3.

CUSTOMER SERVICE KEY ELEMENT OF LOGISTICS

INTRODUCTION

Good customer service ·is the essence of logistics and supply chain management. The
logistics activities start with receiving an order from customer and ends with satisfaction
of consumer needs and wants. The efficiency and effectiveness of logistics is determined
by its ability to provide right product at the right time, right place, to right customer and
at right price.

The present chapter is an attempt to study the relationship between logistics and
customer service and how it helps to provide better customer service and gain competitive
advantage.

MEANING AND DEFINITION 0F CUSTOMER SERVICE

Customer service is a very wide term generally used to describe the assistance or support
provided to the customer before, after buying the product, and during use of the product.
Customer support or assistance helps customers to make a right decision to buy, to
understand how to use product and have trouble free service from the product.
The term 'customer service' is defined by different authors in different ways some of
the important definitions are given below.
1. Shep Hyken, Customer Service expert, "customer service is the act of
taking care of the customer's needs, by providing and delivering
professional, helpful, high quality service and assistance before, during
and after the customer's requirements are met."
2. "Customer service refers specifically to the chain of sales-satisfying
activities, which usually begins with order entry and ends with delivery
of product to customers, in some cases continuing on as equipment
service or maintenance or other technical support.”

NATURE FEATURES/ CHARACTERISTICS ' OF CUSTOMER SERVICE

Analysis of the above definitions shows the following nature of customer service.
1. Customer service is an inseparable and essential part of business.
Private/public, small/big profit or service organisations provide customer service.
2. Customer service is an important element of logistics, designed and executed
to gain competitive advantage over competitors.
3. A good customer service is essential to retain existing, loyal customers and attract
prospective consumers.
4. A sound and trusted customer service is the foundation for healthy and long-term
customer relationship between the firm and customers.
5. Customer service (good or bad) is a good indicator of effectiveness of logistics
system i.e., how effective and efficient the logistics system moves product/ service
to end-user and creates time and place utility.
 6. From logistics point of view, the importance of customer services covers not only
transfer of goods but also helping the consumer to make the right decision by
supplying information, opinions and value-added services.
7. Customer services is a combined result of customer-oriented marketing and
integrated logistics and supply chain management. Any imbalance or disturbance
at the functioning of any of these elements has direct impact on quality of customer
services.

OBJECTIVES/ IMPORT ANCE / BENEFITS OF CUSTOMER SERVICE

The success of marketing and logistics management is measured in terms of 'How far it
has been successful m meeting consumer demand and making him a happy
consumer through its efficient customer service management'. A happy and
satisfied customer helps to increase revenue builds a good reputation, improves employee
morale, develops brand loyalty and provides competitive advantage.

Importance/ objectives of customer service are explained as under.

1. Increased Sales and Revenue: It is observed that efficient customer service do
affect sales along with marketing mix. Similarly, customer respond positively to
prompt delivery of goods, quick redressal grievance and after sales support. In
short, a perfect combination marketing mix supported by proper customer service
leads to customer satisfaction and increased sales and revenue. A happy and
satisfied customer go for repeat orders and induce others to buy.
2. Customer Loyalty and Trust: Customer loyalty, and retention is a biggest
challenge in a market dominated by product variety and price incentives. For this,
it is necessary to identify customer needs plan logistics activities like product
improvement, quick delivery, goodwill gestures (like sending greeting cards on
birthday), value added services like lifetime free repairing services, etc.
3. Competitive Advantage: It refers to competitive advantage company gains by
providing efficient and quality customer service before, during and after sales to
customers. Customer services is the only distinguishing factor which provides on
edge over competitor’s marketing strategies and mix. Efficient customer service
support provides a competitive advantage and assist customers in differentiating
the quality of product and services offered by the company and its competitors.
4. Customer Retention: Retention of existing customers and certain of new
buyers is essential for survival and growth of business, Customers retention
develops brand loyally, repeat purchase and long-term relationship and its better
alternative for creating a new customer. Therefore, many companies adopt
‘consumer centric’ approach and long-term ‘Customer Relationship
Management’ for providing better customer services and satisfaction.
5. Redressal of Complaints: Good customer services in necessary to solve
consumer’s current problems and prevent repeat or recurrence of problems in
future. This is possible by providing regular counselling and training to consumers.
Customers service is essential to solve problems. Whether the products is new or
old it will always have some problems. It is necessary to get details of the problem
and provide a solution quickly either by repairing or replacing the product.
6. Cost of Service: Customer service should not be a costly matter, Therefore,
priority should be given to repairs over replacement. This is necessary from the
firm’s point of view to save on service cost.
 7. Add on Service: Customer always prefer to by accessories, which improve the
performance of the product. For example, camera accessories like flashgun, tripod,
etc. are very useful for improving performance of a camera. Therefor along-with
main product, related accessorise should be provided at responsible rates which is
also considered as part of customer service.
8. Feedback: A good customer service helps the employees to collect feedback from
customers about product performance, design and drawback from customers
about the company performance. This feedback is like evaluation of customer
service3 provided by the company. It helps to rectify errors and plan for better
quality of customer service.

