Supply Chain Final Ch 9 - 12
Facility Types: Contributer Factory
Focused on product development and engineering for products that they manufacture Basically a server factory which also includes -product development -production planning -procurement decisions -supplier development
12 Pillars of Competitiveness
1. Institutions 2. Infrastructure 3. Macroeconomic stability 4. Health and primary education 5. Higher education and training 6. Goods market efficiency 7. Labor market efficiency 8. Financial market sophistication 9. Technological readiness 10. Market size 11. Business sophistication 12. Innovation
Global Facility Types
1. Offshore Factory 2. Source Factory 3. Server Factory 4. Contributor Factory 5. Outpost Factory 6. Lead Factory
Five R's of Reverse Logistics
1. Returns 2. Recalls 3. Repairs 4. Repackaging 5. Recycling
Goods are not legally entered into US commerce until:
1. The shipment has arrived within the port of entry 2. Delivery to the shipping destination has been authorized by the CBP 3. Estimated duties have been paid
Objectives of Transportation
1. To maximize the value to the company through price negotiations 2. To make sure service is provided effectively 3. To satisfy customers' needs
Tangibles
The physical characteristics of the service including, facilities, servers, equipment, associated goods, and other customers
Service Response Logistics
The primary concern of _____________________ is the management and coordination of the organization's service activities
Warehouse
A facility used to store purchases, work-in-process (WIP), and finished goods inventory.
Key Tools and Components of CRM: Churn Reduction
Churn = the process of customers changing their buying preferences because they found a better or cheaper product elsewhere Churn reduction is the efforts to stop losing customers to competition
Market Positioned Strategy
Close to customers to maximize distribution services and improve delivery. Few Suppliers;many customers
Product positioned strategy
Close to supply source to collect goods and consolidate before shipping products out to customers. Many Suppliers; few customers
Global Location Decisions
Companies can locate anywhere in the world due to increased globalization, technology, transportation, and open markets.
Key Tools and Components of CRM: Predicting Customer Behaviors
Company's that sell to customers can collect the buying history, preferences, and trend information of their customers. This info can be used to predict future behavior Info also can be used to determine the effectiveness of marketing efforts and the accuracy of the demand forecast
Location Evaluation Techniques: The Weighted-Factor Rating Model
Compares the attractiveness of several locations along a number of quantitative and qualitative dimensions (1. Identify the factors 2. Assign weights to each factors. The weights sum to 1. 3. Determine a score for each factor 4. Multiply the factor score by the weight, then sum the weighted scores. The location with the highest total weighted score is the recommended location)
Global Location Factors
Competitiveness Taxes and Incentives Currency Stability Access and Proximity to Markets Labor Issues Right to Work Laws Access to Suppliers and Cost Utility Availability and Cost Environmental Issues Land Availability and Cost Quality of Life Issues Business Clusters Trade Agreements
Reliability
Consistently performing the service correctly and dependably
Advantages of Private Warehouse
Control: Offers greater flexibility in designing the warehouse and gives users significant control over operations. Visibility: inventory, material flow, handling, supervision, and associated costs. Cost: Operating cost can be 15% - 25% lower if the company achieves at least 75% utilization.
Service Strategies
Cost leadership, differentiation, focus
Advantages of 3PL
Cost: Eliminates the need for a company to invest in warehouse space, technology, and staff to execute the logistics process. Logistics Expertise: Knowledgeable of industry best practices and the latest developments in technology. Efficiency: 3PL's can leverage relationships and volume discounts, which result in lower overhead and the fastest possible service.
Penalties for Violations can be Substantial
Criminal Penalties - Substantial Fines (and/or) - 10+ years imprisonment Civil Penalties - Substantial fines per occurrence - Individual and/or company sanctions Statutory Sanctions - Seizure and forfeiture of items in violation, including the vessels and aircraft carrying the items. - Loss of import and/or export privileges for a business unit, division, or for the entire company. - Detailed inspections of every single shipment, and delayed release by US Customs & Border Protection.
Trends in CRM
Customer Data Privacy (patriot act, etc) Social Media Cloud Computing
Service Capacity Planning Challenges
Customer arrivals fluctuate and service demands also vary. Customers are participants in the service and the level of congestion impacts on perceived quality. Idle capacity is a reality for services Inability to control demand results in capacity measured in terms of inputs (e.g. number of hotel rooms rather than guest nights).
Customer Service as a Performance Measure
Customer service is a category of performance measures, such as the percentage of orders delivered on time and complete, the number of orders processed within acceptable time limits.
Customer service as a Philosophy
Customer service is a company wide commitment to providing customer satisfaction by placing emphasis on quality
Customer Service as an Activity
Customer service is a particular task that a firm must accomplish to satisfy the customer's needs. Order processing, billing and invoicing, returns, and claims handling
Involvement of the customer in the production process
Customers are more directly involved in the service industry
Returns
Customers return products for a number of reasons. An item may be defective, damaged, seasonal, fail to meet expectations, or be excess inventory
Disadvantages of contract warehouse
Duration: The client company is expected to enter into a contract for a specific period of time; generally three years.
