Supply Chain Final
seven R's rule of customer service
1. the right product 2. the right quantity 3. the right quality 4. the right place 5. the right time 6. the right customers 7. the right costs + the right documentation = the perfect order
transportation and warehousing in services
facilitating goods need to be transported and warehoused in order to provide the service
5 modes of transportation: air
fastest and most expensive mode; approx 5% of total us freight spend; cannot carry extremely heavy/bulky cargo; ideal for items w high cost to weight ratio (jewelry, fine wines, pharmaceuticals, etc); paired w trucks for door-to-door delivery
global location factors: currency stability
impacts business costs and consequently location decisions
trade compliance systems (global trade management systems)
important for every major importing/exporting company in the US; automate the process of checking every transaction
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 (ex. newspapers, magazines, pharmaceuticals); acts as incentive for downstream members to carry more stock bc the risk of obsolescence is taken by the upstream supply chain partner; the risk is that the downstream member in the supply chain might exploit the situation by ordering more stock than is required and returning large volumes
opportunities for global supply chains
increased revenues through global business/economic opportunities; increased sourcing options w more potential suppliers to choose from
disadvantages of less than truckload (LTL)
increased risk of theft/damage; increased shipping times & delays
managing waiting time
involves managing both actual and perceived waiting time
5 R's of reverse logistics: recalls
more complex than basic returns bc they typically involve a product defect or potential hazard and may be subject to govt regulations, liability concerns, or reporting requirements
5 modes of transportation: truck
most flexible, carries more than 80% of us freight, carries anything from packaged household goods to building materials to liquid petroleum; competes w rail & air for short/medium hauls (short = 0-200 miles from driver's home terminal; long = over 200 miles); impacted by truck driver shortage & hour-of-service rules
queue system assumptions
most models assume that a customer will enter the queue and stay until served; assume infinite length of a queue
3 types of warehouses: 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
primary concern of service response logistics
the management and coordination of the organization's service activities
warehouse network
the number of, and relationship between, the warehouses that a company has in their organizational structure
key tools and components of customer relationship management: segmenting customers
the practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing; by demographics/income/geography
key tools and components of customer relationship management: customer defection analysis
the process of analyzing the customers who have stopped buying to determine why they stopped
definition of transportation
the function of planning, scheduling, and controlling activities related to the mode, carrier, and movement of inventories into and out of an organization
transportation deregulation (1970-today): ICC termination act of 1995
the interstate commerce commission (ICC) was eliminated
2 internet distribution strategies
1. pure strategy: many retailers today sell products exclusively over the internet (ex: amazon) 2. mixed strategy: others use online retail as a supplemental distribution channel (ex: walmart)
3 service strategies
1. cost leadership 2. differentiation 3. focus
5 modes of transportation
1. truck 2. rail 3. pipeline 4. air 5. water
load or transportation broker
a transportation intermediary that brings shippers and carriers together
port of entry
any port designed by the US government where goods may enter the united states
advantages of full truckload (FTL)
best for large shipments; ideal for high risk/delicate shipments; considerably faster than LTL
why companies need customer relationship management
1. acquire new customers 2. retain their existing customers 3. meet the changing expectations of customers
strategies for dealing w periods of high demand (that do not involve hiring/firing)
1. cross-training and sharing employees so they can help on more tasks 2. using part-time employees (ex. holiday season) 3. using customers as "hidden employees" (ex. self checkout) 4. using technology 5. using employee scheduling policies (ex: nurses have to work alternating holidays)
european union (EU)
27 countries in europe (26 now bc of brexit tho)
major US international trade legislation
7 major laws/acts in the 70 years from 1930-2000 10 major laws/initiatives in 2 immediate years post 9/11
how much of operating costs does hiring, training, supervising, and equipping personnel account for
75%
4 transportation company classifications: exempt carriers
Person or company specializing in services or transporting commodities exempt from regulation by the Interstate Commerce Act.
north american free trade agreement (NAFTA)
US, canada, mexico
definition of warehouse
a facility used to store purchases, work-in-process, and finished goods inventory
definition of warehousing
a function that allows a company to receive, store, breakdown, repackage, and distribute items to a manufacturing location, or finished products to a customer
3 types of warehouse networks: single warehouse
advantages: less complicated, lower operating costs/inventory, no dupes of equip/staff/managers, centralized network disadvantages: may take longer to deliver product to some customers who are further from the central location
trends in customer relationship management: cloud computing (software as a service)
ala carte and on demand offerings accessed via web browser; changing the cost structure of CRM applications
fourth party logistics (4PL)
an interface between the client company and multiple logistics service providers; company will select a lead logistics partner (referred to as a 4PL) that is then charged with managing the activities of all the other 3PL's being used by the company;
global location factors: land availability
as land and construction costs in big cities continue to escalate, the trend is to locate in the suburbs and rural areas.