ELEMENTS/ COMPONENTS OF CUSTOMER SERVICE

On the basis of time of providing service the elements or activities of customer service
are divided into three parts- (a) Pre-transaction services (b) Transaction
elements/service and (c) Post transaction service. From marketing perspective, it
is termed as "before", "during" and "after sales". These components of customer service
are explained below.

ELEMENT / COMPONENETS OF CUSTOMER SERVICE

Pre-Transaction Transaction Post-Transaction

 Writing policy  Product  Other Status

statement Availability Information
 Organisation  Order  Installation
structure convenience  Customer
 System  Product Complaints
Flexibility Substitute  Customer
 Design the  Order Fulfilment Training
contents Reliability  Product Loaning
 Customer  Delivery or Replacement
Education Consistency during Repairs
 Order information
to Customer
 Shipping
Instruction
 Order
postponement
1. PRE-TRANSACTION SERVICE

This place is more related to framing customer service related policy guidelines, defining
service standards in qualitative and quantitative terms. Services related guidelines are
very useful to operating people to decide the limits of customer service and go to given a
clear understanding of what in include in customer service to customer.
(i) Written Policy Statement: A written customer service policy statement is a
promise or commitment by the company to fulfil, whatever is stated in writing.
For example, a refrigerator company extends 10 years guarantee on
compressor. Companies prefer to handover a written copy of terms of customer
services to customer so that he knows what to expect from the firm.
(ii) Organization Structure: For effective implementation of service policy
guidelines, the company establishes a separate department exclusively tor
custon1er service, establish senior-subordinate structure, delegate authority
and allocate responsibility. Similarly, customers are informed about the name,
designation and contact number of the person for any product related enquiry.
(iii) System Flexibility: It means ability of the firm to adjust according to each
customer's different needs and expectations. The principle of one size-fits-
all is not applicable to customer service because every customer is
unique. Every customer respond or react differently to a given situation,
therefore, while interacting with customer’s utmost care is essential. Flexibility
also means the ability of the firm to manage unexpected situations like natural
calamities, material shortage, fire, etc. successfully.
(iv) Designing the Contents of Customer Service: What should be included in
service terms depends on (a) customer expectations (b) industry standards and
(c) service standards to be provided by the company. For example, capital
goods manufacturing company is required to provide lifetime product support
services.
(v) Customer Education: The purpose of customer education is to make aware
and educate customers about the product use, maintenance of product,
precautions, safety and security measures. Now, many companies provide
operating instructions manual and live demonstration on YouTube.

