Unformatted text preview: Customer
…. for the purpose of conforming to
customer service requirements. Customer Defined
Customer End user as the customer. Firms within the supply chain are
customers. Any delivery location could be considered
customer. Focal Point
Focal Regardless of the motivation and
delivery purpose, the customer
being served is the focal point and
driving force in establishing logistical
performance requirements. Explain!
performance Customer Focused Marketing
Customer The marketing concept. Greater efficiency and effectiveness in
marketing. Differentiation in service levels. Why? Differing requirements. Differing willingness to pay Concept of Utility
Concept Four economic utilities have value to
Place Logistics is directly responsible for which
of Transactional vs. Relationship
Marketing Transactional = short term interaction Relationship = long-term relationships. Supply Chain Management emphasizes
transactional Service Outputs
Service Efficient supply chains help overcome
space, time, quantity, and assortment
discrepancies. A discrepancy in time refers to the
difference between production and
consumption, i.e., goods are produced at
one time and consumed at another.
Does this apply to services as well?
Does Assortment and Quantity
Assortment Refers to the fact that manufacturers
typically specialize in producing
large quantities of a limited variety of
goods. Consumers, on the other hand,
require small quantities of a large
variety of goods.
variety Bucklin’s Theory
Bucklin’s Four basic service outputs required to
accommodate customer requirements.
Product Vaiety and Assortment Spatial Convenience
Spatial Refers to the amount of shopping time
and effort that will be required by the
customer. Higher levels of spatial convenience are
achieved if a good is available in a large
number of locations.
number Distribution Intensity is related to product
categories (shopping, convenience, and
specialty Lot Size
Lot Refers to the number of units that must
be purchased in each transaction.
be Smaller lot sizes enable the matching of
purchasing and consumption
requirements. Larger lot sizes suggest that the
consumer is responsible for holding
inventory. Waiting Time
Waiting Amount of time between placing the
order and receiving the product.
order Also known as order cycle or
replenishment cycle or performance
cycle. Implications for inventory levels? Flexibility important to consumers. Product Variety and
Assortment Depends on the nature of the
customer, e.g., grocery store vs.
specialty Related to marketing strategy,
including market target and
differentiation. Customer Service
Customer Represents logistics’ role in fulfilling the
marketing Customer service adds value throughout
the supply chain. Explain!
the Does the cost associated with achieving
a specific level of service represent a
sound investment? Explain!
sound Dimensions of Customer
Service Availability = capacity to have inventory
available when desired. Americans are
spoiled in this respect.
spoiled Stockout frequency = occurs when no
product is available to fulfill customer
demand. No stockout if not demand
even if products are not available. Why?
even Availability Continued
Availability Fill Rate = percentage of items requested
that are available, e.g., 100 items
requested – 98 are available = 98% fill
rate (should be aggregated across all
customers over time).
customers Orders shipped complete = percentage
of orders that had 100% fill rates.
of Operational Performance
Operational Speed – time from placing the order until
receiving the order.
receiving Consistency – How often does the actual
cycle comport with the planned cycle.
cycle Impact on the consumer? Flexibility – Ability to accommodate
special Malfunction recovery. Customer Satisfaction
Customer Expectancy Disconfirmation
Paradigm A model of customer satisfaction,
figure 3.1, page 57.
figure Note the six gaps that can lead to
dissatisfaction. Figure 3-1 Satisfaction and Quality
Model Gap 1: Knowledge
Gap The difference between customer’s real
expectations and managers’ perception
of those expectations.
of A fundamental lack of knowledge and
understanding of the customer.
understanding Can be remedied through more effective
communication. Gap 2: Standards
Gap Exist when internal performance
standards to not meet customer
expectations. Problem occurs because even if a
firm meets their internal goals,
customers are not satisfied.
customers Gap 3: Performance
Gap Exist because of a gap between
performance standards and actual
performance. Operational limitations. Gap 4: Communications
Gap Customers failing to communicate their
real needs and expectations.
real Firms failing to communicate their real
capabilities. The danger of overpromising or “the
destructive Gap 5: Perception
Gap Difference between actual performance
and customers’ perception of
performance. You are only as good as your last
delivery. Issue of immediacy and recall. Remedy – communication. Gap 6: Satisfaction/Quality
Gap The existence of any of the above gaps
leads to customer perception that
performance is not as good as expected.
performance In other words, these gaps lead to
customer Danger in this? Limitations of Customer
Satisfaction Satisfied customers are not necessarily
happy There are degrees of satisfaction, see
figure 3.2, page 59.
figure Competitors may provide superior
service at the same price.
service Satisfied customers are not necessarily
loyal Figure 3-2 Satisfaction Is Not the Same
as Evolution of Management
Table 3.2, page 60.
Philosophy is related to focus.
Customer service = Meet internal
standards Customer satisfaction = Meet
expectations Customer success = Meet customer
requirements. Table 3-2 Evolution of Management
Thought Table 3-2 Evolution of Management
Forecasting Accommodating customer requirements
requires a forecast.
requires The forecast drives the process. Explain! Accuracy of forecasts are more critical
with long replenishment cycles and
significant economies of scale. Why?
significant To allow for production and
transportation Forecasting Con’t
Forecasting Accurate forecasts are not as critical
when replenishment cycles are short and
economies of scale not as large.
economies Focus in this situation shifts to
responsiveness and flexibility.
responsiveness Forecasting Requirements
Forecasting Logistics systems requires forecasts to
match demand with the capabilities of the
supply Logistics forecasts:
Support Collaborative Planning
Drive Requirements Planning
Improve Resource Management Forecasting Components
Forecast components include:
Affects of Promotion
Irregularity of Demand Forecasting Techniques
Forecasting Qualitative = based on experience,
surveys, panels, consensus meetings.
surveys, Quantitative = examples include time
series and causal such as regression.
series Forecasting error is often high. Why? ...
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