foreign trade zone permitted activities
assembly, exhibition, inspection, salvage, destruction, reclassification, manufacturing, processing, storage, testing, relabeling, repackaging
disadvantages of full truckload (FTL)
costs more than LTL
transportation regulation (1870-1970): interstate commerce act of 1887
created the interstate commerce commission (ICC)
freight terms of sale
delivery and payment terms agreed between a buyer and seller
marketplace
duties paid upon leaving FTZ and leaving US markets; no duties paid if re-exported
5 modes of transportation: pipeline
most reliable and cheapest (per unit cost) mode; approx 2% of total us freight spend; limited variety of commodities; materials transported in liquid/gaseous state (petroleum, natural gas, drinking water, gasoline); little maintenance required once pipeline is running
inbound logistics
moving goods/materials from suppliers to buyers
global logistics intermediaries: non-vessel-operating common carriers (NVOCC)
operate like freight forwarders but use only scheduled ocean liners
regulation pros & cons
pros: tends to assure adequate transportation service throughout the country, protects consumers from monopoly pricing/safety/liability cons: discourages competition, does not allow prices to adjust based on demand or by negotiation
benefits outbound
re-export duty exemption; inverted tariff relief; no duties for waste or zone-to-zone transfer
automated sales force tools: sales territory management
sales managers obtain info on each sales rep's activities
3 service strategies: focus
serve a narrow niche better than other firms (ex: custom stereo in your house)
types of services: pure services
services offering very few or no tangible products to the customers (ex. consulting, storage facilities, training/education)
types of services: state utility
services which directly involve things owned by the customer (ex. car repair, dry cleaning, haircut, healthcare)
types of services: end products
services which offer tangible components along w the service component (ex. restaurants come w food along w dining service)
types of queue systems: structured queues
set in a fixed position (ex: supermarket checkout line); can be structured as a "take a ticket number" type of thing so a person can walk around and wait for their number to be called
global location factors: taxes and incentives
several levels of government must be considered when evaluating potential locations; tariffs are federal taxes designed to protect local; countries with high tariffs discourage importing goods into the country and encourage multinational corporations to produce locally
decisions driving warehouse management
site selection, number of warehouse facilities in the network, layout of the warehouses, methods of receiving/storing/retrieving/distributing products/materials
5 modes of transportation: rail
slow and inflexible but has the most capability; approx 9% of total us freight spend; good for long distances w heavy/bulky shipments; shipments include building materials, construction equipment, coal, gravel, sand, lumber, etc; aging infrastructure/equip is an issue; paired w trucks for door-to-door delivery
customer relationship management is NOT meant for every customer
some customers dont want to be committed to every brand
blending delivery systems together
some services may be designed w different delivery systems to maximize performance in each area (ex: restaurants have customer-centric staff in the front and non-customer-centric staff in the back)
relationships should be built w
strategically significant customers that are likely to provide the most value for the effort
5 primary functions of a warehouse: storage
the safe/secure retention of parts or products for future use or shipment
4 types of transportation pricing: cost of service pricing
the setting of a price for a service based on the costs incurred in providing it
customer relationship management (CRM)
the transformation of the people, process, and tech required to become a customer-centric organization; philosophy of putting customer first; involves acquiring, retaining, and partnering w selective customers to create value for both parties; goal to maintain customers for life
intermodal transportation
the use of multiple modes of transportation to execute a single transport shipment; sometimes referred to as the sixth mode of transportation; growing substantially bc fairly cost-efficient and cost-effective
automated sales force tools: sales activity management
tool offering sales reps a guided sequence of sales activities
3 logistics management software applications: warehouse management systems (WMS)
track and control the flow of goods from receiving dock to outbound shipment; new technologies, such as RFID tags, facilitate tracking
global logistics: international freight security
transportation across national boundaries introduced added complexity/scarcity
full truckload (FTL)
transportation of goods that fill up a full truck, or a partial load shipment occupying an entire truck
less than truckload (LTL)
transportation of relatively small freight, i.e., the freight does not require the entire space of a truck
3 service strategies: differentiation
unique service created based on customer input and feedback (ex: sunday car servicing at hyundai/ford when other dealers are not open sundays)
automated sales force tools: sales force automation (SFA)
used for documenting field activities, communicating w the home office, and retrieving sales history in the field
queuing management systems
used to help control the flow and prioritization of people expecting to receive a service
balking
when a customer refuses to join the queue
advantages of cross-docking warehouses
1. centralization: provides a central site for products to be sorted and combined for delivery to multiple destinations in the most productive and fastest method possible 2. consolidation: combines smaller product loads into one method of transport to save on transportation costs 3. break-bulk: breaks down large product loads into smaller loads for transportation for an easier delivery process to the customer 4. transportation cost savings bc there are less FTL shipments 5. operational efficiency: material does not have to be stored since it directly moves from receiving to shipping 6. inventory efficiency: total inventory can be reduced since theres no storage
