E-Business: Customers Come First?

Online merchants hoping to cash in on holiday shopping should listen to the advice of several industry experts, who recently gathered to figure out how to succeed in e-commerce.

These experts threw aside the notion that spiffy technology is important when creating a successful online business, proclaiming that technology doesn’t mean squat, if you’re not focused on the best interest of your customer. And this customer-oriented business is not just part of the holiday crunch—it’s a 365- or 366-days-a-year job.

The four P’s-price, product, place, promotion-“don’t cut it anymore,” said Jay Heroux, vice president for enterprise applications solutions, EDS Federal, at the Association For Enterprise Integration’s 21st Century Commerce International Expo2000, in Albuquerque, N.M. But rather, Heroux, who has more than 14 years of experience in the federal and aerospace and defense industry, promoted the seven C’s of the customer experience, namely content, communication, customer care, community, convenience, connectivity and customization. Throw in security and privacy, and you have the answer, he said.

Technology vs. Customers
Heroux cited one company that was very competent at taking orders during the holiday season. Filling the orders was another story. A good company, he said, is able to keep its customers informed about their orders—when orders are taken, shipped and delivered. Companies should be able to notify customers if there are problems, such as if an item is out of stock. In the case cited by Heroux, a lot of people woke up on Christmas morning with their gifts stuck in cyberspace. You may have the most advanced Web site with the coolest graphics, but cool technology pales in comparison to customer needs.

The technology-vs.-customer-needs debate is applicable to what is happening at the Defense Department, which is trying to establish a supply chain management or logistics system that provides its customers—the war-fighters—with the right supplies as soon as they need them. The Pentagon spends $200 million a day on logistics, and despite having the self-proclaimed best military logistics system in the world, it needs to be better.

The department needs a logistics system that allows it to keep track of supplies at all times and provides for faster delivery times, officials said. The Pentagon is seeking a system where soldiers, sailors and airmen can purchase items wherever they are stationed.

The system, officials said, must be interoperable and common across the services. Some believe this may be a problem, because the services tend to develop systems to meet their unique requirements.

Each branch has unique needs, and with those, come unique technological capabilities. But ultimately, Pentagon agencies, such as the Defense Logistics Agency, would like to see the services achieve common standards.

“It’s about improving business processes, not about technology,” said Steven Kelman, Weatherhead professor of public management, Harvard University.

Kelman, former administrator of the Office of Federal Procurement Policy at the U.S. Office of Management and Budget, told the conference that progress has been slow in the Defense Department when it comes to the supply chain, but he added that the federal government actually is ahead of many Fortune 500 companies in the electronic business arena. In fact, he said, the whole idea of procurement reform has allowed the government to do business with companies that had no prior federal work.

It’s in the Mail
Although the commercial sector has become known for innovation and efficiency, the Pentagon may be able to seek advice on improving business processes from other government entities.

Among federal agencies, the U.S. Postal Service arguably has the biggest paper management challenge. It has the job of keeping track of all of the billions of pieces of mail that travel through its doors. And in spite of the advent of electronic mail, the number of physical mail items actually is increasing, said Leo Campbell, manager of e-commerce for the U.S. Postal Service.

Though he did admit that there have been instances where mail has been lost or misplaced, the Postal Service’s track record continues to improve.

Another mailing service, Federal Express, has been cited by defense officials as the model for what a logistics or tracking service should be like.

FedEx is said to have the most advanced mapping system in the world. In fact, one unidentified defense official said that had the Pentagon had access to FedEx’s mapping system during the Kosovo air strike, the Chinese Embassy bombing tragedy would not have happened.

Nevertheless, if the mailing services were able to keep track of the flow of information that comes through, the Defense Department should be able to afford a system that gets supplies to the war-fighters on time, officials argued.

Looking Forward
The Pentagon recently did take the next step toward establishing its end-to-end paperless procurement process, which is to be fully operational in March 2004.

Deputy Secretary of Defense Rudy de Leon established a steering group, made up of representatives from the military services and agencies, to guide implementation of the system. Once the system is fully implemented, it will link the contracting, program management, payment, financial management, accounting and logistics communities.

Some of the pieces are already there, such as the Defense Finance and Accounting Service’s Web-Invoicing System. But defense officials say they need an efficient logistics support system before their e-commerce are truly put to the test.

Topics: Electronics, Procurement, Supply Chain