Customer service in logistics

GLOBAL LOGISTIC MANAGEMENT LECTURE 3: CUSTOMER SERVICE IN LOGISTICS Agenda 1 Definition of Logistics Customer Service 2 Marketing and logistics customer service trade-off model 3 Elements of Logistics Customer Service 4 Strategies for Logistics Customer Service:  Reactive techniques  Proactive techniques 5 The Service Quality Model 1 Definition of Logistics Customer Service Logistic Customer Service is a process which takes place between buyer, seller and third party. The process results in a value added to the product or service exchanged. The value added is shared to all parties involve in the transaction Thus, Customer service is a process for providing significant value-added benefits to the supply chain in a cost effective way. 2 Marketing and logistics customer service trade-off model 2 Marketing and logistics customer service trade-off model Marketing objectives: allocate resources to the marketing mix to maximize the long run profitability of the firm. Logistics objectives: minimize total costs given the customer service objective where: Total cost= transportation cost+ warehousing cost+ Order-processing and information cost+ Lot quantity costs+ Inventory carrying costs. 3 Elements of Logistics Customer Service Pre-transaction elements Transaction elements Post-transaction elements Pre-transaction elements Advice on non-availability Quality of sales representatives Regular calls by sales reps Monitors customer stock levels Consult on new product/package development Reviews product depth and breadth regularly Communicates target delivery dates Transaction elements Ordering convenience Acknowledgement of order Credit terms offered Handling of queries Frequency of delivery Order cycle time Order cycle time reliability On-time deliveries Shipment delay Orders filled completely Order tracing capability Back-order percentage Availability Product substitutes Post-transaction elements Accuracy of invoices Returns Damages Easy to read “use by date” on packaging Quality of packaging for in-store display 4 Strategies for Logistics Customer Service Pre-order (Pre-transaction): Availability, Appropriate Order Cycle Time (OCT), Consistent OCT. Order service and quality (Transaction): Accurate invoices, on-time delivery, complete orders, product arrived undamaged, accurate orders, consistent product quality, product arrive to specialization 4 Strategies for Logistics Customer Service Relationship service (Post- transaction): After sale support, delivery time, helpful Customer Service Relationship, Customized services. Relationship Quality (Pos-transaction): Trust, Commitment, Integrity Global satisfaction (The outcome): Overall supplier quality, feelings toward supplier, future purchase intensions Customer service strategy process Firm has 2 techniques: Proactive and Reactive Proactive: to satisfy a customer’s needs. Possible techniques include service quality or “gaps” model, SCOR model or bench-making. Reactive: to a service failure. Possible techniques include complaint analysis, Critical incident technique. 5 The Service Quality Model or Gap Model