3 warehouse network strategies
1. market positioned strategy 2. product positioned strategy 3. intermediately positioned strategy
5 dimensions of service quality
1. reliability: consistently performing the service correctly and dependably 2. responsiveness: promptly and timely service 3. assurance: ability to convey trust and confidence to customers 4. empathy: providing caring attention to customers 5. tangibles: physical characteristics of the service
bundle of service attributes (ex: banking industry)
1. supporting facility: location/decoration/layout/equipment (ex: drive-up tellers and ATMs) 2. facilitating goods: tangible elements that are used by the customer along w the service provided (ex: deposit forms and bank statements) 3. explicit services: availability and access to the service, consistency of service performance, comprehensiveness of the service, and training of service personnel (ex: vault/safety deposit boxes/loans) 4. implicit services: attitude of the servers, atmosphere, waiting time, privacy, security, convenience
how supply chain management in the service industry is different from in manufacturing
1. the tangibility of the end product; services are generally not tangible 2. the involvement of the customer in; more involved in service industry 3. the assessment of quality 4. the labor content; much higher ratio of labor to materials in the service industry 5. the facility location considerations; services are more impacted by location decisions
3 basic alternatives if demand exceeds capacity
1. turn customers away and not service them 2. make them wait until service is available for them 3. increase service capacity
3 logistics management software applications
1. warehouse management systems (WMS) 2. transportation management systems (TMS) 3. global trade management systems (GTM)
global location factors: right-to-work laws
28 states have laws protecting the right of employees to decide whether or not to join or support a union
3 types of warehouse ownership: public warehouse
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; they own their own equipment and hire their own staff; fees = combo of monthly storage fee + pallet-in and pallet-out fee
5 modes of transportation: truck: specialized carriers
a trucking company which handles the movement of cargo that requires specialized equipment for transportation because of the shipment's size, weight and shape; transports commodities like liquids, petroleum, household goods, building materials, and other specialized item
3 warehouse network strategies: product positioned strategy
close to supply source to collect goods and consolidate before shipping products out to customers; many suppliers and few customers
recovering from poor service quality
keeping customers loyal and coming back serves as good word of mouth advertising
customer service elements: post-transaction elements
occur after the sale; includes warranty repair capabilities, complaint resolution, product returns, operating information, etc.
5 primary functions of a warehouse: receiving
physical receipt of material, identification, inspection for conformance with the purchase order (quantity and damage), put-away, and preparation of receiving reports
5 primary functions of a warehouse: 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
website self-service
portals available for customers to access their account info, product info, contact info, etc; customers can make their own decisions about mailing services
disadvantages of public warehouses
potential for incompatible computer systems, specialized services may not be what is required/need, space may not be available where/when needed
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
examples of service capacity
1. airline capacity = # of seats and # of planes 2. restaurant capacity = number of tables 3. hotel capacity = number of rooms
3 types of warehouses
1. consolidation warehouse 2. break-bulk warehouse 3. cross-docking warehouse
4 transportation company classifications
1. contract carriers 2. private carriers 3. common carriers 4. exempt carriers
disadvantages of using a 3pl
1. control: company loss direct control over logistics operation 2. dependency: outsourcing = dependency on 3pl 3. pricing: company is locked into pricing model specified in contract
advantages of private warehouses
1. control: greater flexibility in warehouse design and operations 2. visibility: inventory, material flow, handling, supervision, associated costs 3. cost: operating cost can be 15-25% lower if company achieves at least 75% utilization
6 steps to a successful customer relationship management program
1. creating the CRM plan (objectives; new applications to be developed; integration of existing systems; personnel requirements; costs/time frame) 2. involve CRM users from outset (create project team w members from all affected organizational areas; test w pilot application) 3. select the right application and provider (compare options based on performance/security/system availability) 4. integrate existing CRM applications (centralized database) 5. establish performance measures 6. provide CRM training for all users
disadvantages of contract warehouses
1. duration: the client company is expected to enter into a contract for a specific period of tie; generally 3 years
disadvantages of private warehouses
1: high start up cost: capital to build/buy warehouse; long/risky investment; cost of hiring & training; purchase of material handling equipment 2: fixed location: not easy to move to another location if market changes 3. fixed size and costs: when volume is low, the company still pays the fixed costs
% of sales that end up getting returned (retail)
6-10%
shippers' association
a transportation intermediary that involves nonprofit cooperatives which arrange for members' shipping
key tools and components of customer relationship management: churn reduction
churn is the process of customers changing their buying preferences because they find better or cheaper products and services elsewhere; churn reduction is the effort to stop losing customers to competition
key tools and components of customer relationship management: personalizing customer communications