Successful CRM Program step 3: Select the Right Application and Provider
Find an appropriate application and determine the extent of customization
Global Location Factors: Currency Stability
impacts business costs and consequently location decisions
Key Tools and Components of CRM: Up-Selling
persuading a customer to buy a more expensive item or upgrade a product or service to make the sale more profitable. It also involves selling the customer extra features or add-ons Ex: would you like to super-size your order
Warehouse Network
the number of, and the relationship between, the warehouses that a company has in their organizational structure
Deemed Exports
the release of technology or source code that is subject to the Export Administration Regulations, to a foreign national located in the United States. An intentional or unintentional export of controlled technology can easily occur within the walls of your company, even if located within the borders of the United States -The release can be visual, oral, through on the job training, or via systems access etc -"Technology" is defined as the specific information necessary for the development production or use of a commodity -Usually,technically, is even more strictly controlled than a commodity -The proper controls are needed to ensure that any such export occurs legally (i.e. with the proper licenses and approvals) and does not expose you or your company to penalties
storage
the safe and secure retention of parts or products for future use or shipment
FTL (Full truck load)
the transport of goods that fill up a full truck, or a partial load shipment occupying an entire truck
Secondary functions of a warehouse
* Quality Inspections - incoming and outgoing * Repackaging - for specific customer orders * Assembly Operation - Operations putting products together with other items/components before shipping to a final customer
Warehouse network: Hybrid Approach
"Hub-and-spoke" where there is a centralized ware house which holds most of the inventory linked to a series of smaller geographically dispersed warehouse which hold only a small amount of inventory to support their local area in the immediate time frame
CRM done How:
* Communicating with customers * Understanding their behavior and their requirements * Building a system to satisfy those requirements
Successful CRM Program step 1: Creating the CRM Plan
* objectives of the CRM program * Costs and time frame for implementation
Customer Relationship Management
*A philosophy of putting the customer first* * CRM is about building and maintaining profitable long term customer relationships beyond the one-off buy and sell transaction* CRM is the transformation of the people, process, and technology required to be a customer centric organization Involves acquiring, retaining and partnering with selective customers to create superior value for both the company and the customer Want to have customers remain customers for life NOT FOR EVERY CUSTOMER
CRM done By:
*Focusing on customer requirements * Delivering products and services in a manner resulting in high levels of customer satisfaction
Transportation Pricing
- Cost of Service Pricing - Value of Service Pricing - Combination Pricing - Net-Rate Pricing
Global Logistics Intermediaries
- Customs Brokers Move global shipments through customs and handle documentation. - International Freight Forwarders Move goods to and from foreign destination - Trading Companies Put buyers and sellers from different countries together and handle export/import arrangements, documentation and transportation. - Non-Vessel-Operating Common Carriers (NVOCC) Operate like freight forwarders but use only scheduled ocean liners.
Global Location Factors: Enviromental Issues
- Global warming, air pollution. and acid rain are debated as being the price of industrialization - Trade liberalization creates the need for environmental cooperation
Disadvantage of Private Warehouse
- High Startup Cost: Capital to build or buy a warehouse. Long, risky investment. Cost of hiring and training employees. Purchase of material handling equipment -Fixed Location: Not easy to move to another location if the market changes Fixed Size and Costs: When volume is low, the company still assumes the fixed costs
Benefits of Trade Compliance Systems
- Increased level of compliance compared to a manual process. - Decreased number of physical inspections by US Customs & Border Protection - Faster release of shipments by US Customs & Border Protection. - Avoidance of fines and penalties. - Opportunity to interface with other systems.
Location Evaluation Techniques
- Weighted-Factor Rating Model - Break Even Model
Advantages of public warehouses
- no capital investment or property taxes - flexibility (can be short or long term contact, for seasonal products, add storage capacity even on short notice) -lower costs and reduced risks -access to special features and services (e.g. temperature-controlled storage. customer service, inventory ordering etc. office space for customer's sales, accountingetc)
Public Warehouses characteristics
- owns their own equipment and hires their own staff to manage the facility -fees are typically a combination of a monthly storage fee plus a pallet-in fee and a pallet-out fee (fees will vary based on what is being stored and other factors i.e. size and weight of the pallets, if they can be stacked, how fragile the product is, value of goods (risk of theft), hazards associated with the goods. Also may have document fees and account management fees)
Contract Warehouse Characteristics
- the contract can be for the entire building, or for a defined portion within a building -usually requires a client to commit to services for years rather than months -the fee structure may be fixed cost, cost-plus, or a combination of both -the company providing the space handles the employees, equipment, and maintenance
Global Location Factors: Land Availability and Costs
-As land and construction costs in big cities continue to escalate, the trend is to locate in the suburbs and rural areas
Green reverse logistics programs
-Can have a positive impact on the environment though activities such as recycling, reusing materials and products, or refurbishing unused products. -These programs can reduce environmental impact on landfills and deal with dangerous contaminants. -Example: Unused pharmaceutical product returned to the pharmacy rather than "flushing it down the toilet" which ultimately causes the drug to end up in the water supply.
Transportation Company Classifications
-Contract Carriers -Private Carriers -Common Carriers -Exempt Carriers
Disadvantages of 3PL
-Control: A company will not have direct control over the logistics operation. -Dependency: Outsourcing logistics creates a dependency on the 3PL. -Pricing: The company is locked into the pricing model specified in the contract
Queue System Characteristics
-Queue discipline is the order in which customers are served (FIFO, Triage, Status). -Queuing can be comprised of single or multiple lines. -Queue lines can be serviced by either a single server or multiple servers. Multiple servers can also act in series or in parallel.
