Thesis: The Chief Supply Chain Officer (CSCO) needs to be very close to the Chief Customer Officer or whoever in the enterprise is responsible for the customer experience.
This article is for those who are working supply chain within a company that makes or sells things. We know the 3PL world needs to have a customer experience strategy but what about the CSCO within a manufacturer or retailer? Isn't their job to just reduce costs and become "efficient"? NO! For those who have read my writings over the last 5 years you know I believe the single biggest job of the CSCO is to drive revenue. In this day and age you drive it through customer experience (CX) even more than through product.
Let's look at the big advancements which have propelled massive sales growth for key players during the pandemic. A few examples:
Buy on line and pick up in store
Buy on line and have curbside pick-up
Use your smartphone to activate and pay for fuel at key gas stations (I do this a lot at Shell).
Use of stores as micro fulfillment centers
I could go on and on but all of these are supply chain solutions, empowered by technology to drive customer experience. Notice nothing in that list had anything to do with product but rather had to do with how a customer or consumer acquires the product. If you are back in the supply chain don't think you are immune from this trend because your customer has the same needs as a consumer. They want a frictionless experience to make their business more impactful to the consumer. You can help them with that and that will endear you more to your customer, they will buy more and they will be more loyal. So, a quick conclusion for CSCO's to take action in this space:
Get to know and partner with the person in your company who is in charge of the customer experience. A lot of times this is in the sales or marketing area.}
If your company does not have a person who owns this then take extreme ownership and take charge of it.
Ensure your supply chain strategy supports everything your company is promising in their go to market and customer experience plans. Nothing is worse than a supply chain strategy which is different than the go to market strategy.
Consistently come back to the customer experience and use data such as net promoter scores (NPS) to determine if your supply chain is meeting the customer expectations.
The customer and the consumer have the power. You will differentiate yourself and your company if your supply chain focuses on the customer experience and "wow'ing" them each and every day.
Post Script: I think of this today and had to write about it industry lost a legend this week: Tony Hsieh. Tony founded Zappos and with it founded a company which was legendary for differentiating itself through customer experience. How do you differentiate the selling of shoes? Through Customer Experience! He built the company from nothing and sold it to Amazon for over $1bl. We should all focus on CX like Tony did.
Rest in Peace, Tony Hsieh.
By Charlie Llewellin from Austin, USA - tony hsieh, ceo, zappos.comUploaded by Edward, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=97091081
In recent years AI and machine learning have had a major impact on how we run our businesses. They have also influenced the way we make decisions in supply chain planning. As a result we are now in a position to have a supply chain planning system that may have enough intelligence to grow and change with the organization on its own!
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Eildon Capital is currently a subsidiary of the publicly listed investment company CVC Limited. The company focuses on high yield debt and investments in the property sector. They plan to raise between 2 and 10 million dollars via the IPO, with a market capitalisation on completion between 24 and 32 million. In the prospectus, they state that their goal for debt yields on property are between 12 and 18 percent before management fees and taxes. As a Mezzanine finance company, security on these loans will usually be equity in the ventures themselves.
There’s a lot of things to like about this prospectus; an experienced and stable management team, a good track record and at least on the surface a reasonable price, with every one dollars’ worth of shares bought giving you $1.01 of net assets in the newly created company. I’ve got a few misgivings though, and there are three main reasons I won’t be taking part.
The property sector
As a long term believer in the idea that the housing market is overdue a downward correction, it’s hard to think of who would be more exposed to this than a company specialising in high yield property development loans. A substantial portion of their current assets are mezzanine loans to apartment developments in Melbourne, the Gold Coast and Brisbane. When I think “housing bubble,’ an apartment development in the Gold Coast is probably one of the first things that comes to mind. While Eildon stress in the prospectus that they have ways to mitigate their risk, if they are getting double digit yields on loans it’s hard to believe they are able to protect themselves that well.
Another thing that makes me a little suspicious of this listing is a controversy that has been hanging around Eildon capital’s current parent company, CVC Limited. Founded in 1985, one of CVC Limited’s founding directors and chairman for many years was a guy called Vanda Gould. Vanda Gould resigned in 2014 after becoming embroiled in a lengthy dispute over tax avoidance with the ATO. He recently lost an appeal to the high court over a tax bill of more than $300 million for companies he owns and advises, and is also facing criminal charges relating to tax avoidance that could potentially land him in jail. The guy seems like one of the real characters of Australian investing, his chairman’s letters for CVC would regularly get pretty philosophical, quoting Shakespeare and referencing interest rates from ancient Rome and Babylonia. While these days he holds no position at CVC and you won’t even find his name on the website, it’s hard to believe he is completely disentangled from all of CVC’s various affairs. To give an example of a potential continuing connection, over 10% of the shares of Eildon capital will be held by a company called Chemical Trustees Limited on listing, a company that had its assets frozen in 2010 due to alleged tax avoidance in relation to Vanda Gould. I have no idea if there is still any connection between Chemical Trustees and Vanda Gould, but if they end up having to sell their holding in a hurry or the shares are seized it could have a significant effect on the share price.
The last thing going against this prospectus is CVC Limited’s current share price. With net assets of $214 million as of the end of the last financial year, CVC’s market capitalisation has hovered around the 196 million dollar mark for the last couple of months. This means every 1 dollar you invest in CVC Limited buys you $1.09 of net equity on CVC’s balance sheet. That’s 8 cents more than you will get of Eildon Capital’s equity if you take part in the IPO. As CVC currently owns Eildon capital, this could mean that the IPO is priced above the current market price. Of course, it’s impossible to know for sure what assets exactly on CVC’s balance sheet the market is undervaluing, but it could just as well be the Eildon capital assets as anything else. If this is the case, there is a real danger the share price will drop by around 6% or 7% upon listing. If you are a long term believer in the company this may not bother you, but it does mean you may need to commit to holding these shares for quite a while if you want to make money.
Despite all these issues, the target returns will no doubt be enticing for some investors, and if you have an appetite for a bit of risk and are not currently that exposed to the housing industry taking part in this IPO could make sense. For me though, my scepticism of the housing market along with concerns about the Vanda Gould connection makes me happy to give this one a miss.