clickstream: tracking how a customer navigates a website to help tailor ads; personalization shows customer that a company cares about them which is likely to result in more sales
3 warehouse network strategies: market positioned strategy
close to customers to maximize distribution services and improve delivery; few suppliers and many customers
automated sales force tools: knowledge management
enables quick decision making, better customer service, and a better-equipped and happy sales staff
US department of homeland security (DHS)
government agency whose mission is to 1. prevent terrorist attacks within the US 2. reduce america's vulnerability to terrorism 3. minimize damage from potential attacks/natural disasters
importance of warehousing
having the right product in the right place at the right time
benefits of trade compliance systems
increased level of compliance compared to manual process; decreased number of physical inspections by US customs; faster release of shipments by US customs; avoidance of fines and penalties; opportunities to interface w other systems
5 primary functions of a warehouse: shipping
outgoing shipment of parts, components, and products; includes packaging, marking, weighing, and loading for shipment
challenges of global supply chains
tariffs/duties (import taxes); transporting goods across borders may involve new partners; different customs/business practices
location evaluation techniques: break even model
useful when fixed and variable costs can be determined; basically figure out the fixed cost of land/property taxes/insurance/equipment/buildings and the unit variable cost/materials/utilities/transportation costs and determine break even points on the graph
4 types of transportation pricing
1. cost of service pricing 2. value of service pricing 3. combination pricing 4. net-rate pricing
customer service as a philosophy
a company-wide commitment to providing customer satisfaction by placing emphasis on quality and quality management
3 types of warehouse ownership: private warehouse
a storage facility that is owned by the company that owns the goods being stored in the facility; generally established by companies that have a large volume or highly valuable goods, or the need for specialized storage/handling; can be operated as a separate division within a company; can be co-located on-site w manufacturing or it can be off-site
penalties for violations
criminal penalties: substantial fines and/or 10+ year imprisonment civil penalties: substantial fines per occurrence and individual and/or company sanctions statutory sanctions: seizure/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; detailed inspections of every single shipment and delayed release by US customs
service capacity planning challenges
customer arrivals and service demands vary; level of congestion impacts perceived quality; idle capacity is bad but real; inability to control demand results in capacity measured in terms of inputs (ex: number of hotel rooms rather than guest nights)
queuing system input
customers are the demand source for services and their arrival triggers the start of the service experience; generally appear in predictable arrival patterns (dinner rush at restaurants)
strategically significant customers are
customers w high life-time value (customers that will constantly buy the products or use the services in the long-term), who serve as role models for other customers, who inspire change in the supplier
types of services
pure services, end products, state utility
reneging
when customers decide to leave the queue
LEAN warehousing
1. cross-docking: eliminates need to store inventory & reduces some transportation 2. reduced low sizes/shipping quantities: faster throughput is a LEAN concept 3. increased automation: conveyor systems, voice picking, pick to light, automatized guided vehicles, robotics improve efficiencies 4. green warehousing: sustainability to become a net zero energy user
international expansion
operate/partner w firms familiar w the region's markets/suppliers/infrastructure/government regulations/customers; must address language and cultural barriers
advantages of using a 3pl
1. cost: eliminates need for a company to invest in warehouse space/tech/staff 2. logistics expertise: knowledgeable of industry best practices & tech developments 3. efficiency: can leverage relationships & volume discounts
strategies for when capacity exceeds demand (that do not involve firing)
1. do other jobs when it's not busy (ex: clean or prep in a restaurant) 2. do training/cross-training 3. use demand management techniques to shift demand from peak demand periods into non-peak periods by offering incentives like discounts and special sales (ex: early bird specials)
3 types of distribution channels
1. eatertainment 2. entertailing 3. edutainment (infotainment)
goals and benefits of customer relationship management
1. increased customer satisfaction 2. increased customer loyalty and retention 3. faster responses to customer inquiries 4. increased revenue 5. growth of the customer base through referrals 6. a simplified and more cost effective marketing & sales process 7. increase sales effectiveness; closing sales faster 8. increased sales through cross-selling and/or up-selling 9. access to updated customer information and personalized interactions 10. automation of repetitive tasks
global location factors: 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
determining factors of how many and where warehouses are needed
1. level of customer service the company wants to provide: more customer service = more warehouses 2. amount of inventory the company wants to invest in: more warehouses = more inventory investment
objectives of transportation
1. maximize company's value through price negotiations 2. ensure efficient service 3. satisfy customer needs
6 types of global facilities
1. offshore factory 2. source factory 3. server factory 4. contributor factory 5. outpost factory 6. lead factory
3 types of warehouse ownership
1. public warehouses 2. contract warehouses 3. private warehouses
3 secondary functions of a warehouse
1. quality inspections: incoming and outgoing 2. repackaging: for specific customer orders 3. assembly operation: puts products together w other items before shipping (ex. literature, spare parts, advertising materials)