LEAN warehousing
-Cross Docking - A LEAN concept because it eliminates the need to store inventory, and reduces some transportation, which are both wastes. -Reduced Lot Sizes and Shipping Quantities - By reducing lot sizes and shipping quantities, a company can increase velocity in the warehouse, and get shipments out faster. -Faster throughput is a LEAN concept. -Increased Automation - Companies are using automated systems like pick to light, voice picking, conveyor systems, automatized guided vehicles (AGV's), and robotics to improve efficiencies and throughput times in the warehouse. -Green Warehousing - One of the more sustainable goals for a green warehouse is to make it a net zero energy user.
Managing Service Quality
-Customer satisfaction with the service depends not only on the ability of the firm to deliver what customers want, but on the customers' perceptions of the quality of the service received *e.g., Was the car fixed properly? *e.g., Was the client properly defended? *e.g., Was the hired comedian funny? -_____________ depends on the firm's employees to satisfy customers varying expectations -The key is to exceed the customers expectations . . . so you also need to help form their expectations *e.g., You promise 4 hour service, knowing that you can do it in 3.5 hours
Private Warehouse Characteristics
-Generally established by companies that have a large volume or highly valuable goods, or the need for some type of specialized storage or handling - can be operated as a seperate division within a company -can be co-located on-site with manufacturing, or off-site
Global Location Factors: Business Clusters
-Geographic concentrations of interconnected companies and institutions -Research parks and special economics/industrial zones serve as magnets for business - Reasons for success include: Innovation and competition can be geographically concentrated Close cooperation, coordination and trust among clustered companies Fierce competition among rival companies Companies recruit from local skilled workers
Trade Compliance Systems (or Global Trade Management systems)
-Have become a vital tool for every major importing and exporting company in the US -Really the only way to keep current with all of the continuously changing laws, regulations and procedures -Trade Compliance Systems can automate the process of checking every transaction
Global Services/issues managing them
-Identifying global customers. *Follow customers globally and support them locally -Labor, facilities, and infrastructure support vary by country. *Cultural differences, education, expertise -Legal and political issues: *Laws may restrict foreign competitors. -Domestic competitors and the economic climate:
Typical services provided by 3PLs
-Inbound Transportation -Outbound Transportation -Warehousing -Pick and Pack -Freight Forwarding -Customs Brokerage -Customs Clearance -Order Taking -Billing and Invoicing -Inventory Auditing -Freight Bill Auditing and Payment
Waiting Time Management Techniques
-Keep customers occupied -Start the service quickly -Relieve customer anxiety -Keep customers informed Ex: "The wait time from this point is...", "The ride is stopped but will resume in 4 minutes" -Group customers together (they often talk to pass the time) -Design a fair waiting system
Single Warehouse Positives
-Less complicated -Operating costs and inventory will be lower -No duplication of equipment, warehouse staff, and managers -Network will be centralized and the company will have its best people, equipment and inventory systems concentrated in one place. -Warehouse can more actively focus on the needs of its customers
Multiple Warehouse - Negatives
-More complicated -Operating costs and inventory will be higher as each warehouse costs money to staff and operate. Duplication of equipment, warehouse staff, and managers -Network will be decentralized and the company will have to spread its best people, equipment and inventory systems across a larger network.
Queue System Assumptions
-Most queuing models assume that customers enter the queue, and stay in the queue until served: *Balking *Reneging -Queuing models assume infinite length of a queue
Logistics is necessary to
-Move goods and materials from suppliers to buyers (inbound logistics) -Move goods and materials between sites (internal and external) (material handling) -Move finished goods to the customer (Outbound logistics)
Managing Distribution Channels
-Multiple methods to deliver service 1. Self Service 2. Internet 3. Franchising 4. Partnership
Poor Reverse Logistics Can Hurt A Company
-Problems include: *Inability of INFORMATION SYSTEMS to handle returns. *Lack of WORKER TRAINING in reverse logistics procedures. *Little or no IDENTIFICATION on returned packages. *Need for adequate INSPECTION and TESTING of returns. *Danger of placing returned products BACK INTO SALES stocks. -Can affect the entire supply chain financially. -Can have a large impact on how a consumer views a product or brand, potentially impacting future sales. -Retail returns = 6% to 10% of sales.
Differences Between Goods and Services
-Services cannot be inventoried (in most cases). Normally, services are produced and consumed simultaneously. *Capacity planning is key -Services are often unique to the customer (e.g., insurance policies, legal services, tax preparation, etc.) -Services have high customer interaction -Services are decentralized. Due to the inability to inventory or transport most services, they must be located near to the customer base.
SCM in Services
-Services often require the use of facilitating goods which are tangible elements that are used or consumed while providing the service (repair parts, food, tools, equipment, etc.) *These items need to be purchased, transported and warehoused in order to provide the service activity. *Generally these SCM activities occur behind the but are crucial to customer satisfaction *Customers expect the facilitating goods to be readily available as part of the service purchase!
