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A Key Element in Logistics Strategy
Chapter 2 Logistics Management - Vinod V. Sople
• Introduction • Customer Service • Customer Service for Competitiveness • Customer Service Phases / Elements • Importance of Customer Service • Objectives of Customer Service • The Perfect Order • Seven R Rule • Customer Service Strateg • Customer Service !udit
• Customer service is a measure of the effectiveness of a logistical s stem in creating time"and"place utilities • #ar$eters vie% customer service %ithin the larger conte&t of building customer relationship • 'ence organi(ations constantl strive to deliver superior customer value through customer service) %hich is a $e element in the logistics strateg • In the conte&t of *ogistics) customer service is more than just transportation of a shipment from point ! to point +
Introduction “The goal as a company is to have customer service that is not just the best but legendary” . 'elping the supplier understand trends and d namics of mar$ets .. ... Providing customers %ith information) options e&pertise to ma$e the right decision .Sam Walton • In the conte&t of logistics customer service is about .or$ing %ith the customer to deliver the best possible value for their mone 4 .
Customer Ser ice • Customer Service is a set of activities and programs) designed and implemented b a business firm to ma$e customers/ bu ing e&perience more re%arding . 0ood customer service builds customer loyalty %hich generates positive %ord"of"mouth communication %hich attracts ne% customers . These activities enhance the value of a product or service the customer gets from the seller . 0ood customer service is the bases for all Customer Relationship Management (CRM) programs that man leading firms implement 5 .
Standards adopted . Intangible elements of service aspects %hich are usuall ver difficult to evaluate accuratel • Thus there gaps bet%een client perceptions and actual service provided • These gaps ma arise due to . Service deliver . Communication .Customer Ser ice "or Competiti eness • Customers base their evaluation of a service on their perception • These perceptions are affected b . Customer $no%ledge ! . The actual service provided 1realit 2 .
Services provided ma be different from service standards of the firm Customer knowledge . Customer Ser ice "or Competiti eness Communication .. The actual service provided ma be different from %hat is communicated through advertisements promotional campaigns Standards Adopted . Service standards adopted ma be different from customers/ e&pectations Service Delivery . The firm ma fail to understand customers/ perception of the service standard # ...
Transaction Securit .. Competence . Customer Ser ice "or Competiti eness • 3irms that can identif these gaps and bridge them) can succeed in . Enhancing customer satisfaction levels . Responsiveness . !ccess . Remaining competitive . Reliabilit . Trust%orthiness $ ... Stimulating repeat purchase • Some elements that affect client perception are .
damages in the post"sales phase Reliability . 4eliver of the product / services as promised in terms of place) time . The ease %ith %hich the customer %ill have access to information on products .... Customer Ser ice "or Competiti eness Competence .5ualit % . The manner .services before placing an order) status of the order placed) status of product complaints) claims .accurac in %hich information is provided b the firm through product brochures) manuals) %ebsites) sales tal$ about the compan /s products and the service offerings Access .
Returning customer calls) e"mails) letters etc on time . The confidentialit of customer information transactions Trustworthiness . Resolving customer problems or complaints %ith speed during all three phases of transactions Transaction Security . Customer Ser ice "or Competiti eness Responsiveness ... +uilt through evolving policies on product return) %arrant and guarantee and honoring commitments 1& ..
place utilities to .. Customer Ser ice "or Competiti eness • *ogistics helps in creating time ... !vail of sales opportunities . Create ne% opportunities for repeat sales to the same customers • 'ence logistics competenc is critical to customer service planning and needs to be developed as a core competenc for sustainable competitive advantage for survival .place utilities of the product that satisfies customers/ needs • In toda /s competitive mar$ets) the competitiveness of a firm is judged b ho% efficientl .gro%th 11 .effectivel it manages creation of time .
Customer Ser ice 'hases ( )lements 12 .
services • +u ers loo$ for value for mone the spend • The seller tries to deliver superior customer service and stri$ing a balance bet%een customer satisfaction costs • #eaning of customer service varies %ith the organi(ation) product being mar$eted and transaction phase the purchase is going through • There are 6 phases to the customer service process • 4egree of importance of each phase varies %ith organi(ation) depends on the product ..customer re5uirements 13 .. Customer Ser ice 'hases ( )lements • Customer service is a measure of ho% logistics creates time ..place utilities for products .
