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Customer service
Who is customer?
In the term of logistics, “ The customer is any delivery destination”.
Taking into consideration of supply chain management customer are divided into two part internal and external.
Customer service Customer service is a process which takes
place between the buyer, seller and a third-party.
The process results in addition of value to the product of service exchanged.
The value added in exchange process might be short term in a single transaction or long term as in a contractual relationship.
Feature of Customer Service It is a strategic process for providing value
added services to the customer It keeps the customer happy and loyal. It generally start with an order entry and
ends with the delivery of goods to customers.
It brings about a competitive advantage in the marketplace, increase sales and improves profits
Reason for better logistical service
Growth in customer expectation. Freshness or date of manufacturing of
product are becoming a very important issue in most of the purchase decision.
Market have become more service centric. Customer retention. Product are unable to retain brand loyalty
in stock-out situation resulting into availability of product is a vital factor.
The Logistics (Strategic) Planning TriangleThe Logistics (Strategic) Planning Triangle
Which mode?Which carrier?Which route?Shipment size and frequency?
Where?, How many? What size?Allocation?
Strategy/Control system?How much?
Where?
Element of customer service Pre-Transaction element
Written statement of customer service policy
Order contact point Organisational structure Method of ordering Order size constraints System flexibility
Cont… Transaction element
Order cycle time Order preparation Inventory availability Delivery alternative Delivery time Delivery of complete order Condition of goods System accuracy
Cont…
Post-Transaction element
Invoicing procedure and accuracy Product warranty Return policy Customer complaints and claim
procedures
Component of Customer Service
In respect of customer as a business partners:
Strategic
Logistics
Non-logistics
Strategic component
1) Best return of investment
2) Long term association
3) Continuous improvement of quality of service.
Logistics Component
1) Availability of products2) Offer fixed replenishment cycle time3) Zero-defect delivery4) Point to point information5) Consistency in service
Non-logistics component
1) Financial support2) Credit facility3) Training programmes4) Authority power for spot decision5) Fare trade practices
Internal communication Gap
Customer service need for
Competitive advantage
Present Customer
Service level
PrevailingCustomer
Service levelIn industry
Corporate vision about customer service
Service expectationOf customer
3
1
4 2
Major Gap Minor Gap
Inventory management
Inventory is any stored resource that is used to satisfy a current or future need.
Raw materials, work-in-process, and finished goods are examples of inventory.
Inventory control means keeping track of your stock.
Knowing how much was sold and how much is left.
To know when to order. To keep records of losses and gains. To know consumption rates of high
demand and low demand.
Purpose of inventory
Smooth-out variations in operation performances.
Avoid stock out or shortage. Availability of Fund. Safeguard against price changes. Take advantage of quantity discounts.
Types of Inventory On the basis of nature of material.
Production inventory
MRO inventories
In-Process Inventories
Finished Goods Inventories
Cont…
On the basis uses of Materials
Transaction Inventory
Speculative Inventory
Precautionary Inventory
Function of inventories
Working Stock Safety Stocks Anticipation Stock Pipeline Stock
Element of Inventory cost
Procurement cost Carrying cost Stock-out cost
Procurement cost Cost of order processing. Cost of transmission of an order from
purchase department to supplier (Postage, follow up, fax).
Cost of transportation, including freight, Octroi, transit insurance, protective packaging.
Cost of invoice pricing, including checking, approval, book entries and payment.
Inventory carrying cost Rent for storage Cost of working capital Cost of insurance of goods Cost of spoilage in the quality of
goods in storage. Cost of wastages due to passes of
time and change in weather. Cost of obsolescence of goods or
depreciation.
Stock-out cost The stock-out is the economic consequence
of either an external or an internal shortage.
Internal shortage occurs when an order of a group/department within the organisation is not filled.
External shortage incurs back order cost, present profit loss due to loss of potential sale, and future sales loss due to loss of corporate image affecting future sales.
Customer Response
1) Customer says” I will be back”
2) Customer says" call me when it’s in”
3) Customer buy substitute product which yields a higher profit for seller.
4) Customer goes to competitor.
Just in Time
Just in TimeInventory is the Minimum inventorythat is necessary to keep a systemperfectly running.
Cont… A corporate system designed JIT to produce
output within the minimum lead time and at the lowest total cost by continuously identifying and eliminating all forms of corporate waste and variance.
With just in time (JIT) inventory, The exact amount of items arrive at the moment they are needed, Not a minute before OR not a minute after.
Cont…
To achieve JIT inventory, Managers should Reduce the Variability Caused by some Internal and External Factors.Most variability is caused by tolerating waste (inventory).For example –Transportation waste, Process Waste, Inventory Waste, Waste from product defects, Waiting time, Overproduction
Objective of JIT
Reduce inventory carrying cost. Produce only customization product. Production in minimum lead time. Reduction of wastage.
Function of JIT
Elimination of Waste Synchronized manufacturing Reduce inventory size Reducing the order batch size can be
a major help in reducing inventory.
Limitation of JIT
Applicable in growth to maturity phases of Product Life Cycle
standard product • standard/fixed pay-rate • problems with piece-rate scheme
Kanban System Developed at Toyota 1950s to
manage line material flows. Kanban ( Kan=card, Ban= signal ) Kanban = an authorization to
produce more inventory We thus limit the amount of inventory
in process. A card is used to signal the need for
material in a work center.
Cont… Sending a card authorizes the previous
work center to send its finished batch to the subsequent work center.
Batches are typically very small. Such a system requires tight schedules and frequent set-ups for machines.
Server only delivers components to client work station as & when needed (called/pulled).
Kanban Control System
production kanban
Material Flow
Card (signal) Flow
Bin Part AMachine
Center
Bin Part A Assembly
Line
What does look like. Kanban No.Kanban No. 5678990 5678990 part No: part No: 66789X66789X description description 16ga. Copper Wire16ga. Copper Wire units units Ft.Ft. reorder/lot qty reorder/lot qty 2020 store location store location Row 12, Bin 6Row 12, Bin 6 supplier supplier BICCBICC supplier tel supplier tel 0208-891-01210208-891-0121 supplier part supplier part RT45502RT45502 routing process Name/location of next process Name/location of preceding process container type & capacity number of containers released
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