Global Location Factors: Tax incentives
-Several levels of government must be considered when evaluating potential locations -Tariffs are federal taxes that are designed to protect local businesses -Countries with high tariffs discourage importing goods into the country and encourage multinational corporations to produce locally
Decisions driving warehouse management include:
-Site selection -Number of warehouse facilities in the network -Layout of the warehouse(s) -Methods of receiving, storing, retrieving, and distributing products and materials. (eg. manual, semi automated, fully automated)
Global Location Factors: Utility Availability and Cost
-Supply of electricity has not always kept pace with the high speed of development - In heavy industries the availability and cost of energy are critical considerations -telecommunication costs have dropped dramatically. Many organizations now have back office operations and call centers internationally to serve the US market
Global Location Factors: Access and proximity to markets
-The trend in manufacturing is to be within delivery proximity of your customers (logistic timelines and costs are the concerns, so that reinforces a clustering effect of suppliers and produces to places that offer lower cost labor and lower real estate prices - in the service industry, proximity to customers is even more critical
demand exceeds capacity, alternaties
-Turn customers away and not service them -Make them wait until service is available for them -Increase service capacity, i.e., the number of service personnel and the associated infrastructure to provide the service.
Managing Waiting Time
-________________________ involves managing both the actual waiting time and the perceived waiting time. -Key questions to ask to determine waiting time strategy: *What is the average arrival rate of the customers? *In what order will customers be serviced? *What is the average service rate of providers? *How are customer arrival and service times distributed? *How long will customers wait before they either leave or lower their perceptions of service quality? *How can the wait be longer without customers lowering their perceptions of service quality?
Global Location Factor: Labor Issues
-labor availability, productivity and skill -unemployment/underemployment rates -wage rates; turnover rates; labor force competitors
Facility Types: Source Factory
-manufactures products at low cost but with skilled workers and significant managerial resources Basically an offshore factory that includes: plant management involvement in supplier selection Plant management involvement in production planning More developed local infrastructure Access to skilled workforce Low production costs
Advantages of contract
-services: client can be obtained specialized services tailor-made to suit their needs -cost: can be bundled in the contract and negotiated at a lower cost -control: contract warehousing offers a degree of control at a reasonable price
Reasons for Cross-docking
1. to provide a central site for products to be sorted and combined for delivery to multiple destinations in the most productive and fastest method possible 2. Consolidate: Combine smaller product loads into one method of transport to save on transportation costs. 3. Break bulk: Break down large product loads into smaller loads for transportation for an easier delivery process to the customer
Global Location Factors: Right-to-Work
28 states have laws protecting the right of employees to decide whether or not to join or support a union
major US international trade legislation
7 major laws/acts in the 70s years from 1930-2000 10 major laws/ initiatives in 2 immediate years post 9/11
Repackaging
95% of returned products are because customers are dissatisfied with them not because there are defective. These products are typically repackaged and returned to inventory for restock or resale in secondary channels.
Facility Type: Offshore Factory
A factory set up for manufacturing or assembly in a country where labor and/or raw material are less expensive for eventual import back into the manufacturer's home country. Manufactures products at low cost with minimal technical and managerial resources Take advantage of low labor costs Import or acquire parts locally. then export to the manufacture or directly to customers Local managment serves in a supervisory roll not in making management decisions
Facility Type: Server Factory
A factory set up to take advantage of government incentives and/or reduced tax/tariff barrier, to meet regional or local market needs Firm uses government incentives Low exchange risk and tariff barriers to reduce taxes and logistics costs Makes minor improvement to product and process Set up to serve the local market
Key Tools and Components of CRM: Customer Lifetime Value (CLV)
A prediction of the net profit attributed to the entire future relationship with a particular customer Helps to identify top tier customers
Key Tools and Components of CRM: Target Marketing
A segment of customers a company has decided to aim its marketing effort and its products towards. Allows company to focus on customers most likely to respond.
Private Warehouse
A storage facility that is owned by the company that owns the goods being stored in the facility.
Truck- general freight carriers
A trucking company which handles a wide variety of commodities in standard trailers. Freight is generally palletized
Truck- Specialized carriers
A trucking company which handles the movement of cargo that requires specialized equipment for transportation bc of the shipments size, weight and shape (eg liquids, petroleum, household goods, building materials, and other specialized items_
Contract Warehouse
A variation of public warehousing that handles the shipping, receiving and storage of goods on a contract basis for a fee
Assurance
Ability to convey trust and confidence to customers
Modes of Transportation: Rail
Accounts for approximately 9% of total US freight spend Competes for transportation when the distance is long and the shipments are heavy or bulky (eg. building materials, construction equipment. coal. gravel,sand, lumber etc) Issues: aging infrastructure and equipment Rail is slow and inflexible but it has the most capability Paired w trucks for door to door deliveries
Mode of transportation: Water
Accounts for appx 5% of total US freight spend Includes inland waterways, coastal and intercoastal and deep-sea cargo shipments Inexpensive Very slow and inflexible Primarily used for heavy, bulky, low value materials like coal, grain. sand and petroleum (but bc it s so cheap, almost every item is shipped by water; including automobiles, produce, containerized cargo etc) competes with rail and pipeline for some cargo shipments paired with trucks for door-to-door delivery
Advantages/Disadvantages of FTL
Advantages: Best way to transport large shipments. Ideal for high risk or delicate freight shipments. Considerably faster than LTL. Disadvantages: Costs more than LTL
Advantages/Disadvantages of LTL
Advantages: Can be cost effective. There are more available carrier options. Ideal for small businesses Disadvantages: Increased risk of theft/damage. Increased shipping times and delays
Franchising
Allows business to expand quickly in dispersed geographic markets, protects existing markets, builds market share and facilitates business when owners have limited financial resources Ex: fast food restaurants, temp agencies, tax businesses, etc.