most common forms of intermodal transportation
1. rail and motor carriers (trucks): offer point to point pickup and delivery service known as trailer-on-flatcar (TOFC) 2. rail and water carriers: offer point to point pickup and delivery service known as container-on-flatcar (COFC) 3. roll-on/roll-off ships: specifically designed to allow trucks to be driven directly on and off the ship without the use of cranes, provides flexibility & speed
5 primary functions of a warehouse
1. receiving 2. storage 3. picking 4. packing 5. shipping
5 R's of reverse logistics
1. returns 2. recalls 3. repairs 4. repackaging 5. recycling
rules for managing perceived waiting times
1. satisfaction when customer perception is greater than or equal to customer expectation 2. hard to play catch-up so dont mess up the first time
4 primary activities of service response logistics
1. service capacity 2. waiting times 3. distribution channels 4. service quality
differences between goods and services
1. services cannot be inventoried 2. services are produced and consumed simultaneously 3. services are often unique to the customer (insurance policies, legal services, tax prep) 4. services have high customer interaction 5. services are decentralized and must be located near customer base bc of inability to inventory or transport services
advantages of contract warehouses
1. services: clients can obtain specialized services to suit their needs 2. cost: can be bundled in the contract and negotiated at a lower cost 3. control: contract warehousing offers a degree of control at a reasonable price
queuing system designs
1. single channel, single phase, single server (ex: customer to service rep) 2. single channel, multiple phase, multiple servers acing in series (ex: customer to hostess to wait staff to chef) 3. multiple channel, single phase, single server (ex: customer to one of multiple available service reps) 4. multiple channel, multiple phase, multiple servers acting in parallel (ex: customer to one of multiple fast food order takers to fast food cook) **look at slide 166 for visuals**
3 types of warehouse networks
1. single warehouse 2. multiple warehouses 3. hybrid approach
5 R's of reverse logistics: repackaging
95% of returned products are bc customers are dissatisfied w them, but bc they are defective; these products are typically repackaged and returned to inventory for restock or resale
service delivery system
The delivery of services can be expressed as a spectrum w mass produced, low-customer contact systems at one end (ticket kiosks/vending machines/ATMs), and highly customized, high-customer-contact systems at the other end (personal shoppers/hair stylists/financial managers)
customer service as a performance measure
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, etc
6 types of global facilities: offshore factory
a factory set up for manufacturing or assembly in a country where labor and/or raw materials are less expensive, for eventual import back into the manufacturer's home country; manufactures products at low cost w minimal technical/managerial resources; low labor costs; local management serves in supervisory roll but not in making management decisions ex. clothing produced in indonesia
6 types of global facilities: server factory
a factory set up to take advantage of government incentives, and/or reduced tax/tariff barriers, to meet regional or local market needs; firm uses govt incentives, low exchange risk/tariff barriers to reduce taxes/logistics costs; makes minor improvements to products/processes; set up to serve the local market ex. coca-cola bottling; mixes the final ingredients to take advantage of exchange rates/tariffs/taxes
key tools and components of customer relationship management: event based marketing
a form of marketing that identifies key events in the customer/business life cycles; ex. birthdays/holidays/marriages; personalized
customer service as an activity
a particular task that a firm must accomplish to satisfy the customer's needs. Order processing, billing and invoicing, product returns, and claims handling are all typical examples of the customer service activity
key tools and components of customer relationship management: customer lifetime value (CLV)
a prediction of the net profit attributed to the entire future relationship w a particular customer; some customers are worth more than others
4 types of transportation pricing: value of service pricing
a pricing strategy which sets prices based on the value perceived by the customer (ex. priced at what the market will bear)
key tools and components of customer relationship management: target marketing
a segment of customers a company has decided to aim its marketing efforts towards; more effective than mass marketing
freight forwarder
a transportation intermediary that consolidates LTL shipments into FTL shipments; they take small shipments from multiple companies and consolidate them into larger shipments
intermodal marketing company
a transportation intermediary that purchases blocks of rail capacity and sells it to shippers
5 modes of transportation: truck: general freight carriers
a trucking company which handles a wide variety of commodities in standard trailers; freight is generally palletized; can be LTL or FTL carriers; carry majority of goods shipped; does not require specialized equip
international trade compliance
a typical cross-border shipment involves: about 35 accurately filed documents, compliance w over 600 laws and 500 trade agreements, facing about 25 parties including customers, carriers, freight forwarders basically international trade activities are a lot to handle bc info is always changing
3 types of warehouse ownership: contract warehouse
a variation of public warehousing that handles the shipping, receiving, and storage of goods on a contract basis for a fee; contract can be for an entire building or for just a part of it; usually requires client to commit for years rather than months; fee structure may be fixed cost, cost plus, or a combo of both; the company providing the space handles the employees/equipment/maintenance rather than the warehouse
3 types of warehouse networks: multiple warehouses
