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,#,Contemporary Logistics,Twelfth,Edition,Chapter,7,Demand Management, Order Management, and Customer,Service,Contemporary LogisticsTwelfth,1,Learning,Objectives,7.1,To understand the linkages between demand,management,order,management, and,customer,service,7.2,To introduce you to demand forecasting models,7.3,To examine the order cycle and its,four components,7.4,To understand the four dimensions of customer,service,as,they pertain,to logistics,7.5,To familiarize you with select managerial issues,associated,with,customer service,Learning Objectives7.1 To und,2,Demand Management,(1 of 7),Demand,management,can be defined as “the creation across the supply chain and its markets of a coordinated flow of demand.”,1,1,John T. Mentzer, “A Telling Fortune,”,Industrial Engineer, April 2006, 4247,.,Demand Management (1 of 7)Dema,3,Demand Management,(2 of 7),Demand (sales),forecasting,Refers to an effort to project future,demand,Is a key component in demand,management,Is helpful in make-to-,stock,situations,Is helpful in make-to-,order,situations,Demand Management (2 of 7)Dema,4,Demand Management,(3 of 7),Demand forecasting models,Three basic types of demand forecasting models:,Judgmental,Time series,Cause and effect (associative,),Demand Management (3 of 7)Dema,5,Demand Management,(4 of 7),Demand forecasting models,Judgmental demand forecasting model:,Involves using judgment or intuition,Preferred in situations where there is limited or no historical data,Techniques include surveys, the analog technique, and others,Surveys used to learn about customer preferences and intentions,An analog (similar item to that being forecasted) is used as the basis for demand,history,Demand Management (4 of 7)Dema,6,Demand Management,(5 of 7),Demand forecasting models,Time series forecasting model:,Underlying assumption is that future demand is solely dependent on past demand,Some techniques include:,Simple moving averages,Weighted moving,averages,Demand Management (5 of 7)Dema,7,Table 7.1: Forecast Example Using the Simple and Weighted Moving Average Techniques,Time period (1),Demand,(2),Simple Moving,Average,Weighting,Factor (3),Projected,Demand,(4; =,2,3),Weighted,Moving Average,Weighting,Factor (5),Projected,Demand,(6;,=,2,5),Last month,250,.25,62.5,.40,100,Two months ago,230,.25,57.5,.30,69,Three months ago,200,.25,50,.20,40,Four months ago,180,.25,45,.10,18,Forecast,215,227,Table 7.1: Forecast Example Us,8,Demand Management,(6 of 7),Demand forecasting models,Cause-and-effect forecasting model,Also referred to as associative forecasting,Assumes that one or more factors are related to demand and that the relationship between cause and effect can be used to estimate future demand,Some techniques include:,Simple regression,Multiple,regression,Demand Management (6 of 7)Dema,9,Demand Management,(7 of 7),Demand forecasting issues,Selection of forecasting technique(s) depends on many factors,Selecting an inappropriate technique will reduce forecast accuracy,Forecast accuracy can have important logistical implications,Computer forecasting software unable to completely eliminate forecast,errors,Demand Management (7 of 7)Dema,10,Order Management,(1 of 10),Order management refers to management of the various activities associated with the order cycle,Order cycle (replenishment cycle or lead time) refers to the time from when a customer places an order to when goods are received,Order to cash cycle refers to the length of time it takes an organization to receive payment for an order,Some organizations include order to cash cycle in their order management,model,Order Management (1 of 10)Orde,11,Order Management,(2 of 10),Four stages of the order cycle include:,Order transmittal,Order processing,Order picking and assembly,Order,delivery,Order Management (2 of 10) Fou,12,Order Management,(3 of 10),Order transmittal,Refers to the time from when the customer places an order until the seller receives the order,Methods of order transmittal,In person,Mail,Telephone,Fax,Electronically,Order Management (3 of 10) Ord,13,Order Management,(4 of 10),Order processing,Refers to the time from when the seller receives an order until an appropriate location (i.e., warehouse) is