Successful CRM Program step 5: Establish Performance Measures
Allows firm to determine if objectives have been met
Key Tools and Components of CRM: Relationship Marketing or Permission Marketing
Approach to selling products in which a customer explicitly agrees in advance to receive marketing info. ex: an "opt-in" email customers signs up for info about certain products. About building an ongoing relationship Preserves business relationship
Implicit Services
Attitude of the servers, atmosphere, waiting time, status, privacy and security, and convenience Ex: security, atmosphere, privacy, convenience, etc.
Explicit Services
Availability and access to the service, consistency of service performance, comprehensiveness of the service, and training of service personnel Ex: vault, safe deposit boxes, loans, etc.
Bundle of Service Attributes
Can deliver more than expected and enhance customer satisfaction Ex: Banking Industry
Level Demand Strategy
Capacity remains constant regardless of demand. When demand exceeds capacity, queue management tactics deal with excess customers Ex: one line at a bank (first come, first serve) Ex: ticket number system at a deli
Chase Demand Strategy
Capacity varies with demand. So you can handle fluctuations but must take appropriate actions prior. Need to have options Ex: Open up additional line(s) Ex: Call in additional off-shift workers to meet increased demand
Key Tools and Components of CRM: Segmenting Customers
Dividing customer base into groups that are similar in way relevant to marketing. Ex: income, demographics, geography
Capacity Exceeds Demand, alternatives
Do other jobs when it's not busy. Example: in a restaurant you might have workers clean the bathrooms, prep for the dinner rush, etc. Do training or cross training Use demand management techniques to shift demand from peak demand periods into non-peak periods by offing incentives like discounts and special sales Example: early bird specials, 20% off from 9am to noon, etc.
Global Location Factors: Regional Trade Agreements
EX. EU, NAFTA, Southern Common Market (MERCOSUR amount Argentina Brazil Paraguay and Uruguay), ASEAN, COMESA (Eastern and Southern Africa)
Global Location Factors: Quality of Life Issues
Education Economy Natural Environment Social Environment Culture Healthcare Government / Politics Mobility Public Safety Recreation
Successful CRM Program step 2: Involve CRM users from Outset
Employees should understand how it affects their jobs
Net-Rate Pricing
Established discounts and accessorial charges are rolled into one all-inclusive price. Pricing is tailored to the individual customer's needs
Internet
Expands reach and markets served
Facility Types: Outpost Factory
Factory set up in an area with an abundance of advance suppliers, competitors, research facilities etc Set up in a location within proximity to - advanced suppliers -competitors -research faciltities & universities for materials, components and products
Partnership
Operate/partner with firms familiar with the region's markets, suppliers, infrastructure, government regulations, customers, language & cultural barriers
Other transportation intermediaries
Freight Forwarder: Consolidates LTL shipments into FTL shipments Load or Transportation Broker: Bring shippers and carriers together Shippers' Association: Non-profit cooperatives which arrange for members' shipping Intermodal Marketing Company: Purchase blocks of rail capacity and sell it to shippers
FOB destination
Freight terms indicating that ownership of goods remains with the seller until the goods reach the buyer.
Warehousing
Function that allows a company to receive, store, breakdown, repackage, and distribute items to a manufacturing location, or finished products to a customer
Measuring Customer Satisfaction
Get feedback from customers using surveys, questionnaires, phone calls, etc
Service Productivity
High labor content Individual customized services Automating services is difficult Service quality assessment process
Transportation Deregulation
ICC Termination Act of 1995: The Interstate Commerce Commission ICC was eliminated
Key Tools and Components of CRM: Event Based Marketing
Identifies key events in the customer and business lifecycle and when an event occurs, a customer specific marketing activity is undertaken [Black Friday, birthday reward, etc]
Benefits to the hybrid approach
Operating costs are lower bc the smaller warehouses are smaller than in the purely decentralized model Inventory is lower as all of the safety stock is held centrally, which generally means that less total safety stock is required because all of the risk and uncertainty is managed centrally Customer Service is generally better than in a purely centralized model since some of the inventory is maintained closer to the customer
Return of Unsold Goods
In some industries, goods are distributed to downstream members in the supply chain with the understanding that the goods may be returned for credit if they are not sold e.g., newspapers, magazines, even pharmaceuticals.
Global Supply Chain Opportunities
Increased revenue through global business (i.e., more customers) and economic opportunities Increased sourcing options with more potential sources of supply to choose from including potential economic opportunities
Unstructured queues
Informally lines in various directions and locations. Ex: retail stores, at an airport waiting for a taxi, people waiting for an ATM machine, etc.