advantages: faster than single warehouse bc decentralized network disadvantages: more complicated, higher operating costs/inventory, dupes of equip/staff/managers, decentralized network means best people/equip/inventory is spread across a larger network
franchising
allows business to expand quickly; protects existing markets; builds market share; facilitates business when owners have limited financial resources
key tools and components of customer relationship management: relationship marketing/permission marketing
an approach to selling products and services in which a customer explicitly agrees in advance to receive marketing information.; customers self-select the type and time of communication they want (ex. opt-in emails); all about building an ongoing relationship w customers
third party logistics (3PL)
an outsourced provider that manages all, or a significant part, of an organization's logistics requirements for a fee; typically generate 10-20% savings in logistics costs; favored by small businesses; used a bit for international logistics
measuring customer satisfaction
can be done through surveys/phone calls/etc; must capture and then analyze the data; most companies need to use a database to manage
service capacity decisions: long-range
capacity can be used as a preemptive strike where the market is too small for two competitors to co-exist (ex: the first to build a luxury hotel in a mid-sized city may capture all the business)
service capacity decisions: balance
capacity decisions must be balanced against the costs of lost sales if capacity is inadequate or against operating losses if demand does not reach expectations
managing service capacity: level demand strategy
capacity remains constant regardless of demand; when demand exceeds capacity, queue management tactics deal with excess customers (ex: grabbing a number at the deli for first come first serve)
service capacity utilization
capacity utilization = actual customers served per period / capacity
managing service capacity: chase demand strategy
capacity varies w demand so you can handle fluctuations but must take appropriate actions prior (ex: open up additional lines)
3 types of distribution channels: eatertainment
combined restaurant and entertainment elements (ex: rainforest cafe)
3 types of distribution channels: edutainment (infotainment)
combines learning w entertainment to appeal to customers looking for substance along w play (ex: liberty science center)
3 types of distribution channels: entertailing
combining retail w entertainment elements (ex: mall of america has a ferris wheel, rock climbing wall, etc)
global location decisions
companies can locate anywhere bc of increased globalization, tech, transportation, and open markets
key tools and components of customer relationship management: predicting customer behaviors
company can collect customers buying history, preferences, trend info to target marketing efforts
location evaluation techniques: weighted-factor rating model
compares attractiveness of several locations through quantitative and qualitative factors; basically identify factors and assign scores and weights to each
customer defection analysis and churn reduction are
complements to determine why customers leave and to find ways to retain them
US customers and border protection (CBP)
controls the import process; mission is to safeguard america's borders thereby protecting americans from dangerous people and materials while enhancing global economic competitiveness by enabling legit trade/travel; protects US through active inspections at ports of entry
advantages of less than truckload (LTL)
cost effective; more available carriers; ideal for small businesses
downsides of reverse logistics
costs 4-5x as much as forward logistics; requires on avg 12x as many processing steps; often viewed as an "unwanted' supply chain activity (many companies outsource this to a 3PL) or a cost of doing business or a quality/compliance issue
trends in customer relationship management: social media
creating virtual communities around a brand
global location factors: world trade organization (WTO)
deals w the global rules of trade between nations to ensure that trade flows as smoothly, predictably, and as freely as possible; functions include administering agreements, forum for trade negotiations, trade disputes, monitoring trade policies, aiding developing countries, international organizations
service recovery systems require
developing recovery procedures that are thought out prior to the bad event happening; training employees in these procedures prior to the event; empowering employees to remedy customer problems and recognizing them when they do
technology and trends in transportation
driver monitoring, traffic coordination, safety technology, platooning, new concept trucking, vertically folding shipping containers, driverless trucks, drone delivery
deregulation
encourages competition and allows prices to adjust as demand and negotiations dictate; US transportation industry remains mostly deregulated
green reverse logistics programs
environmentally friendly activities such as recycling, reusing materials/products, refurbishing unused products
4 types of transportation pricing: net rate pricing
established discounts and accessorial charges are rolled into one all-inclusive price; pricing is tailored to the individual customer's needs
global location factors: regional trade agreements
european union (EU), north american free trade agreement (NAFTA), southern common market (MERCOSUR), association of southeast asian nations (ASEAN), common market of eastern and southern africa (COMESA)
global location factors
factors used to compare/contrast one potential location against another when making global location decisions 1. competitiveness 2. taxes and incentives 3. currency stability 4. access and proximity to markets 5. labor issues 6. right to work laws 7. access to suppliers and cost 8. utility availability and cost 9. environmental issues 10. land availability and cost 11. quality of life issues 12. business clusters 13. trade agreements
6 types of global facilities: 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 competitors, advanced suppliers, and research facilities/universities for materials/components/products ex. Raleigh, Durham, Chapel Hill NC. Research Triangle Center. UNC, Duke, IBM , Cisco, etc. Silicon Valley, Calif.
