to connect the end-to-end value chain.

Instead, it needs to be driven by someone who can orchestrate and design end-to-end from the customer back based on channel consumption. Only 1% of companies have someone in this role. Only 1/3 of companies have a supply chain center of excellence and 50% of these companies feel that it is successful. The reason is that supply chain has now been defined as another function. As such, it becomes part of the problem, not part of the solution.

Be Part of the Solution:

Take five actions to become part of the solution, not the problem:

1) Analyze and design supply chain processes outside-in. Focus on market-driven, not sales-driven, processes to enable your moments of truth in the channel.  Design the processes to use channel data with a focus on decreasing demand latency. I posted a slide deck on slideshare yesterday that outlines the current state of connectivity. I find it sad that after four decades of working with EDI that we are only 1/3 of orders can move hands free in our systems.

2) Change the reward systems to measure and manage the supply chain as a complex system. Align incentives to focus jointly, and across the organization, on revenue, margin, inventory turns, and customer service improvement.

3) Build strong horizontal processes. Move supply chain from a functional orientation to an enabler of horizontal processes. The key horizontal processes are revenue management, sales and operations planning, supplier development and corporate social responsibility.

4) Actively design the network. I find it ironic that companies would never implement a manufacturing site without intensive design. However, most companies inherit the supply chain and do not question the design. A challenge for most companies is understanding the design levers.

5) Redesign the ends of the supply chain. Actively work on improving connectivity and recognize the need to harmonize and synchronize partner data.  The term integration is too simplistic. Learn how to use multiple data streams in planning.

Happy holidays to you and your team. We hope that you like the gift that we will send you next week.

Do you think that I missed anything in my analysis?  Please let me know.

Breaking Up Is Hard to Do….

by Lora Cecere on November 13, 2013 · 1 comment

I feel it in my heart. The decision is divorce.

I came to this relationship three years ago. It started casually. It was off and on. I tried to give it a go and make it stick. I thought that we could make this work, but I was wrong.

The What?

Airline experiences, in my blog, give me many “teaching moments” for supply chain leaders. Customer service and the delivery of the brand promise is job number one for a supply chain leader.   We all travel, and can relate to airline stories. I can use them to emphasize some principles that I think matter.

Here is the story:

For the past three years, I achieved Delta Diamond frequent flier status. The Diamond experience gets me preferential treatment. In 2013 I gave Delta preference. I made a choice to fly Delta over other airlines—despite layovers and price—but, not now. Last week changed this.

Slowly, the Delta Diamond status and the perks granted have become less important due to changing Delta policies. Airport lounges and clubs are now very crowded, the TSA lines are longer, and the upgrade lists are less certain due to the change in policy to allow access to credit card holders.

I have spent a lot of time in a Delta airline seat.  Last year it was 74 segments and 122,000 miles. It was a transactional cost of $62,000. I am not sure where I stack in the ranks of Delta Diamond Medallion members, but Diamond is the highest status; and  trust me, 122,000 miles is a lot of miles.

At the start of each segment, I am forced to listen to the voice of Delta’s new CEO, Richard Anderson. The videos started this year. Hearing them over and over again is tiring. Each flight starts with a video:

“…on behalf of the entire Delta family, I want to thank you for loyalty. My name is Richard Anderson, and I have the privilege of working with Delta employees. They are the finest in the industry. We are committed to serving our customers….”

The So What…

What happened that is driving the divorce? Here is the background.

Case Number 10482476

Message: I am a Diamond, Million Miler passenger. Tonight, I was flying on your 8:10 flight from Atlanta to Seattle. I am tired. I want to get work done. I am not looking forward to the flight. I was number three on the upgrade list. There were two seats open, and I did not make the cut. I was next on the list.

I buckled up in my 29D seat and prepared for the journey. However, before the plane left the gate, the gate agent came and moved a Delta employee from 30A to first class. Evidently, one additional passenger did not show. I questioned the gate agent saying, “If a passenger did not show, and I was next on the list, and you agree that I am next on the list, should this not be my seat?” He abruptly stated that the Delta employee was on “official business.” My question is, shouldn’t the “official business” Delta employees be listed on the monitor as well? He walked away.

What I want to know is WHY THE DELTA EMPLOYEE IN SEAT 30A WAS MOVED TO SEAT 3B as the doors of flight 2329 were shutting with 40 of your loyal passengers still on the upgrade list.