..prospective customers 14 . Customer Ser ice 'hases ( )lements re!transaction phase • Phase related %ith setting polic for defining the service level .limitations of the customer services provided b the organi(ation • Creates a service platform to serve customers so as to . +uild credibilit in the mar$et . Create of good image %ith e&isting .related activit ) in 5ualitative 5uantitative terms • ! non"routine activit • Provides guidelines to operating people regarding the dos / don/ts ..
re%ard structure 15 7 S stem design . Customer service policy 7 Provides the service policy statement in written form 7 Indicates the service standards of the organi(ation 7 !t this stage) organi(ation %ill have to evolve a polic frame%or$ for performance measures) evaluation methods) reporting structure ... Customer Ser ice 'hases ( )lements """ re!transaction phase • Important elements of this phase 7 Customer service polic 7 Customer education 7 Organi(ation building 7 Structuring the service ..
. #rgani$ation building 7 'erein the service policy statement is implemented 7 Organi(ation %ill have to • Create relevant hierarch ) reporting structure) delegate authorit ) allocate responsibilit • Provide customers %ith contact person/s name / phone numbers for information on order status) dispatch status) %arrant claims etc • Contact person to be given full authorit in ta$e decisions on customer service %ithin their domain) made accountable for decisions ta$en • Implement a proper re%ard s stem to motivate emplo ees involved in customer service 1! .. Customer Ser ice 'hases ( )lements """ re!transaction phase ..
%hen the product is in maturit stage) competition is fierce) firm can gain competitive advantage through superior customer service 7 Service innovation is a must for sustainable competitive advantage 7 Important element of service is its deliver %hich varies %ith the product .. Customer Ser ice 'hases ( )lements """ re!transaction phase .client/s need " firm %ill have to allocate and coordinate resources for this purpose 1# ... Structuring the service 7 +asic service structure depends on customer standards) industr standards and the service standard the organi(ation %ants to $eep 7 !lso depends on the t pe of product / service) stage of P*C the product is in .
""" Structuring the service 7 e8g8 • E&ide Industries *td8 introduced +at"#obile Service %hich offers free van service for batter related problems of vehicles irrespective of brand of batter • Service provided in all metro cities to vehicles stranded on high%a s • E&ide Industries *td8 operates this service through its o%n fleet of vans %ith e5uipment installed in them .technicians carr ing an inventor of ne% batteries dedicated to the service • #onitoring) coordinating . Customer Ser ice 'hases ( )lements """ re!transaction phase ....customer shift from competitor/s to E&ide 1$ .controlling the movements of vans is a tedious logistics service tas$ • This value"added service has borne results in the form of customer lo alt .
System design 7 Involves developing a s stem %hich ans%ers all possible 5ueries in the customers/ mind before order placement 7 S stem ma be manual or full automated 7 Essential to implement fle&ibilit to ta$e care of unplanned events 1% .. re!transaction phase Customer education 7 Re5uired for minimi(ing customer complaints on product deliveries) product operations) maintenance) spare parts inventor ) service centers) freight charges) transit damages) product recall) limits of %arranties / guarantees 7 9suall done through user manuals) training) seminars %or$shops . Customer Ser ice 'hases ( )lements """ ...
efficient in delivering the desired standard of customer service • ..arious elements involved in this phase 7 Order fulfillment reliabilit 7 Order postponement 7 Product substitute 7 4eliver consistenc 7 Order convenience 2& ... Customer Ser ice 'hases ( )lements Transaction phase • Customer service during this phase is associated %ith routine tasks per%ormed in the supply chain • :eed to be coordinated for the entire s stem to be effective .
with respect to quality & quantity of product ordered 7 This re5uires close coordination ....management of the various components of the order c cle vi( order processing) material planning) allocation) pic$ing) pac$ing .transportation . Customer Ser ice 'hases """ Transaction phase . #rder %ul%illment reliability 7 #ost important factor herein is reliability to fulfill the order within the promised time period. Delivery consistency 7 Organi(ation must ensure deliveries happen consistentl 7 Inconsistent deliveries ma result in customer dissatisfaction or production disruptions at customer end 21 .