6 types of global facilities: contributor factory
focused on product development and engineering for products that they manufacture; basically an upgraded server factory that includes product development, production planning, procurement decisions, supplier development ex. 1973 Sony built a Server factory in Wales and then 15 years later got involved in development, planning, etc. and now is a contributor factory
global location factors: quality-of-life
following considerations: education, economy, natural environment, social environment, culture, healthcare, govt, politics, mobility, public safety, recreation
foreign country export to USA/USA import from foreign country
foreign factory -> foreign warehouse -> foreign customs -> foreign port -> ocean shipment -> USA port -> USA customs -> USA warehouse -> USA factory
types of queue systems: mobile queues
formed virtually w tech; provides flexibility and reduced stress (ex: using a mobile app to place your name in an electronic queue at like a restaurant)
global location factors: business clusters
geographic concentrations of interconnected companies/institutions; reasons for success include innovation/competition can be geographically concentrated, close cooperations among clustered companies, fierce competition among rival companies, recruitment from local skilled workers
global location factors: environmental issues
global warming/air pollution/acid rain considered prices of industrialization; trade liberalization creates need for environmental cooperation
improving service productivity is challenging due to
high labor content, individual customized services, difficulty of automating services, problem of assessing service quality
issues with global services
identifying global customers; labor/facilities/infrastructure support vary by country; legal/political issues (foreign laws); domestic competitors and economic climate
third party logistics services
inbound/outbound transportation, warehousing, pick and pack, freight forwarding, customs brokerage, customs clearance, order taking, billing/invoicing, inventory auditing, freight bill auditing and payment
key tools and components of customer relationship management: up selling
involves persuading a customer to buy a more expensive item or upgrade a product or service to make the sale more profitable; involves selling the customer extra features or add-ons to the product they are already buying or considering
reverse logistics (aka 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; basically backwards flow of goods from customers in the supply chain; all about damage control and making the process as customer friendly as possible
customer relationship management program
involves training users within the company to make customers feel valued; can get complex bc finding out the needs of thousands/millions of customers can get ruff
waiting time management techniques
keep customer occupied, start service quickly, relieve customer anxiety, keep customers informed, design fair waiting system
global location factors: labor issues
labor availability/productivity/skill; unemployment/underemployment rates; wage rates; turnover rates; labor force competitors
service layout strategy
layouts designed to reduce distance traveled within the store (ex: being able to watch your car get washed or your pet get groomed)
call centers (or customer contact centers)
links an org and its customers together; where reps respond to customer queries; enhances customer to business relationship
benefits inbound
local and state tax breaks/benefits; duty deferral and reduction; streamlined cost-saving input procedures
3 types of warehouse networks: hybrid approach: advantages
lower operating costs (smaller spoke warehouses are more efficient than a purely decentralized model), lower inventory (safety stock is held centrally), better customer service (inventory is maintained closer to the customer than in purely centralized model)
6 types of global facilities: source factory
manufactures products at low cost but with skilled workers and significant managerial resources; basically an upgraded version of an offshore factory that includes plant management involvement in supplier selection/production planning, more developed local infrastructure, access to skilled workforce, and low production costs ex. HP singapore factory produced calculators and keyboards
global location factors: access and proximity to markets
manufacturing should be within delivery proximity of customers
establishing an FTZ
may be formed by any public entity, including quasi-governmental corporations/organizations
3 warehouse network strategies: 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
global logistics intermediaries: customs brokers
move global shipments through customs and handle documentation
global logistics intermediaries: international freight forwarders
move goods to/from foreign destination
outbound logistics
moving finished goods to the customer
material handling
moving goods and materials between sites (internal & external)
service location strategy
must make it easy for customers to find the store and what they want to do
advantages of public warehouses
no capital investment, no property tax, flexibility, lower costs, reduced risk, access to special features (ex. temp-controlled storage, customer service, etc.)
5 R's of reverse logistics: repairs
not all products returned are disposed; manufacturers may identify the failure and repair/refurbish/remanufacture the product to like-new condition and return it to stock or harvest various components for re-use
customer service elements: 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 customer relationship management: cross selling
occurs when a company sells an additional related or complementary product or service to an existing customer after the initial purchase (ex. asking if you want fries w ur burger)
3 types of warehouse networks: hybrid approach
one hybrid network is a "hub-and-spoke" where there is a centralized warehouse (i.e., the "hub") which holds most of the inventory linked to a series of smaller geographically dispersed warehouses (i.e., the "spokes") which hold only a small amount of inventory to support their local area in the immediate time frame; the hub warehouse feeds the spoke warehouses with inventory on a regular basis
4 transportation company classifications: 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
4 transportation company classifications: common carriers
person or company who transports freight for a fee that can be hired by anyone to transport goods
4 transportation company classifications: contract carriers
person or company who transports freight under contract to one or a limited number of shippers
foreign trade zones (FTZ's)
physical areas inside the US supervised by US Customs 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 various permitted activities; while in the FTZ, merchandise is not subject to US duty/excise tax (only paid when the material is moved outside the FTZ for consumption); subject to both laws of the US as well as those of the states/communities in which they are located; no time limit on how long a material can remain in the zone
customer service elements: pre-transaction elements
precede the sale; includes customer service policies, the mission statement, the organizational structure, system flexibility, etc.