2. DURING TRANSACTION ELEMENTS

This phase indicates the regular and routine activities performed at the, time of buying
and delivery of goods.
(i) Product Availability: The customer should find out whether the product to
be ordered is available for delivery or out of stock. When the product is out of
stock, the firm should offer a substitute, or make arrangement to ship the
product from another location or expedite the delivery as soon as the product
is available.
(ii) Order Convenience: It means the order placement procedure should be as
simple as possible and the customer should feel at ease to place an order. For
this it is advisable to avoid too much of paper work, confusing formats, use of
technical terms, compliance to lengthy procedures, rigid payment terms, poor
communication network and many more. These problems lead to consumer
dissatisfaction and order cancellation.
(iii) Product Substitute: Sometimes the product ordered is not available for
delivery due to manufacturing or technical issues. At this stage, the seller may
 offer a substitute product of similar or better quality in different sizes or
different brands in order to keep better relationship with client.
(iv) Order Fulfilment Reliability: It means the capacity to execute the order
within agreed time limit with respect to quality and quantity of the materials/
goods ordered. For industrial buyers, production or distribution schedule is
affected if goods are not delivered on time.
(v) Order Cycle: Reliability of order fulfilment and order cycle is the time gap
between receipt or order its delivery to consumers. As far as possible efforts
should be made to keep order cycle time low so that goods can be delivered
on time to customer.
(vi) Delivery Consistency: It means delivery of goods be made as per agreed
time table. For example, an order is Placed to supply 100 computers within 20
days from receipt of the order suppose out of 100, 40 are delivered on 18th
day, 30 on 24th day and remaining 30 on 35th day of order. Here the delivery is
not made as agreed upon. Such irregular delivery affects the buyer’s future
plan and spoils suppliers image.
(vii) Order Information to Customer: Customers should have access to
information about their purchase orders like inventory status, data of shipping,
expected date of delivery, etc.
(viii) Shipping Instructions: Certain type of hazardous chemicals, glassware,
delicate and costly equipment’s require special handling. These items need
special care and separate shipping arrangement prevent losses.
(ix) Order Postponement: Sometimes, the customer may ask to reschedule the
delivery of whole or part of the order in phased manner or the order is placed
for delivery on a certain future date. These instructions should be adhered to
as a part of value-added customer service.

3. POST-TRANSACTION ELEMENTS
These elements/phases occur after the delivery of goods to consumer has been made.
Post transaction elements include:
(i) Order Status Information: It is a value added service to provide feedback
on the status of goods shipped/transported. In case of e-commerce business,
it helps the customer to track the movement of his goods ordered, find out
expected day, date and time of delivery so that arrangements can be made to
deliver goods on right time.
(ii) Installation: This is applicable in case of capital goods equipment’s Even
consumer goods like T.V., refrigerator, air-conditioner etc. needs installation by
the supplier. Further, the buyer is informed about the terms and conditions of
installations, conditions and warranty, rules regarding repairs and
replacement.
(iii) Customer Complaints: Delivery of goods at consumer's doorstep is not an
end in itself. There are possibilities like goods damaged/ spoiled during transit,
delivery of wrong consignment, product performance is not as per
specifications and many more. Complaint from customers must be attended as
per terms and conditions. A company should repair or replaced a defective
product at the earliest to avoid inconvenience to consumer. For return of goods,
reverse logistic is a better solution and every assistance be provided to
consumer for return of goods.
 (iv) Customer Training: This is an important element in the post-transaction
phase. The seller is required to educate and provide operating training to
buyers about the product usage, safety measures, etc. so that desired level of
operational efficiency is attained. Training can be provided through, operating
manual, practical demonstration, short-term training, hands-on experience,
etc.
(v) Product Loaning Replacement: Suppose, a computer requires 10 days to
repair. During the period of repair, the buyer's work is likely to be affected and
would cause inconvenience. Under such situation, the supplier provides a
computer to the buyer on loan basis (may be free of cost) so that the buyer's
work is not disturbed till the original computer is returned back after due
repairs. Product loaning is a value added service and goodwill gesture for better
customer relationship management.

LEVEL OF CUSTOMER SERVICES

The levels of customer services are an attempt or a way to define the term ‘customer
services’. The levels of customer services are defined on the basis of attitude
and a approach of a firm towards providing customer. For example, some
companies treat it as a compulsory task, extension of selling activities, burden on cost,
and many professionally managed organisations consider customer service as a
philosophy of doing business.