_______________________________________________

 There are circumstances which enable nonrevenue passengers to receive upgrades on flights when Medallion members do not. The restrictions placed on employee travel and the benefits of the Medallion upgrade program are independent from one another from a business standpoint.

I realize it can be frustrating when a nonrevenue passenger receives an upgrade that was not showing on the Upgrade Board at the gate. Please keep in mind that Delta strictly follows the policy and procedures we have established for both programs.

 We appreciate the opportunity to again be of service to you. We look forward to welcoming you aboard your next flight and thank you for your continued Medallion loyalty.

 Sincerely, Belle Star, Diamond Desk

________________________________

Belle

I am very disappointed in your answer.  The two programs merge for the gate agent to make a decision. As a passenger, I am just asking for a better understanding of the rules.

What circumstance allowed this Delta employee to be placed ahead of me for placement in the open seat when he was not on the monitor? And, why do you not display all requests on the monitor (including Delta employees)?

I am noticing a steady degradation of employee attentiveness. For example on this flight, the steward stood next to me in the aisle most of the flight so that he could see another passenger’s flight monitor to view the game.

There were not snacks available for purchase, and I find the peppering of Fairfield ads on the monitors to be intrusive.

Not a happy Delta passenger tonight.

Lora

__________________________________________________________

 Thank you for your reply.

 As a general matter of policy, employees traveling on company business are able to stand by for an upgrade and will be cleared after all Medallion members have been upgraded. They are also listed on the upgrade list on the monitors at the airport in the correct order.

 However, there are some exceptions from a contractual standpoint that require us to adhere to different rules for certain work groups. In those situations, an employee may be placed in the First Class cabin ahead of Medallion members. We try to make this process invisible to our customers, not because we are trying to hide anything, but because the internal affairs of some of our processes are truly meant to be internal only. We sincerely apologize that this process was displayed in public.

 I have forwarded your comments regarding the lack of in-flight service and food for purchase options to our in-flight leadership team for review. We want to make sure that you have everything you need for a comfortable flight, and we are disappointed that you were unhappy with the service on board. As a gesture of goodwill for these problems, I have added 5,000 SkyMiles to your account with the hope that you will continue to make Delta your airline of choice for future travels. We really do appreciate your Diamond Medallion and Million Miler loyalty to Delta, and we look forward to seeing you on board on Tuesday. 

Thank you for giving Delta the opportunity to serve your travel needs.

Sincerely, Rob O’Rourke,  Diamond Desk

_____________________________________________________________________________________

I have flown 122,000 miles with Delta this year with over 70 segments. With each takeoff and landing, you force me to listen to a recording of Richard Anderson talking about how he is privileged to “work with the finest employees that care about the customers.”

On the Seattle flight I was using miles. I cashed in 100,000 miles that would have a $3200 value if I purchased them. I am 2,200 miles short of qualifying for my third year in the Delta Diamond Medallion program.

I am a guest writer for a popular magazine/online site. The article that I will be writing is on “Why Jet Blue Will Win” in the market. I do not want the 5,000 miles offered to me in the email below. Please take it back. What I want to know is WHY THE DELTA EMPLOYEE IN SEAT 30A WAS MOVED TO SEAT 3B as the doors of flight 2329 were shutting with 40 of your loyal passengers still on the upgrade list.

Let’s be clear on the retelling of the events:

  • -The flight was held 15 minutes to enable passengers on an Aruba flight to make this connection.
  • -When the boarding ended, two frequent fliers were upgraded. I was next on your list on the monitors.
  • -The line on the jet way was long. I spoke to your gate agent on the jetway about how I was next on the list, and I thought he had an opening in first class, and if that passenger did not show, I was in 29D.
  • -The 29th row, where I was seating, was three rows back from the boarding door. When the passenger for 3B did not arrive, he motioned for the Delta employee to move to first class over me. The Delta employee was not listed above me on the monitors.
  • -When I questioned the gate agent, he was evasive saying that it was official “Delta business” that he moved the Delta employee ahead of all of the frequent fliers on the list. He would not answer the question of “why he was not listed on the monitor” or “what was the official business”
  • -It was clear that if the passenger for 3B had made the plane that the Delta employee would not have been upgraded.
  • -On the flight, I was peppered with offers to buy. The movies were $6, I had to listen to Fairfield Inn adds, the headsets were $2.
  • -I had a Delta Medallion coupon for a free snack. You had none on board.
  • -The flight was full. It was late.
  • -My personal monitor at my seat did not work very well.
  • -The flight attendant stood next to me in the aisle so that he could watch the game bending over next to me with his body. His rear was in my face for about 2500 miles of the flight.
  • -No one on this flight made me feel like a valued passenger.