authorized to fill the,order,Order Management (4 of 10) Ord,14,Order Management,(5 of 10),Order processing activities include:,Checking for completeness and accuracy,Checking the buyers ability to purchase,Order entry into the computer system,Crediting salesperson with the sale,Recording the transaction,Determining inventory location,Arranging for outbound,transportation,Order Management (5 of 10) Ord,15,Figure 7.1: Flowchart of Order Handling (Order Processing) System,Figure 7.1: Flowchart of Order,16,Order Management,(6 of 10),Order picking and assembly,Includes all activities from when an appropriate location is authorized to fill the order until goods are loaded aboard an outbound,carrier,Order Management (6 of 10)Orde,17,Order Management,(7 of 10),Order picking and assembly,Often represents the best opportunity to improve the effectiveness and efficiency of an order cycle,Can account for up to two-thirds of a facilitys operating cost and,time,Order Management (7 of 10)Orde,18,Order Management,(8 of 10),Order picking and assembly,Examples include:,Handheld scanners,Radio-frequency identification (RFID),Voice-based order picking,Pick-to-light technology,Order Management (8 of 10)Orde,19,Order Management,(9 of 10),Order delivery,Refers to the time from when a transportation carrier picks up the shipment until it is received by the,customer,Order Management (9 of 10)Orde,20,Order Management,(10 of 10),Order delivery,Three key order delivery issues:,Variety of options in terms of transit time are now available, such as delivery by 12 noon and delivery by 4:30 p.m.,A number of shippers are emphasizing both elapsed transit time as well as transit time reliability,Transportation carriers are revamping their operations to provide faster transit times to,customers,Order Management (10 of 10)Ord,21,Customer Service,(1 of 4),Defined as “the ability of logistics management to satisfy,users in terms of time, dependability, communication, and convenience.”,2,Customer service is much more difficult for competitors to imitate than other marketing mix variables such as price and,promotion,2,Roger A. Kerin, Steve W. Hartley, and William Rudelius,Marketing, 10th ed. (Boston, MA: McGraw-Hill/Irwin, 2011), Chapter 16,.,Customer Service (1 of 4)Defin,22,Customer Service,(2 of 4),Four dimensions of customer service include:,Time,Dependability,Communication,Convenience,Customer Service (2 of 4)Four,23,Customer Service,(3 of 4),Time,Refers to the period between successive events (e.g., order cycle),Dependability,Refers to the reliability of the service encounter,Consists of three elements:,Consistent order cycles,Safe delivery,Complete,delivery,Customer Service (3 of 4)Time,24,Customer Service,(4 of 4),Communication,To be effective, should be a two-way exchange between seller and customer,Goal is to keep both parties informed,Requires correct parties to be involved in the process,Convenience,Focuses on the ease of doing business with a,seller,Customer Service (4 of 4)Commu,25,Managing Customer Service,(1 of 2),Four specific customer service considerations include:,Establishing customer service objectives,Measuring customer service,Customer profitability analysis (CPA),Service failure and,recovery,Managing Customer Service (1 o,26,Managing Customer Service,(2 of 2),Establishing customer service objectives,Means by which goals are to be achieved,Should be “SMART”:,Specific,Measurable,Achievable,Realistic,Timely,Managing Customer Service (2 o,27,Key Terms,(1 of 3),Activity-based costing (ABC),Benchmarking,Cause-and-effect forecasting,Collaborative planning, forecasting, and replenishment (CPFR),Customer profitability analysis (CPA),Customer,service,Demand management,Judgmental forecasting,Make-to-order,Make-to-stock,Key Terms (1 of 3)Activity-bas,28,Key Terms,(2,of,3),Multichannel marketing systems,Order cycle,Order delivery,Order fill rate,Order management,Order picking and,assembly,Order,processing,Order to cash cycle,Order transmittal,Order,triage,Key Terms (2 of 3)Multichannel,29,Key Terms,(3,of,3),Pick-to-light technology,Service recovery,Service recovery paradox,Time series forecasting,Voice-based order picking,Key Terms (3 of 3)Pick-to-ligh,30,
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