On the basis of attitude, degree of involvement and awareness, customer service can be
viewed in three principal ways as under.
1. Customer Service as an Activity: This is the first level and can also be called
as operating task. This level includes all those activities which a firm is supposed
to perform to satisfy the customer needs. The activities of first level of customer
service incorporate most of the elements of customer service i.e. (a) Pre-
transaction phase, (b) Transaction phase and (c) Post transaction phase like receipt
and processing of an order, billing and invoicing, dispatching, attending to
complaints, reverse logistics, customer e Customer service is considered as any
other activity (like marketing) and an integral part of business activity.
2. Customer Service as Performance Measures: This is the second level of
customer service' and can be also called as administrative measures. This level
attempts to measure and evaluate customer service in quantitative terms like the
number of complaints received and resolved during a specified time i.e., say daily
or weekly, number of orders received and how many were delivered on time,
number of orders could not be processed on time, delay in delivery schedule. This
level is one step ahead of 1st activity level and works more likely analysing the
performance, finding out shortcomings and taking remedial measures to enhance
consumer satisfaction.
3. Customer Service as a Philosophy: This is the highest level of customer service
which takes the earlier two levels to a high degree of customer centric or customer
first based management mission and philosophy of doing business. It considers
customer service as a way of doing business and a way to business growth. It
shows the commitment of an organisation to provide consumer satisfaction
through quality customer service. An attempt is also made to inculcate the
 philosophy of superior customer service in mission and goals of the entire
organisation. This level broadens the role and importance of customer service in a
firm and adds to efficiency and success of the firm.

7 RIGHTS OF CUSTOMER SERVICE

The 7R's are like guideline to supply chain managers to provide quality of customer
service. It provides an answer to a question "What constitutes good consumer
service?" or "How to make the customer service more effective?" It is to be noted
that consumer rights and 7R’s of customer service are not similar. The Consumer
Protections Act has laid down certain rights of consumers like (a) Right to
Information (b) Right to choose, (c) Right to be Heard (d) Right to Seek
Redressal and many others. On the others hand ‘Rights’ of customer service
are like logistics guidelines to suppliers to make customer service more
effective and efficient.

The Chartered Institute of Logistics and Transport Management (UK) defines

7R's of customer service as "Grating the right product, in the right quantity, in the right
conditions, at the right place at the right time, to the right customer at the price.” A
brief explanation of each right or guidelines is explained below.

1. Right Product: It means product supplied must meet consumer needs and wants.
While designing the product, it is necessary to consider potential logistics issues
that may arise during transportation and warehousing. Product related issues like
weight, height, size, shape, packaging, fragility, distance, mode of transport,
distance between buyer and supplier, etc. requires due consideration. A product
designed after considering logistics requirements brings standardisation in
packaging, warehousing, product handling and transportation.
2. Right Quantity: The object of 'right quantity' states that the product must be
made available in required quantity to consumer as and when an order is placed.
For this purpose adequate stock of goods should be made available with retailer,
wholesaler and with the firm.
3. Right Condition: This refers to safety and security factor in transportation. For
example, a product like ice-cream requires special type of transport system
(refrigerated -trucks) to prevent it fron1 melting and spoilage. Therefore, whether
it is ice-cream or any other product, delivering the product in right condition is
fundamental to better customer service.
4. Right Place: This element says that it is the responsibility of the supplier to deliver
the product to the right destination. For example, a courier service operator is
responsible to deliver a parcel or letter as per the address mentioned.
5. Right Cost / Price: This element states that product should be transported or
shipped at the most economical way. Therefore, it is necessary to find out shorter
routes, economical means of transport, minimum and maximum workload
advantages. It helps the company to earn profit and customer gets value for
money.
6. Right Time: It refers to time of delivery indicating thereby, that delivery of goods
must be made on time as specified in delivery schedule. Organisations which
adhere to delivery on time have better competitive advantage.
 7. Right Customer: This element believes that the right product reaches the right
customer. For this, market research would help to identify potential customers and
accordingly plan logistics activities. For example, Indian customers prefer to buy in
small quantity at affordable price. That is why, washing powder, shampoos are
sold in small sachet and pouches.

