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chapter 8 answers to study questions

chapter 8 answers to study questions - Chapter 8 ANSWERS TO...

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Chapter 8 ANSWERS TO STUDY QUESTIONS 1. Explain how order management and customer service are related. Answer: How an organization receives an order (electronically versus manually), how it fills an order (inventory policy and number and location of warehouses), and how it ships an order (mode choice and its impacts on delivery times) are all dictated by how an organization manages an order. Customer service, on the other hand, is anything that touches the customer. This includes all activities that impact information flow, product flow, and cash flow between the organization and its customers. Customer service can be described as a philosophy, as performance measures, or as an activity. Customer service as a philosophy elevates customer service to an organization-wide commitment to providing customer satisfaction through superior customer service. This view of customer service is entirely consistent with many organizations’ emphasis on value management, elevates it to the strategic level within an organization, and makes it visible to top executives. Most organizations employ all three definitions of customer service in their order management process. Figure 8-1 shows one way in which order management and customer service are related. As this figure shows, customer service is involved in both influencing a customer’s order as well as in executing the customer’s order. The topics in this figure will be discussed in more detail in this chapter. (Pages 268-269) 2. Describe the two approaches to order management. How are they different? How are they related? Answer: The order management system represents the principal means by which buyers and sellers communicate information relating to individual orders of product. Effective order management is a key to operational efficiency and customer satisfaction. To the extent that an organization conducts all activities relating to order management in a timely, accurate, and thorough manner, it follows that other areas of company activity can be similarly coordinated. In addition, both present and potential customers will take a positive view of consistent and predictable order cycle length and acceptable response times. By starting the process with an understanding of customer needs, organizations can design order management systems that will be viewed as superior to competitor firms. There are two phases of order management. First is influencing the order, the phase where an organization attempts to change the manner by which its customers place orders. Second is order execution, the phase that occurs after the organization receives the order. (Pages 269-270) 3. What is the role of activity-based costing in customer relationship management? In customer segmentation? Answer: Figure 8-5 shows one method to classify customers by profitability. The vertical axis measures the net sales value of the customer, while the horizontal axis represents the cost to serve. Those customers who fall into the “Protect” segment are the most profitable. Their interactions with the shipper provide the shipper with
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