value of products before they are moved to the customer's point of consumption
pretty low value
4 types of transportation pricing: combination pricing
price is set at a value between cost of service minimum and value of service maximum; most carriers use some form of this; common in highly volatile markets and changing competitive situations
how poor reverse logistics can hurt a company
problems include inability of info systems to handle returns, lack of worker training, little or no identification on returned packages, need for adequate inspection and testing of returns, danger of placing returned products back into sales stock; can affect how consumers view products or brands
3 logistics management software applications: global trade management systems (GTM)
provides global visibility, standardization, and documentation to comply w international trade regulations
global logistics intermediaries: trading companies
put buyers and sellers from different countries together and handle export/import arrangements/documentation/transportation
queue system characteristics
queue discipline describes the order in which customers are served; 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
3 service strategies: cost leadership
requires large capital investment in state of the art equipment and significant efforts to control/reduce costs (ex: UPS optimization)
trends in customer relationship management: customer data privacy
rules and laws regarding invasion of privacy include patriot act in the US and internet privacy law in the EU
automated sales force tools: lead management
sales reps can follow prescribed tactics when dealing w prospects to aid in closing the deal
free on board (FOB) destination
seller places goods free on board to the buyer's place of business and seller pays freight costs; ownership stays w seller until buy receives goods; seller assumes risk for in-transit loss/damage
free on board (FOB) origin
seller places goods free on board w the carrier at the seller's location and buyer pays freight costs; ownership of the goods passes to the buyer when the public carrier accepts the goods from the seller; buyer assumes the risk for in-transit loss/damage
field service management
setting up the company operations to allow customers to interact directly w the company's service personnel
6 types of global facilities: 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, basically your go-to factory ex. Intel factory in Penang, Malaysia opened in mid 1970's, now is a lead factory
global location factors: access to suppliers and costs
supplier proximity influences the delivery of materials and the effectiveness of the supply chain
definition of logistics
that part of scm that plans, implements, and controls the efficient/effective flow and storage of goods, services, and related information, from the point of origin to point of consumption, in order to meet customer requirements
service capacity decisions: short-range
the lack of short-term capacity planning can generate customers for the competition (ex: if restaurant staffing is inadequate to handle the volume of customers arriving at the restaurant, customer will likely go elsewhere)
service capacity
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
deemed exports
the release of tech or source code that is subject to the Export Administration Regulations to a foreign national (non US citizen) located in the US; can be visual/oral/through job training/via systems access
3 logistics management software applications: transportation management systems (TMS)
used to select the best mix of transportation services and pricing
5 modes of transportation: water
very slow and very inflexible but also inexpensive; approx 5% of total us freight spend; used for heavy/bulky/low value materials (coal, grain, sand, petroleum); competes w rail and pipeline for some cargo shipments
3 types of warehouses: break-bulk warehouse
warehouse operation that divides full truckloads of items FROM A SINGLE SOURCE into smaller, more appropriate quantities for use or further distribution; located closer to the customer base so that the smaller LTL shipments travel the shorter distance, while the larger FTL shipments from the single source travel the longer distance before arriving at the break-bulk warehouse. (takes single FTL shipment and splits into several LTL shipments; opposite of consolidation) **break-bulk = breaking the bulk shipments
3 types of warehouses: consolidation warehouse
warehouse operation that receives products from MANY DIFFERENT plants or suppliers, stores them, and then COMBINES them with similar shipments from other plants or suppliers for further distribution; located closer to the supply base so that smaller LTL shipments travel shorter distance and can be consolidated into larger FTL shipments traveling longer distance to the customer (takes several LTL shipments and makes them in singular FTL shipments)
5 R's of reverse logistics: returns
when a customer returns a product for whatever reason, such as if an item is defective/damaged/seasonal/fails to meet expectations/excess inventory
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; must complete/submit a shippers export declaration (SED); submit commercial invoice for the product
import process
when a shipment reaches the US, the Importer of Record (the owner, or purchaser) must file entry documents at the port of entry; goods are not legally entered into USA commerce until: shipment has arrived within port of entry, delivery to shipping destination has been authorized by CBP, estimated duties have been paid; CBP is also concerned w revenue collection
types of queue systems: unstructured queues
when people form queues somewhat informally (ex: waiting for a taxi at an airport or people waiting for an ATM machine)
5 R's of reverse logistics: recycling
when products reach the ends of their useful lives and must be scrapped, companies must find safe, cost-effective and environmentally friendly ways to dispose of them; companies can reduce costs and minimize waste
5 primary functions of a warehouse: picking
withdrawing components from stock to make assemblies or finished goods, or to ship to a customer
