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Chapter 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 .

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Chapter 4 learning objectives l.jpg
Chapter 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

Logistics Customer Service

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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…

Logistics Customer Service

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Customer 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.

Logistics Customer Service

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Elements of customer service

Logistics Customer Service

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  • 時間性(Time)

  • 可靠性(dependability)

  • 聯繫性(communication)

  • 便利性(convenience)

Logistics Customer Service

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  • 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

Logistics Customer Service

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  • 前置時間

  • 安全運送

  • 正確的訂貨量

Logistics Customer Service

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  • 賣方傳遞物流服務資訊給顧客

  • 顧客查詢有關之物流資訊

Logistics Customer Service

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  • 運送方式

  • 運送時間

  • 貨物的包裝

  • 運送路線

Logistics Customer Service

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  • 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

Logistics Customer Service

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Relative importance of service elements

  • Table 4-1 customer service variables ranked by order of importance for office systems and furniture industry vs. plastics industry.

Logistics Customer Service

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Figure 4-2, common customer service complaints.

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

Logistics Customer Service

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Order 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 transmission

  • order processing and assembly

  • stock availability (see figure 4-4)

  • delivery time

Logistics Customer Service

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Components of a customer order cycle

Logistics Customer Service

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Adjustments to the order cycle time

1.order processing priorities

2.order condition standards

Ex:standards set for package design, procedures for returning and replacingincorrect or damaged goods.

3.order constraints

Ex: minimum order size, precise transaction schedule

Logistics Customer Service

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Importance of logistics customer service (I)

  • Service effects on sales

    • [Krenn and Shycon]: distribution, 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 4-5Penalties for customer service failures imposed by purchasing agents against suppliers

Logistics Customer Service

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Importance of logistics customer 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.

Logistics Customer Service

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Defining 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

Logistics Customer Service

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General relationship of sales to customer service

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.

Logistics Customer Service

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Modeling the sales-service relationship

1.Two-point method

First setting logistics customer service at a high level, then the level is reduced to a low level.

2.Before-after experiments

Current service level serves as the “before” data point only the “after” data point is then needed.


Set up a laboratory simulation, or gaming situation.

4.Buyer surveys

Most popular method.

Mail questionnaires and personal interviews.

Logistics Customer Service

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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.

Logistics Customer Service

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Service as a loss function




Logistics Customer Service

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Service 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

Logistics Customer Service

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Service contingencies

  • System breakdown

  • Product recall

Logistics Customer Service

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Nature of System Breakdown

  • 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.

Logistics Customer Service

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Product 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 identification card at the point of sale

  • Designing the retromovement channel

Logistics Customer Service

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product characteristics

customer characteristics

Middleman characteristics


Nature of the defect

market coverage

recall type

Remedial program required

Current distribution system

Financial capabilities of the company

Consideration Factors of Retromovement Channel Design

Logistics Customer Service