supply chain management chapter Chapter02.pptx

supply chain management

1. Chapter 2 Customer service and satisfaction Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.

2. introduction Are customer service and customer satisfaction the same thing? No! Customer service is created by logistics activities and is a component of customer satisfaction. Customer satisfaction is a more expansive term encompassing all aspects of the customer interface. Customer satisfaction is directly related to the marketing concept, which consists of customer satisfaction integrated effort, and long-term profitability. Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 2

3. Definition of customer service CUSTOMER SERVICE Activities between the buyer and seller that enhance or facilitate the sale or use of the seller’s products or services [http://www.cscmp.org]. 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 [https://study.com/academy/lesson/what-is -customer-service-definition-types-role-in-marketing.html]. Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 3

4. Customer service and marketing exchanges Pre-transaction elements : all service aspects that must be completed prior to any transaction taking place Transaction elements : service aspects that occur during the transaction Post-transaction elements : all service aspects that must occur after a transaction or sales has occurred Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 4

5. Elements of customer service Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 5

6. Three components of customer satisfaction Activity or process : activities and processes that must be managed such as product delivery, reverse logistics, order processing, sourcing and procurement Performance measures : metrics that measure specific aspects of customer satisfaction (e.g., market share percentage, on-time delivery, net profit margins) Corporate philosophy : incorporates the first two perspectives and is a philosophy that treats customer satisfaction as an integral part of a firm’s total supply chain activities Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 6

7. Definition of customer satisfaction CUSTOMER SATISFACTION Customer satisfaction measures how well the expectations of a customer concerning a product or service provided by your company have been met [https://study.com /academy/lesson/what-is-customer-satisfaction-definition-examples-quiz.html]. The degree of satisfaction provided by the goods or services of a company as measured by the number of repeat customers [http://www.businessdictionary.com /definition/customer-satisfaction.html]. Customer satisfaction indicates the fulfillment that customers derive from doing business with a firm. In other words, it’s how happy the customers are with their transaction and overall experience with the company [https://www.myaccountingcourse.com /accounting-dictionary/customer-satisfaction]. Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 7

8. The importance of consistency Customers require consistent service and quality Customers can plan when service is consistent; it is more difficult to plan when service is inconsistent A major objective of supply chain management is to provide certainty to customers While consistency and speed are essential to achieving customer satisfaction, consistency is much more important than speed Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 8

9. Customer satisfaction and the scor model plan—demand/supply planning and management Balance human and physical resources of the organization and supply chain with customer service requirements and establish/communicate customer satisfaction plans and strategies for the whole supply chain. Manage business rules, supply chain performance, data collection, inventory, capital assets, transportation, planning configuration, and regulatory requirements and compliance that have a direct influence on the delivery of various service components to customers. Align customer service and satisfaction strategies with the overall financial plan of the organization. Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 9

10. Customer satisfaction and the scor model source—sourcing stocked, make-to-order, and engineer-to-order product Schedule deliveries; receive, verify, and transfer product; and authorize supplier payments to optimize service levels. Identify and select supply sources that are capable of providing consistently high levels of customer service. Manage business rules, assess supplier performance, and maintain data on customer service and satisfaction attributes. Manage inventory, capital assets, incoming product, supplier network, import/export requirements, and supplier agreements that have a direct influence on the delivery of various service components to customers. Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 10

11. Customer satisfaction and the scor model make—make-to-stock, make-to-order, and engineer-to-order production Schedule production activities, issue product, produce and test, package, stage product, and release product to deliver so that customer service requirements are met. Manage rules, performance, data, in-process products (WIP), equipment and facilities, transportation, production network, and regulatory compliance for production that have a direct influence on the delivery of various service components to customers. Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 11

12. Customer satisfaction and the scor model deliver—order, warehouse, transportation, and installation management Carry out all order management steps from processing customer inquiries and quotes to routing shipments and selecting carriers. Optimize warehouse management from receiving and picking product to load and ship product. Receive and verify product at customer site and install, if necessary. Invoice customer accurately and in a timely fashion. Manage DELIVER business rules, performance, information, finished product inventories, capital assets, transportation, product life cycle, and import/export requirements that have a direct influence on the delivery of various service components to customers. Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 12