#rder convenience 7 Refers to the ease %ith %hich customer can place an order 7 +arriers to convenience are paper%or$ re5uired b supplier) compliance to various procedures) comple& pa ment terms) poor communication net%or$ and lac$ of coordination in the suppliers/ sales net%or$ 7 In competitive mar$ets this could result in loss of sales orders .. Customer Ser ice 'hases ( )lements """ Transaction phase ..reduction in customer base 22 ..
.. Customer Ser ice 'hases ( )lements """ Transaction phase . #rder postponement 7 3or some reason) customer ma re5uire part or an entire order to be postponed or deliveries to happen in a phased manner 7 This ma cause production reschedules at supplier end 7 The organi(ation must be fle&ible enough to cater to this .. roduct substitute 7 If a condition arises %herein the product ordered cannot be shipped due to some manufacturing or 5ualit problems) supplier ma offer a substitute product of similar or better 5ualit ) in order to retain the customer 7 3or obtaining customer/s consent for a product substitute) supplier needs a closer interaction .clear communication %ith the customer 23 .
returns 7 Product installation) commissioning .arious elements involved in this phase 7 Order status information 7 Customer complaints) claims .technical snags 7 Customer education . Customer Ser ice 'hases ( )lements ost!Transaction phase • This phase deals primaril %ith customer satis%action & building a long term relationship • Involves commitment of resources to offer desired level of service • .training 24 ....
Customer Ser ice 'hases ( )lements """ ost!Transaction phase .... Customer Complaints( Claims & Returns 7 The seller/s role / responsibilit does no end %ith dispatch of product to customer 7 Organi(ations/ must provide mechanisms to handle post sales activities such as complaints) goods damaged in transit) incomplete / incorrect shipments) product recalls 7 Implemented through reverse logistics 25 . #rder Status 'n%ormation 7 !fter an advance part / full pa ment of the product) customers need constant information on order status 7 3or this purpose organi(ation/s provide consignment trac$ing on their %ebsites 7 Organi(ations can provide order status information through more modern modes such as emails / sms alerts .
.demonstrations 2! . roduct installation( commissioning & technical snags 7 Several technical products need supplier to provide after"sales service such as installation . Customer Ser ice 'hases ( )lements """ ost!Transaction phase .. Customer education & training 7 In case of technicall comple& products) it is necessar to educate .train customers 7 Implemented through product manuals) training %or$shops ..commissioning) servicing product brea$"do%ns / failures during %arrant periods 7 Implemented through a separate set"up for after"sales departments / teams .
ecti es o" Customer Ser ice • Objectives of customer service are . Creating competitive value b delivering Seven R . 4elivering <==> perfect orders .*+.alue to customers • ! percentage of occasions on %hich customer/s re5uirements are met in full • Is a customer order measure for logistical 5ualit ) %hich in turn indicates abilit to provide customer service • Is a customer order %hich is fulfilled in all respects vi( time) place) 5uantit ) fault free installation and 2# documentation 'er"ect *rder .
Represents ideal performance . 'er"ect *rder . #eets the follo%ing standards 7 4elivered complete? all items delivered in the 5uantities re5uested 7 4elivered on time) using the customer@s definition of on"time deliver 7 Complete and accurate documentation 1including pac$ing slips) bills of lading) and invoices2 to support the order 7 4elivered in perfect condition and in the correct configuration to be used b the customer / faultlessl installed 2$ ....
.FH the li$elihood that a perfect order %as achieved during the period under revie% %as onl I=8J> 2% ...then the percentage achievement on each element is multiplied together • e8g8 if the actual performance across all orders for <A months is as belo% On"time In"full B C=> B D=> Error"free B E=> !ctual perfect order achievementF C=> G D=> G E=> F *+". 'er"ect *rder • Perfect order as a percentage is usuall measured across all customers over a period of time • Can also be measured at individual customer level or for customer segment or for individual emplo ee or for distribution center or countr • ! common measure of perfect order is )on!time( in!%ull and error!%ree) • To calculate the actual service level using the perfect order concept re5uires performance on each element to be monitored .