Global Logistics
International Freight Security: -Transportation across national boundaries introduces added complexity, particularly security - Since 9/11 there is more conflict between the US govt and industry regarding more security and restrictions for international shipments
Transportation Regulation
Interstate Commerce Act of 1887- created the Interstate Commerce Commission (ICC)
Field Service Management
Involves setting up the company operations to allow customers to interact directly with the company's service personnel Customers call service people directly
Layout Strategy
Layouts designed to reduce distance traveled within the store Departmental layouts to maximize closeness desirability Ex: Doctors office waiting room Ex: Service center at the car dealership, pet grooming, car wash, etc. (i.e., Watch them working on your prized possession)
Facility location considerations
Location decisions are often critical to success in the service industry
Supporting Facility
Location, decoration, layout, architectural appropriateness, equipment Ex: drive-up tellers, ATM's, etc.
Definition of Logistics
Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements.
Why do companies need CRM
Loyal Customers are the source of most profits, and a relatively small percentage of those customers may generate most of the profit for the company 1. Acquire new customers 2. Retain existing customers 3. Help meet changing expectations of customers
Location Strategy
Make it easy for customers to find the facility / store. Once they arrive, make it easy to find what they want, or to find what you want them to find. Ex: Drop off / pick up your clothes at dry cleaners on the way to work.
International Trade Compliance
Managing international trade activities is a complex process A typical cross-border shipment involves: -Accurately completing and filing about 35 documents -Compliance with over 600 laws and 500 trade agreements which are constantly changing -Interfacing with about 25 parties, including Customs, carriers,freight forwarders, other government agencies etc
shipping
Outgoing shipment of parts, components, and products. Includes packaging, marking, weighing, and loading for shipment.
Types of Warehouse Network Strategy
Market Positioned Strategy Product Position Strategy Intermediately Positioned Strategy
Intermediately Positioned Strategy
Midway between supply source and customers, when distribution requirements are high and product comes from various locations Relatively equal number of suppliers and customers
Truck
Most flexible mode of transportation Carries > 80% of US Freight (bc of interaction w other transportation modes to and from ports& warehouses) Carries nearly anything from packaged household goods, to building material, to liquid petroleum etc Competes w Rail and Air for short-to-medium hauls Impacted by the truck driver shortage and hour of service rules
Successful CRM Program step 4: Integrate Existing CRM Applications
Need centralized database or data warehouse containing all customer information
Key Tools and Components of CRM: Personalizing Customer Communications
Need to customize communications with a group of customers that is likely to result in greater levels of sales. Use customers language and communicate in meaningful way
Repairs
Not all products that are returned are disposed. Manufacturers may identify the failure and repair, refurbish or remanufacture the product to like-new condition and return it to stock, or harvest various components for re-use
Post-transaction elements
Occur after the sale Includes warranty repair capabilities, complaint resolution, product returns, operating information, etc
Transaction Elements
Occur during the sale Includes the order lead time, the order processing capabilities, the distribution system accuracy, etc
Key Tools and Components of CRM: Cross Selling
Occurs when a company sells an additional related or complementary product or service to an existing customer after initial purchase Ex: would you like fries with that
Exempt Carriers
Person or company specializing in services or transporting commodities exempt from regulation by the Interstate Commerce Act.
Common Carrier
Person or company who transports freight for a fee that can be hired by anyone to transport goods.
Contract carriers
Person or company who transports freight under contract to one or a limited number of shippers.
Foreign Trade Zone (FTZ)
Physical areas inside the US supervised by US Customs and Border Protection that are considered to be outside of the US territory. Usually located at or near a port of entry Foreign and domestic merchandise may be moved into FTZs for operations not otherwise prohibited by law including these permitted activities...
receiving
Physical receipt of material, identification, inspection for conformance with the purchase order (quantity and damage), put-away, and preparation of receiving reports
disadvantages of public warehouse
Potential for incompatible computer systems Specialized services may not be what is required/needed Space may not be available when/where needed
Multiple Warehouse positives
Potentially faster delivery to customers from a decentralized network that is geographically dispersed throughout the market, assuming adequate inventory in each warehouse.
Pre-transaction elements
Precede the sale Includes customer service policies, the mission statement, organizational structure, system flexibility, etc
Improving service productivity
Productivity=(Outputs produced/inputs used)
Responsiveness
Promptly and timely service
Successful CRM Program step 6: Providing CRM training for all users
Provide and require training for initial users and then ongoing training
Empathy
Providing caring attention to customers
Types of Warehouse Ownership
Public Warehouses Contract Warehouses Private Warehouses
Types of Services
Pure services, end products, state utility
Recalls
Recalls are more complex than basic returns because they typically involve a product defect or potential hazard and may be subject to government regulations, liability concerns or reporting requirements
Regulation pros and cons
Regulation Pros: - Tends to assure adequate transportation service throughout the country -Protect consumers from monopoly pricing, safety, and liability Cons: -discourages competition -does not allow prices to adjust based on demand or by negotiation
The Five Dimensions of Service Quality
Reliability, responsiveness, assurance, empathy, tangibles
Cost Leadership
Requires large capital investment in state-of-the art equipment and significant efforts to control and reduce costs Ex: Auto diagnostics software, route planning to reduce windshield time, UPS optimization, etc.
