unit 4 cs

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.
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 Andy’s 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 1year warranty.”, how should the firm deal with the problem?
Set CS priorities
profitability
5% 15%
80% 20% 50% 30%
A
B
C
% of Product/customers
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.
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
Levels of CS
The trade-off between level of CS and costs
Cost of service
10
5.5
3
2.5
70
80
90
100
Service level (%)
The logistics implication of CS
One major measurement is DIFOT – delivery in full on time.
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
B
review C A B C CUSTOMERS
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%
Components of CS
Pre-transaction elements
1. Written CS policy; 2. organization structure
Transaction elements
1. Order cycle time; 2. order fill rate 3. Inventory availability; 4. order status information
Customer service
The role of CS is to provide “time & space utility” in the transfer of goods and services between buyer and seller. I.e., there is no value in the product or service until it is in the hands of customers or consumers. Logistics is to make products or services “available”. Supply chain thinking is strengthening the links between vendors and their customers.
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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.
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%
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 and Servicedriven Logistics
What is customer service? Components of customer service Service levels vs costs Service-driven logistics system Set CS priorities
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
Corresponding logistics practice
80/20 rule provides a basis for inventory control product category stock availability A 99% B 97% C 90%
80/20 Rule
Key products & key accounts (protect) A PRODUCTS develop develop maintain



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
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