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Customer Service and Service-driven Logistics,What is customer service? Components of customer service Service levels vs costs Service-driven logistics system Set CS priorities,Service is ,Smiling to everyone Excellent in everything you do Reaching out to every customer with hospitality Viewing every customer as special Inviting your customer to return Creating a warm atmosphere Eye contact that shows we care,Who is the customer?,Can you suggest the customer groups for a logistics operator? Consumer / end user Customers of the company Other functions of the company such as sales and marketing Other sections of logistics department,What is customer service?,CS is the collection of activities performed in a way that keeps customers happy and creates in the customers mind the perception of an organization that is easy to do business with. It is an excellent competitive weapon and has an advantage over price competition.,CS in logistics,Logistics is part of the supply chain that plans, implements, and controls the efficient, effective flow and storage of goods, services and related information, from the point of origin to the point of consumption in order to meet customer requirements. -Council of Logistics Management,The ultimate purpose of logistics,Logistics is to deliver - (the right product) - to the right place - at the right time - in the right quantity - at the right quality - at the right price (cost) - for the right customer,Customer service,The role of CS is to provide “time 2. organization structure Transaction elements 1. Order cycle time; 2. order fill rate 3. Inventory availability; 4. order status information Post-transaction elements 1. Availability of spares; 2. product warranty 3. Customer complaints,Basic & value-added services,No company provides all its customers with the same level of service. Definition of basic and value-added services P52,Levels of CS,The trade-off between level of CS and costs,Cost of service,The logistics implication of CS,One major measurement is DIFOT delivery in full on time. Delivered complete to the quantities ordered Delivered exactly to the customers requested date and time No delivery problems (damage, shortage, refusal, etc) Accurate and complete delivery documentation,A perfect order DIFOT,If the actual performance of all orders for the last 12 months was as follows: on-time: 90% in-full: 80% error-free: 70% the actual perfect order was: 90% x 80% x 70% = 50.4%,Set CS priorities,The Pareto or 80/20 rule provides basis of a cost-effective strategy. Not all our customers are equally profitable nor our products, the highest service level should be given to key customers and key products.,Set CS priorities,80/20 rule: 80% of profits of the business comes from 20% of customers. 80% of total costs of service will be generated from 20% of customers.,Corresponding logistics practice,80/20 rule provides a basis for inventory control product categorystock availability A 99% B 97% C 90%,80/20 Rule,Key products & key accounts (protect),A B C CUSTOMERS,A B C,PRODUCTS,80/20 Rule,If the 80/20 rule applies both to products and customers, then all businesses are actually very dependent on a very few customers buying a few high profit product lines. 20% of customers buying 20% of products = 4% of all transactions Which provides: 80% of 80% of total profit = 64%,Case study Handy And, Inc,Is this a CS problem? Why or why not? Logistics channels handle the physical flow of goods or services. Is the problem discussed in Handy Andys logistics channel? Why or why not? As stated in the case “ The factory distributors in these few cities indicated that they, not Handy Andy, stood behind the 1-year warranty.”, how should the firm deal with the problem?,
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