E-Business And The Distribution Network

1. E-Business And The Distribution Network

3. IMPACT of E-Business on Customer Service • Response Time to Customers: • Product Variety • Product Availability • Customer Experience • Faster Time to Market

4. IMPACT of E-Business on Customer Service [contd…] • Order Visibility • Returnability • Direct Sales to Customers • Flexible Pricing, Product Portfolio and Promotions • Efficient Funds Transfer

5. Response Time to Customers • In selling products that cannot be downloaded, an e-business without a physical retail outlet takes longer to fulfill a customer request than a retail store. • Example: • A mutual fund prospectus or music can be downloaded from the Web. • Whereas a physical mailing of these products or even making a trip to a music store takes much longer.

6. Product Variety • More selection compared to the bricks-and-mortar store. Example: Amazon Product Availability • An e-business greatly increases the speed with which info on customer demand is disseminated throughout the Supply chain, giving rise to accurate forecasts

7. Customer Experience • Allows access to customers who cannot access a physical stores open only during business hours • surge in orders after their bricks-and-mortar store closes. • Without e-business, see people staying in and around visit you

8. Faster time to market • Dell often introduces new products earlier than its competitors' that use traditional channels. Order visibility Returnability

9. Direct Sales to Customers • Allows manufacturers to enhance revenues by bypassing intermediaries and reaching out directly to customers. • This allows collection of intermediary’s incremental revenue. • Example:Dell

10. Flexible Pricing, Product Portfolio and Promotions • An e-business, can easily alter prices by changing one entry in database linked to its Web site. • Advantage: • Pricing can be done based on current inventories and demand. • Example: • Airlines make available last minute low cost fairs…… • Analogous to vegetable market….

11. Efficient Funds Transfer • An e-business enhances revenues by speeding up collection.

12. Some probable questions What has been the impact of e-business on supply chain cost? What has been the impact of e-business on customer service? In the future, do you see the number of distributors decreasing, increasing, or staying about the same? Is e-business likely to be more beneficial in the early part or the mature part of a product’s life cycle?

13. Smile • Girl: What is the price of this dress? • Shopkeeper: Rs. 10,000/- • Girl: Aww! • Girl: ok what is the price of the pink dress? • Shopkeeper: Aww! + Aww!

14. Impact of E-Business on Cost

17. Customer Service Dimension The Customer service dimension – Customer Service and Customer Retention, Service driven logistics systems, Setting customer service priorities and service standards

18. Customer should be prime focus

19. What is Customer Service? • Customer service is the provision of service to customers • before, • during and • after a purchase.

20. Significance of Customers • No value in the product or service until it is in the hands of the customer • The importance of customer service may vary by product or service, industry and customer. • Good customer service experience = • change in entire perception a customer wrt the organization.

21. Availability- the concept • Delivery frequency • Reliability • Stock levels • Order cycle time Interaction among all these affects the process of making products & services available to whom ?

22. Argument -> Decline in Quality Customer Service • To address this argument, • many organizations have employed a variety of methods to improve their customer satisfaction levels, • and other key performance indicators (KPIs)

23. Customer Service Practices • Customer service could be examined under :

24. Pre- transaction Elements • Corporate policies or programs •  i.e. written statements of service policy, • adequacy of organizational structure and • system flexibility. Transaction Elements • Variables directly involved in physical distribution. •  Order cycle time, • Inventory availability • Order fill rate, Order status information

25. Post- transaction Elements • The post transaction elements of customer service are generally supporting of the product while in use e.g. • product tracing / warranty, • parts and repair service, • procedures for customer complaints and product replacement.

27. How dangerous is a Stock-out? • Switch in brand loyalty • Cost penalty for: • Manufacturers • Retailers • 46% of potential sales

28. The New Competitive Environment • Many companies have suffered, why? • Their focus -> traditional Marketing • Product development • Promotional activities • Price competition via reduction in logistics • Are these important? • Yes they are but not at the cost of logistics

29. Cost cutting • Low cost strategies Low cost strategies Efficient logistics = ≠ Effective logistics

30. New strategy • The impact of logistics has resulted in a focus on marketing towards… • Creation of customer franchise • Creation of consumer franchise • The above two can be enhanced or diminished based upon the efficiency of the suppliers’ logistics system.

31. Customer Service and Retention “People don’t buy products, they buy Benefits” -Theodore Levitt What do you understand from that?

32. What would you buy?A) An HP laptop B) lenovo laptop with free accessories

34. Lifetime value of a customer • The lifetime value of a customer is much greater than the profit generated from just a single deal with that customer. • A simple formula follows: Lifetime value = Average transaction value * Yearly frequency of purchase* customer life expectancy

35. Service-driven logistics systems • The role of logistics can be seen as the development of systems and the supporting co-ordination processes to ensure that customer service goals are met. • Main idea of service driven logistics systems : to meet predefined service goals.  • Ideally all logistics service systems are defined along the following lines: • Identify customers' service needs • Define customer service objectives • Design the logistics system

36. Setting service standards • We are entering the era of supply chain competition - the fundamental difference here is that the company cannot act individually but …. • must act as a supply chain entity to ensure competitiveness in the marketplace.

37. Setting customer service priorities • As the new competitive context of business continues to change, brining with it new complexities and concerns for management generally, it also has to be recognized that the impact of these changes on logistics can be considerable. • Of the many issues facing organizations today perhaps the most challenging are in the area if logistics.

38. Why people are hooked on to machines?Why can’t they stay away from their fb status updates even during a lecture? Why people are hooked on to cell phones? “The feeling that ‘no one is listening to me’ make us want to spend time with machines that seem to care about us.”  (Sherry Turkle) Connected, But ALone