S s s s s s table 82 traditional vs activity

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Unformatted text preview: §༊ Drivers trigger resources consumption §༊ Drives costs to appropriate level Figure 8.3 – Distribution Center Process Flow Chart Figure 8.4 – Flow- Through Costing for a Distribution Center Influencing the Order – Customer Relationship Management M༄ Classifying Customers by Profitability §༊ Protect Zone • Those customers who fall into the “protect” segment are the most profitable §༊ Danger Zone • Customers in the “danger zone” segment are the least profitable and incur a loss o The firm has three alternatives for danger zone customers: §༊ Change customer interaction with firm so the customer can move to another segment §༊ Charge the customer the actual cost of doing business §༊ Switch the customer to an alternative distribution channel §༊ Build Zone • These customers have a low cost to serve and a low net sales value, so the firm should maintain the cost to serve and build net sales value to help drive the customer into the “protect” segment Figure 8.5 – Customer Segmentation Matrix M༄ Protect – High (Net Sales Value of Customer), Low (Cost to Serve) M༄ Build – Low, Low M༄ Cost Engineer – High, High M༄ Danger Zone – Low, High Executing the Order – Order Management and Fulfillment M༄ Order- to- Cash (OTC) and Replenishment Cycles §༊ Order Cycle • All activities that occur from when an order is received until the product is received §༊ Replenishment Cycle • Refers to acquisition of additional inventory • One firm’s order cycle is another’s replenishment cycle Chapter 8 – Order Management and Customer Service S༅ S༅ S༅ S༅ S༅ S༅ S...
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