13. Customer satisfaction and the scor model return—return of raw materials and receipt of returns of finished goods All Return Defective Product steps from source—identify product condition, disposition of product, request product return authorization, schedule product shipment, and return defective product—and deliver—authorized product return, schedule return receipts, receive product, and transfer effective product; this should be a transparent process, one that is understood by and visible to all customers. All Return Maintenance, Repair, and Overhaul product steps from source—identify product condition, disposition of product, request product return authorization, schedule product shipment, and return MRO product—and deliver—authorize product return, schedule return receipt, receive product, and transfer MRO product. All Return Excess Product steps from source—identify product condition, disposition of product, request product return authorization, schedule product shipment, and return excess product—and deliver—authorize product return, schedule return receipt, receive product, and transfer excess product; to be completed in a timely manner. Manage Return business rules, performance, data collection, return inventory, capital assets, transportation, network configuration, and regulatory requirements and compliance that have a direct influence on the delivery of various service components to customers. Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 13

14. Measures and metrics The management adage is correct: You can’t manage what you don’t measure . Companies must have defined metrics in order to determine if service and satisfaction goals and objectives are being met. The most important metrics are referred to as key performance indicators (KPIs). There are usually less than 20 KPIs that are important. Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 14

15. The perfect order The optimization of customer satisfaction through supply chain management is referred to as the perfect order A perfect order meets all of the following conditions: At the right time (100% on-time delivery) In the right quantity (100% fill rate) In the right condition and packaging (100% quality related to fulfillment) With the right documentation (increasingly electronic) Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 15

16. Strategic profit model Developed by the DuPont Company Return on net worth (RONW) is the most important financial factor and is a measure of the return on shareholders’ investment plus retained earnings RONW is impacted by three major factors: Net profit Asset turnover Financial leverage Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 16

17. Strategic profit model Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 17

18. Balanced scorecard The Balanced Scorecard consists of four components, only one of which is financial: Financial performance : traditional financial measures such as ROI, ROA, cost reduction, asset utilization, and productivity levels Internal business process : focuses on company metrics such as waste reduction, product quality, and order cycle time variability Customer service : measures that focus on customer requirements and satisfaction such as order response time, customer retention, customer profitability, and customer satisfaction ratings Education and learning : measures concerned with employees, systems and procedures Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 18

19. Why do companies lose customers? The Disconnect: Customers say it is primarily due to poor customer service Companies say it is primarily due to price and not being the lowest-cost provider Knowing which one is correct depends on the company having the right data! Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 19

20. Data versus information Non-Metric Data Nominal Ordinal Metric Data Interval Ratio Information is data that are useful Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 20

21. Product stock-outs Most of the time when a customer experiences a product stock-out, it is due to a customer service failure Collaborative planning, forecasting and replenishment (CPFR) software is used by companies to optimize customer service Knowing how customers will behave when experiencing a product stock-out is important Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 21

22. Cost-service trade-offs Activity-based costing can be useful in in capturing the actual costs related to serving customers Cost-service trade-offs can be of two types: within cost centers; and between cost centers Steps in implementing cost-service trade-offs: Establish distinct supply chain activity cost centers Allocate costs to those centers Analyze cost and service variations from alternative volume projections and/or structural alternatives Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 22

23. Customer/product action matrix Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 23

24. Gap analysis in customer satisfaction Exceeding the service requirements of customers can result in mis-allocating resources on the wrong things and lower the ROI associated with various satisfaction strategies. Underperforming on customer service requirements results in unhappy customers and can provide competitors with an opportunity to take those customers away from your firm. Matching customer requirements is the optimal approach to satisfying customers. Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 24

25. Customer relationship management (CRM) CRM is an approach to managing customer relationships and serving customers using various types of information systems technology. CRM can be applied to organizations of any size or type. Copyright © 2020 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill. 25