First & Second Rules of Service
Rule 1: Satisfaction = customer perception - customer expectation Rule 2: It is hard to play catch-up, you may only get one chance to get it right
Automated Sales Force Tools: Sales Territory Management
Sales managers obtain information on each sales rep's activities
Automated Sales Force Tools: Lead Management
Sales reps can follow prescribed tactics when dealing with prospects to aid in closing the deal
Focus
Serve a narrow niche better than other firms. Ex: Grocery shopping for you, Mechanic specializing in Volvo or Porsche repair, Custom stereo in your house or car
Assessment of quality
Service Quality is assessed differently than product quality.
The four primary activities of Service Response Logistics
Service capacity Waiting times Distribution channels Service quality
Tangibility of the end product
Services are generally not tangible and cannot be inventoried
Pure Services
Services offering very few or no tangible products to customers Ex: consulting, storage facilities, training / education, etc
State Utility
Services which directly involve things owned by the customer Ex: car repair, dry cleaning, haircut, and healthcare
End Products
Services which offer tangible components along with the service component Ex: restaurants; food along with the dining service
Structured queues
Set in a fixed position, may use with or without numbers to allow people to walk around while they wait for their turn Ex: super market checkout line, airport or bank
Facility Types: Lead Factory
Source of product and process innovation and competitive advantage across the entire organization (world-class) - competitive advantage of the organization -source of innovation
Major Challenges of International Trade Compliance
Staying up to date bc the information changes frequently. It's often made available only in a foreign language. It's not always produced in an electronic form
CRM Program
Successful CRM program is both simple and complex Simple in it involves training users within the company to make customers feel valued Complex in that it also means finding affordable ways to identify thousands/millions of customers and their needs. * Then designing customer contact strategies geared toward creating customer satisfaction and loyalty
Global Location Factors: Access to Suppliers and Cost
Supplier proximity influences the delivery of materials and the effectiveness of the supply chain
Facilitating Goods
Tangible elements that are used or consumed by the customer or the service provider along with the service provided Ex: deposit forms, statements, etc.
Global Supply Chain Challenges
Tariffs or duties (i.e., import taxes) Transporting goods across borders Customs, business practices, and regulations vary by country Foreign markets are not homogeneous even within the country
Service Delivery System
The delivery of services can be expressed as a continuum with mass produced, low-customer contact systems at one end, and highly customized, high-customer-contact systems at the other end.
Transportation
The function of planning, scheduling, and controlling activities related to mode, vendor, and movement of inventories into and out of an organization.
Cross-Docking Warehouse
The logistics practice of unloading materials from an incoming truck or railcar and loading these materials directly onto outbound trucks or railcars, with little or no storage in between to reduce inventory investment and storage space requirements.
Export Administration Regulations (EAR)
The shipper must: - know the product or technology being exported -know where it is being produced -know where and to whom it is being sent -know who will use the product -know whether there are any illegal restrictions in the order, L/C or other document (eg Boycott clause
Single Warehouse negatives
The single warehouse (i.e. centralized network) may take longer to deliver product to some customers who are remote from the central location
Labor content ratio
There is a much higher ratio of labor to materials in the service industry
Automated Sales Force Tools: Sales Activity Management
Tool offering sales reps a guided sequence of sales activities
Advantages to cross-docking
Transportation costs: 8 FTL shipments are less expensive per unit that 16 LTL shipments Operational Efficiency: Warehouse operations are more efficient as the material does not have to be stored at the warehouse, moving directly from receiving to shipping Inventory Effciency: As there is no storage at the warehouses; total inventory in the supply chain can be reduced
modes of transportation
Trucks, railroads, water carriers, pipelines, air carriers, and the Internet
Differentiation
Unique service created based on customer input and feedback Ex: Sunday car servicing at Hyundai, Ford, etc. Being different from another local dealer. This may be helpful in selling a car to someone who can't take off work on a Monday-thru-Friday when their car needs repair.
Queuing Systems
Used to help control the flow and prioritization of people expecting to receive a service Ex: Common in airports, amusement parks and retail stores.
Location Evaluation Techniques: Break Even Model
Useful location analysis technique when fixed and variable costs can be determined (1. Identify the locations to be considered. Determine the fixed cost of land, property taxes, insurance, equipment, and buildings. Determine the unit variable cost, materials, utilities, and transportation costs. Construct the total cost lines. Determine the break-even points on the graph. Identify the range over which each location has the lower cost.
Mobile queues
Virtual or with technology to place their name in a real-time system, flexible and reduces stress for customer Ex: Electronic notifiers at a restaurant
Logistics Management Software Applications
Warehouse Management Systems (WMS): Track and control the flow of goods from recieving dock to outbound shipment. new tech such as RFID tags facilitate tracking. Transportation Management Systems (TMS): Used to select the best mix of transportation services and pricing Global Trade Management Systems (GTM): Provides global visibility, standardization, and documentation to comply with international trade regulations
Break- bulk Warehouse
Warehouse operation that divides full truckloads of items from a single source or manufacturer into smaller, more appropriate quantities for use or further distribution.
Consolidation Warehouse
Warehouse operation that receives products from different plants or suppliers, sorts them, and then combines them with similar shipments from other plants or suppliers for further distribution.
Balking
When a customer refuses to join the queue
Export Process
When a shipment is ready to be exported, the shipper will file export documents for the goods' at the port of departure. Shipments must conform to Export Administration Regulations Complete and submit a Shippers Export Declaration (SED) Submit a Commercial Invoice for the product
Import Process
When a shipment reaches the US, the Importer of Record (i.e., the owner, or purchaser) must file entry documents at the port of entry.