STRATEGIES TO IMPROVE CUSTOMER SERVICE

Excellent customer satisfaction and business success. This is because a happy and
satisfied customer helps to build brand image, loyally, credibility of the firm and more
Profits. Below mentioned are guidelines and strategies that are very useful to improve
customer services standards.
1. Customer Feedback: A true and reliable feedback from customers about the
company's product, services offered, etc. provides an insight knowledge about the
good or bad experiences of the customer with the firm. This helps to redefine
priorities and take measures to improve customer services.
2. Build a Strong Customer Service Team: A team of dedicated, skilled and
experienced personnel is essential to improve customer service performance.
People with right qualification and skill in communication should be appointed.
Further, training should be provided on topics like how to deal with consumers and
handle consumer complaints.
3. Good Communication Skills: Persons handling or in charge of customer service
should possess good communication skill, knowledge of local language and positive
attitude. In addition, the company's employee should have complete knowledge
about the company, product and services. A feedback from customers about the
performance and behaviour of employee helps to initiate remedial actions against
defaulters and rewarding meritorious employee.
4. Recognise Good Work: The performance of customers services term should be
evaluated on regular basis and the top performers be give rewards an incentive to
motivate them to achieve customer service goals.
5. Use Customer Relationship Management Software: For the managing
interactions with a customer, a company can use technology and software. Such
software’s can be used to co-ordinate. people from different departments (like
production, finance) and customers’ service. This helps to avoid delay in
communication and decision can be taken quickly.
6. B a Good Listner: A good listner is a good problem solver. Active involvement
and listening to consumer develop good relations. The customer feels at case when
the employee listens carefully and with interest
7. Use Positive and Encouraging Language: A positive and encouraging
language reduces stress and tension from the situation. A positive attitude helps
to cool down an angry customer and helps to resolve issues amicably.
8. Understand Customer: understanding customer needs and expectations is a
pre-condition for successful customer service. A research into customer social and
economic background helps to understand consumer’s perceptions an expectation
about the product. Such information can be used to study how best the existing
product/ service can be most suited to customer needs.
9. Delight Your Customer: It means giving surprises to customers by something
that was not anticipated or expected. For example, pre-monsoon free check-up of
 cars, 10% discount on labour and material charges, free road side assistance, etc.
delights the customer and creates a positive attitude towards the company.
10. Customer Oriented Services: The elements of customer service like order
processing, packing, storage, transport, delivery, billing, after sales service, etc.
should be co-ordinated and integrated into a single unit. This helps to streamline
the activities and improve customer service.

DIMENSIONS OF CUSTOMER SERVICE

Dimensions means criteria or indicators used to measure the quality of customer service.
The following dimensions are generally used to evaluate quality of customer service.
1. Time: This is an important key performance indicator usually measured with order
cycle time i.e., the average time required to fulfil customer order i.e., shorter the
time, higher the efficiency and vice-versa. A customer expects the firm to fulfil his
orders without delay. now, with the help of better inventory control and other
techniques It is possible to reduce order cycle time and lead time.
2. Dependability: Refers to reliability of service and includes consistent order cycle,
safe and complete delivery. A regular and reliable supply of materials and finished
product helps to minimise inventory level and avoid keeping safety stock.
Dependability also refer to delivering customer orders with regular consistent
supply of materials in safe conditions as per customer order specifications.
3. Communication: It includes (a) forwarding the customer order to the order filling
area, (b) actual process of collecting/ picking the item from inventory and
(c) communication with customers.

Communication with customers and internal systems is very essential to provide

most effective customer service. Two-way communication between the customer
and seller is necessary to supply details of shipment, expected date of delivery to
avoid inconvenience.
4. Convenience: Customer service should be flexible enough to meet individual
needs of customers. Convenience implies recognising the idea that the individual
requirements of customer are different. Considering the different requirements,
the seller can group customer requirements on basis of size, location, market area,
value, volume and frequency of purchase for providing quality customer service.
5. Philip Kotler also formulated five determinants of quality of service. They are:
(a) Reliability: The ability to carry out the service which promised with reliably
and accurately.
(b) Responsiveness: Willingness to help customers and provide service quickly.
(c) Guarantee: Knowledge and courtesy of employees and their ability to convey
trust and confidence.
(d)Empathy: Willingness to provide deep concern and specific service to each
customer.
(e)Tangible Material: Appearance of physical facilities, equipment, personnel,
communication materials.

VIREN SIR: COMPILATION 2022