Logistics Customer Service 1 Chapter 4 Learning Objectives Define the meaning of customer service Identify the important elements of service Determine

Logistics Customer Service 1

Chapter 4 Learning ObjectivesChapter 4 Learning Objectives

• Define the meaning of customer service

• Identify the important elements of service

• Determine the relationship between sales and the level of service

• Plan for service contingencies


Customer service Customer service • From a logistics perspective, customer service is

the outcome of all logistics activities or supply chain processes.

• [kyj]: Customer service, when utilized effectively, is a prime variable that can have a significant impact on creating demand and retaining customer loyalty.

• Order entry and ends with delivery of product to customers.

• Equipment service maintenance other technical support.

• [Heskett]: The speed and dependability with which items ordered can be made available…


Customer service elementsCustomer service elements

• Corporate-wide perspective: 4 Ps —Product, Price, Promotion, and Place

• National Council of Physical Distribution Management– Pretransaction elements.– Transaction elements : affect delivery times,

accuracy of order filling, condition of goods on receipt and stock availability

– Post-transaction elements. – See figure 4-1.


Elements of customer service


顧客服務的要素顧客服務的要素

• 時間性 (Time)• 可靠性 (dependability)• 聯繫性 (communication)• 便利性 (convenience)


顧客服務之時間性顧客服務之時間性

• 訂單傳送時間• 訂單處理時間• 訂貨準備時間• 訂貨裝運時間或貨物運輸時間


顧客服務之可靠性顧客服務之可靠性

• 前置時間• 安全運送• 正確的訂貨量


顧客服務之聯繫性顧客服務之聯繫性

• 賣方傳遞物流服務資訊給顧客• 顧客查詢有關之物流資訊


顧客服務之便利性顧客服務之便利性 (( 彈性彈性 ))

• 運送方式• 運送時間• 貨物的包裝• 運送路線


顧客服務標準之衡量顧客服務標準之衡量• 時間—迅速的運送能力• 訂貨的可靠性—正確供應率• 安全—損毀率


Relative importance of service elementsRelative importance of service elements Table 4-1 customer service variables

ranked by order of importance for office systems and furniture industry vs. plastics industry.


Figure 4-2, common customer service complaints.

Table 4-2, ranking of six physical distribution service elements by product type.

Late delivery 44%

Product or quality mistakes

31%

Damaged goods 12%

Frequently cut items

6%

Other 7%

Product Type

Major Capital

Minor Capital

Materials Component Parts

Supplies

In-stock performance 2 1 3 3 1

Lead time 3 3 2 2 3

Consistency of delivery 1 2 1 1 2

Order progress information

4 5 5 5 5

Protective packaging 6 6 6 6 6

Cooperation in handling shipping problems

5 4 4 4 4


Order cycle timeOrder cycle time

• The elapsed time between the time a customer order, purchase order, or service request is placed and time it is received by the customer.

be composed of several time elements : order transmissionorder processing and assemblystock availability (see figure 4-4)delivery time


Components of a customer order cycle


Adjustments to the order cycle timeAdjustments to the order cycle time

1.order processing priorities2.order condition standardsEx:standards set for package design, procedures for returning and replacing incorrect or damaged goods.3.order constraintsEx: minimum order size, precise transaction schedule


Importance of logistics customer service (I)Importance of logistics customer service (I)

Service effects on sales– [Krenn and Shycon]: distrib

ution, when it provides the proper levels of service to meet customer needs, can lead directly to increased sales, increased market share, and ultimately to increased profit contribution and growth.

– [Baritz and Zissman]: customer can perceive service differences among their “best” and their “average” suppliers. Figure 4-5 Penalties for customer

service failures imposed by purchasing agents against suppliers

Reduced the volume of business

29%

Called in salesman or manager

26%

Stopped all purchases with supplier

18%

Discontinued items 16%

Refused to purchase new items

9%

Refused to support promotion

2%


Importance of logistics customer Importance of logistics customer service (II)service (II)

Service effects on customer patronage[Ibid]: 65 percent of a firm’s

business comes from its present customers.

[Bender]: On the average it is approximately six times more expensive to develop a new customer than it is to keep a current customer.


Defining a sales-service relationshipDefining a sales-service relationship

• See figure 4-6, indicates how sales are likely to change when service is improved above that offered by competing supplies


3 stages: 1.threshold : reach the threshed, further service improvement relative to competition can show good sales stimulation.2.diminishing returns: in this region that most firms operate their logistics system.3.decline : that service improvement can be carried too for, with resulting decline in sales.

General relationship of sales to customer service


Modeling the sales-service Modeling the sales-service relationshiprelationship

1.Two-point methodFirst setting logistics customer service at a high level, then the level is reduced to a low level.2.Before-after experimentsCurrent service level serves as the “before” data point only the “after” data point is then needed.3.Game-playingSet up a laboratory simulation, or gaming situation.4.Buyer surveysMost popular method. Mail questionnaires and personal interviews.


Cost vs. Service Cost vs. Service Once the sales-service relationship is known, it is the possible to match costs with service .See figure 4-8.This maximum profit point typically occurs between the extremes of low and high service levels.


Service as a loss function

望目特性： L=k(y-m)2 望小特性： L=ky2

望大特性： L=k(1/y)2


Service as a constraintService as a constraint• Predetermined a customer

service level which base on the competitors, the opinions of salespersons, and tradition.

• Take a sensitivity analysis to find the minimum-cost.

• See table 4-3


Service contingenciesService contingencies

• System breakdown• Product recall


Nature of System Nature of System BreakdownBreakdown

• The probability of occurrence is considered lower than for events included in the regular planning process.

• The actual occurrence of such an event would cause serious damage, especially if not dealt with quickly.

• It deals with a subject about which the company can plan ahead to deal with swiftly if the event occurs.


Product RecallProduct Recall• Chairing the task force committee for recall• Tracing the product

– Coding products by manufacturing location– Using the warranty card information– Requires all customers to fill out an identificatio

n card at the point of sale• Designing the retromovement channel


Consideration Factors of RetromoveConsideration Factors of Retromovement Channel Designment Channel Design

• product characteristics

• customer characteristics

• Middleman characteristics

• Company• Nature of the

defect• market coverage

• recall type• Remedial

program required

• Current distribution system

• Financial capabilities of the company

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Logistics Customer Service 1 Chapter 4 Learning Objectives Define the meaning of customer service Identify the important elements of service Determine