Reneging
When customers decide to leave the queue
Recycling
When products reach the ends of their useful lives and must be scrapped. Companies must find safe, cost-effective and enviromental friendly way to dispose of them. Companies can reduce costs and minimize waste
FTZs part 2
While not in the FTZ, merchandise is not subject to US duty or excise tax - US duty and excise tax, if applicable, are only payable when the material is moved outside the FTZ for consumption -Foreign-trade zone sites are subject to the laws and regulations of the United States as well as those of the states and communities in which they are located - There is no limit on the time material may remain in the zone -Internationally, similar are called Free Trade Zones
picking
Withdrawing components from stock to make assemblies or finished goods, or to ship to a customer
Public Warehouses
a business that provides storage and related warehouse functions to companies on a short or long term basis, generally on a month-to-month basis for a fee.
CRM's role in SCM
a company must find ways to meet its customers needs, otherwise, the customer goes elsewhere and takes years worth of future purchases with them * just as companies create methods for finding good supplier, they must create methods for becoming and staying good supplier themselves to their customers Because many customers don't sell their products directly to end-product consumers, they may also need to train intermediate customers to adequately represent their products
Mode of transportation: Pipeline
accounts for approximately 2% of total US freight spend most reliable form of transportation lowest per unit cost for transportation limited variety of commodities materials are transported in a liquid or gaseous state; petroleum, natural gas, drinking water, gasoline Little maintenance needed once the pipeline is running
Mode of transportation: Air
accounts for appx. 5% of total US freight spend generally the fastest mode of transportation most expensive mode of transportation Cannot carry extremely heavy or bulky cargo Ideally items with a high cost to weight ratio (eg. jewelry, fine wines, pharmaceuticals, racehorses lol etc) Half the good transported by air are carried by freight-only airlines eg. FedEx . The other half in passenger planes with luggage Paired with trucks for door-to-door delivery
4PLs (fourth party logistics)
an interface between the client company and multiple logistics service providers
FOB origin
buyer takes ownership at seller's location
Service Capacity
can be expressed as the number of customers per day, per shift, per hour, per month, or per year, that the company's service system is designed to serve.
Types of Warehouses
consolidation, break-bulk, cross-docking
Deregulation
encourages competition and allows prices to adjust as demand and negotiations dictate US transportation industry remains mostly deregulated
Automated Sales Force Tools: Knowledge Management
enables quick decision making, better customer service, and a better equipped and happy sales staff
Reverse Logistics (Returns Management)
involves the process of moving a product from the point of customer receipt back to the point of origin to recapture value or ensure proper disposal "all about damage control and making the process as customer-friendly as possible"
Value of Service Pricing
is a pricing strategy which sets prices based on the value perceived by the customer, i.e., "priced at what the market will bear".
3PL (Third Party Logistics)
is an outsourced provider that manages all or part of an organizations logistics requirement for a fee
Intermodal transportation
is sometimes referred to as the sixth mode of transportation, but it is really the use of multiple modes of transportation to execute a single transport shipment
cost of service pricing
is the setting of a price for a service based on the costs incurred in providing it.
LTL (less than truckload)
is the transportation of relatively small freight (i.e. the greight does not require the entire space of the truck)
Multiple channel, multiple phase
many lines with multiple servers acting in parallel Ex: Car inspection
Multiple channel, single phase
many single servers Ex: Grocery store
Products have little value to the customer until they are
moved to the customer's point of consumption aka delivered at the right time at the desired location * customers can be internal or external
Single channel, multiple phase
multiple servers acting in series Ex: Starbucks (order, make, pickup)
Private Carriers
person or company that transports its own cargo as a part of a business that produces, uses, sells or buys the cargo that is being hauled.
packing
placing one or more items of an order into an appropriate container for safe shipping, and marking and labeling the container with customer shipping destination data, and other information that may be required
Combination Pricing
price is set at a value between cost-of-service minimum and value-of-service maximum. Most carriers use some form of combination pricing. Common in highly volatile markets and changing competitive situations
Key Tools and Components of CRM: Customer Defection Analysis
process of analyzing the customer who have stopped buying to determine why *Finding a new customer costs 5-10 times as much as keeping an existing customer*
Primary Functions of a Warehouse
receiving, storage, picking, packing, shipping
Strategically Significant Customers
relationships should be built with strategically significant customers (they provide the value for the effort) Strategically significant customers are: * customers with high life time value (customers that buy the products constantly in long term) * Customers who serve as role models for other customers * Customers who inspire change in the supplier and or supply chain
CBP is also concerned with
revenue collection Revenue is determined by item such as -Correct valuation (price paid or payable) -Correct classification -Country of Origin (COO) -Identification of the merchandise -Identification of buyer and seller and whether they are related
Queuing System Design
single channel, single phase; single channel, multiple phase; multiple channel, single phase; multiple channel, multiple phase
Single channel, single phase
single server Example: Single counter retail store.
Queue Types
structured, unstructured, mobile
Clickstream
tracking how a customer navigates a website can help tailor a website's images, ads, or discounts based on past usage of the site
using email or direct mail, saves labor and postage and reduces the chances of being a nuisance