Right lace . Right roduct .Se en . Right Condition • ! misstep in an of the above can result in customer dissatisfaction • Competitive advantage can be gained b creating an organi(ation that routinel satisfies ERs • To provide higher levels of customer service) organi(ations see$ to fulfill ERs through the 6 phases of customer service 3& .uantity . Right Cost . Right Customer . Right . Right Time .-ule • States that the follo%ing seven factors must all be satisfied to create the perfect order .
ision . Re%ard . !ssessment of Customer :eeds .Recognition 31 .Customer Ser ice Strateg. Customer Service . !ccountabilit . 'iring the Right Emplo ees . Training . • 'aving a %ell thought out and planned customer service strateg is critical to the development of a strong service culture • Organi(ations need to incorporate customer service into their business goals) and into emplo ee goals to help the organi(ation reach their corporate objectives • Steps to developing a customer service strateg . Customer Service 0oals .
. Customer Service /ision 7 Communicating the customer service vision to emplo ees 7 Emplo ees need to understand %hat the vision and goal for customer service is and understand their responsibilit to help achieve that vision .hat a customer %ants toda %ill be ver different from %hat the customer %ants a ear or I ears later 32 . Customer Ser ice Strateg.. . Assessment o% Customer 0eeds 7 In order to meet the needs of their customers) organi(ations/ must have a good understanding of customer needs and e&pectations 7 !n assessment is done b soliciting customer feedbac$ through customer focus groups) satisfaction surve s) or customer comment cards) and developing a comprehensive plan to meet and e&ceed the customer needs 7 Organi(ations must $eep in mind that customer needs and e&pectations $eep changing " ..
.... 1iring the Right 2mployees 7 Screening emplo ees and ensuring that the possess the disposition and s$ill set to help support a strong customer service environment is important 7 S$ills can be taught but attitude and personalit cannot . Customer Ser ice Strateg. Customer Service 3oals 7 !fter customer needs and e&pectations are identified and customer satisfaction is measured) ne&t step is to create goals for achieving customer satisfaction 7 Emplo ees need to understand %hat the target is so the can help the organi(ation reach their corporate objectives 33 .
Customer Ser ice Strateg. Training 7 Emplo ees must be trained regularl to ensure customer services are in $eeping %ith the organi(ations/ standards . Accountability 7 Emplo ees need to be held accountable for achieving customer satisfaction goals 7 This is part of a comprehensive performance management s stem and should be culturall e&pected 7 Emplo ees should have a good understanding of ho% their service to the customer affects the organi(ation@s overall performance 34 .re5uirements 7 #uch of the training should be practical teaching for ho% the organi(ation %ould li$e the emplo ee to behave in ever situation) ho% to respond to customer complaints) ho% to be responsive to customers) ho% to meet customer needs) being empo%ered to perform service recover ) ho% to ans%er the phone and customer service standards ... ..
.. .. Customer Ser ice Strateg. Reward and Recognition 7 There should be a %ell thought out s stem for ac$no%ledging and re%arding emplo ees for good customer service 7 Emplo ees need positive reinforcement %hen the demonstrate the desired behaviors of a strong customer service culture • 'aving a strong vision and strateg for customer service is a critical component to the success of an organi(ation • Organi(ations need to identif %ho their customers are) %hat the %ant and develop strategies to achieve those customer re5uirements • ! strong customer service strateg is %hat separates the successful organi(ations from the rest 35 .
Customer Ser ice /udit • !ssignment 3! .
Suppl Chain #anagement .Perfect Order • Elements of *ogistics . #artin Christopher 3# .ishal #ehta .Suppl Chain #anagement .$4ef$!-hlFen-eiFbQjKTbAN4sG#rRe*6*4c4%-saFG-oiFboo$Kresult-ctFresult -resnumFN-vedF=CERRN!E%+RSvFonepage-5-fFfalse Customer Service Strateg • httpB//thethrivingsmallbusiness8com/articles/E"steps"to"creating"a"customer"service" strateg / • httpB//%%%8aberdeenshire8gov8u$/about/customerservice/CustomerServiceStrateg 8pdf Objectives of Customer Service .-e"erences • httpB//en8%i$ipedia8org/%i$i/SamK. .#ihir #ehta • *ogistics .alton Seven R Rule • httpB//boo$s8google8com/boo$sLidFDM#N%9Ks+c=C-pgFP!6ID-lpgFP!6ID-d5FEOr >AEsOofOcustomerOservice-sourceFbl-otsFpPpCpc4NbP-sigFD!s6gTf(cEC5j$:R" b(5.
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