So, in closing, please take back your 5000 points. I will not be flying you in the short term. I think that we need a divorce.

___________________

Thank you for sharing your disappointment with our Vice President of Reservations and Customer Care, Allison Ausband. She’s asked me to respond to you. It must’ve been very frustrating to see someone given an open seat in First Class when you had let our gate agent know that you were the next person on the standby list for an upgrade.

As a Diamond Medallion and Million Miler, you know the service we strive to provide. I want to ensure you receive an accurate answer to your question. I’m presently reviewing your travel with another team. Once we have completed our review, I will respond promptly. Your patience during this process is valued.

Regards,

Gina Rubino, Customer Solutions Specialist, Corporate Customer Care, Delta Air Lines

You Share, We Care

Gina never responded.

__________________________________________________

The below email chain was forwarded to my attention, and I wanted to personally reply.  While I realize that you are disappointed in the outcome of not receiving an upgrade in this particular situation, the rationale explained by our Diamond Executive Desk is actually accurate.

 In nearly every instance, Diamond Medallions are upgraded first and take top priority in our complimentary upgrade program and processing.  As you know, these upgrades clear within 5 days of departure, and in some instances, won’t clear when the First Class cabin is full of paid First Class passengers or customers who cleared the upgrade at a prior time (for example – they used miles or one of their global upgrade certificates to clear at time of booking rather than waiting for a complimentary upgrade).

 Although it is possible in very rare circumstances that an employee is placed into First Class for travel, those reasons are not common and would generally be driven by a contractual agreement between the employee and Delta.  While I appreciate your desire to be made aware of who was upgraded and what that purpose was, these contracts are proprietary and confidential.  Likely not want you want to hear, but again, these situations are rare.  Employees nearly always only sit in First Class after all paying passengers, including elites requesting complimentary upgrades.  This can be supported through the fact that Diamond Medallions on average are upgraded more than 90% of the time on eligible domestic flights.

 Jeff Robertson, Vice President – SkyMiles Program

Jeff’s final response was that upgrades of Delta employees over Delta Medallion members happens and that it is not transparent to the customer. The Delta employees are not shown on the boarding monitors, and that it is normally not an issue. That it will happen on a rare occasions….

_____________________________________________________________________________________

I sent the email to trail to Richard Anderson, CEO of Delta to see if I could get him to engage in the dialogue before I wrote my article. He referred me to his Customer Solution Specialist – Executive Correspondence, Corporate Customer Care, Roger Salz. His reply, “I am quivering.” <Gotta love a sarcastic response!>

 What Can We Learn?

  • Loyalty Programs should Be Loyal. But, Today Customer Engagement Matters More. Delta had an opportunity to learn from me and to build my loyalty. The CEO did not engage, and there is no recognition of the problem.
  • Customer Communication needs to be Transparent and Consistent. The head of the Delta Medallion program stated that Diamond members are upgraded 90% of the time and that there are many times that Delta employees are moved ahead of loyalty program members without transparency. It is just how it is.  My take-away, “Be glad for the times that I am upgraded.” There is no recognition that the monitor sets an expectation that is unfulfilled.
  • The Customer is always Right. And, when responding to a problem, empathy helps. Notice the different tones of the responses.
  • Listening is a Learning Opportunity. Delta sends me a survey each flight to understand how I liked the experience. Most of the time , I ignore them. However, in this email exchange, I openly shared information. It was never acknowledged.

I only wish we had more true choice when we fly.

In summary:

  • If you as a company really don’t care, don’t say that you do.
  • Customer segmentation and customer loyalty should matter. Customer service should have the customer’s back.
  • Customer engagement is a wonderful way for companies to learn and deepen loyalty. Many companies do not know how to directly engage with customers.
  • Execution should be transparent, visible and reliable. Don’t play hidden games, it only makes a customer mad.

I think that the answer here for Lora is divorce. Next year, I will be checking out other airline options.

I am hoping that the answer for you is to think more holistically about your customer service programs. And, if you are Delta Diamond, and a Delta employee gets preferential treatment on the upgrade list, don’t waste your time complaining. It is just how it is.

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