Logistics

Reasons Increased Importance of Logistics

(1) A Reduction in Economic Regulation (2) Changes in Consumer Behavior (3) Technological Advances (4) The Gaining Power of Retailers (5) Globalization of Trade

Role of Company Warehouse Network

(1) Critical to provide quick lead times to customers by positioning items close to final markets (2) Presents consolidation opportunities to reduce costs of transportation - Ex: Having a warehouse co-located with a manufacturing facility allows finished items to be aggregated into full truckload shipments, thus reducing transportation cost without occupying excess space within the factory (3) Storage for inventory - When there is an unstable supply of inputs (Ex: fresh oranges for orange juice manufacturers), warehouse space is needed to hold this inventory - Hedge against changes in market conditions (4) Product Mixing - Distribution centers allow for the "mixing and matching" of products to fill customers orders and then have the order delivered in an aggregated fashion The goal of warehousing is to reduce total logistics costs while maintaining the desired level of customer service

Importance of Customer Service

(1) Existing Customers are Often Considered "Cheaper" to Sell to (2) Existing Customers are More Loyal (3) Existing Customers Often Buy More (4) Existing Customers are a Good Source of Referrals (5) Lifetime value of customer

Post- Transactional Elements

(1) Installation, Warranty, Alterations, & Repairs - In many industry after-sales support is absolutely critical to maintain customer loyalty (2) Product Tracing - Absolutely crucial for industries such as pharmaceuticals and food products to be able to identify contaminated products (3) Customer Claims, Complaints, and Returns - Important to have policies in writing to ensure that they are consistently applied (4) Temporary Product Replacement - Many Manufactures of heavy equipment will provide temporary replacements when equipment breaks down under warranty

Transactional Elements

(1) Stockout Level (Measure of Product Availability) (2) Order Information - Provide information on order status, inventory status, expected shipping date, and backorder status (3) Expedited Shipments and Transshipments (4) System Accuracy (Order Quantities, Products, and Billing) (5) Order Convenience - How hard it is for customers to place an order and acquire info about it

Supply Chain Management: Elements and Key Decisions

(1) Supply Chain Management Processes (2) Supply Chain Management Components (3) Supply Chain Network Structure

Type of Warehousing: Mixing Warehouse

- A mixing warehouse takes full container-load of truckload shipments from incoming sources and then "mixes" different materials to meet the requirements of customers - Food distributors are a perfect example of this: they receive full truckload shipments of vegetables, meat, and fruit, and then provide an assortment for customers - Value of mixing warehouse is from a customer service standpoint; such warehouses better enable an organization to provide an assortment of products in a aggregate fashion

Air Cargo

- Accounts for only 1% of intercity ton-miles - Fasted of all modes - Fixed cost is 2nd lowest but variable costs are extremely high - Most products air-shipped have high value, high priority or extreme perishability

Liability

- Carriers must pay for liability insurance or accept financial responsibility - Shippers can reduce their risk by Improving packaging and loading Ex: Dunnage - Reducing susceptibility to loss or damage

Public Disadvantages

- Communication Challenges: Lack of standardization in contract agreements - Lack of specialization in terms of services available: Focal Firm's Exact needs cannot be met - Difficult to Respond to Rapidly to Special Request: Focal Firm does not operate the facility

Partnership Drivers

- Compelling reasons to partner - Expect benefits from expanding a relationship Improvement in asset/ cost efficiencies Improved customer service Enhanced marketing advantage Profit growth/ stability - The stronger the drivers, the more chance of a successful partnership

Public Advantages

- Conservation of Capital: Do not need to Tie-Up capital in facilities Easily meet peak requirements by adding more capacity - achieve economies of scale if operations are small (reduced costs) - Flexibility in that the focal organization is not locked into a long-term lease or owns the building - Know exact warehousing costs: Receive bill from the operator - Tax advantages: some states do not charge inventory taxes on goods stored in public warehouses - Focus on Core Competencies

Type of Warehousing: Manufacturing Support

- Consolidates Shipments from multiple incoming suppliers into shipments bound for a manufacturing facility; often found in Just-In- Time operations such as Toyota's manufacturing facilities - Advantages of Manufacturing support warehouses are (1) reducing the number of deliveries to the plant, which helps maintain operational efficiency and (2) the exact mix of components can be sent with each delivery based on inventory requirements

Private Advantages

- Control: the focal organization operates the warehouse and can better control employee actions - Increased Flexibility to tailor operations to meet the organization's specific needs and the needs of customers - Cost advantages if volume is large - Intangibles: Sense of "Permanent Presence"

Weight

- Cost per pound decreases as weight increases until carrier vehicle is full Relationship states again for the next vehicle load - Small loads should be consolidated into larger loads to maximize scale economies

Drivers of Inventory Growth

- Customer pressure for Service - SKU proliferation - Scrambled merchandising - Growth of variability of demand - Length and variability of lead time - Lack of information - Number of warehousing locations - Diffused inventory management responsibility

Requirements for Humanitarian Logistics

- Delivery of a wide variety of supplies, when and where they are needed - Multiple modes and unconventional modes utilized - Rapid delivery from sometimes undefined origin locations - Storing, staging and moving products in an uncertain environment - Coordination across a variety of agencies - Possible military interaction - May also involve movement of people

Humanitarian Logistics Challenages

- Dependence on voluntary contributions - Many stakeholders involved - High levels of uncertainty (demand, supply, information, political, security, etc. ) - Unsolicited donations - Degraded or nonexistent infrastructure - Lack of logistics assets/ companies - Delivery constraints due to military or government

Fixed Order Interval Model

- Determine a fixed order cycle - Depending on demand, the quantity ordered varies, but not the interval between orders - Requires forecasting of demand for next order cycle

Fixed Order Point, Fixed Order Quantity Model

- Determine an inventory level, at which to reorder the EOQ - Depending on demand, the interval between order varies, but not the quantity ordered

Cross-Docking

- Different from a warehouse or distribution center in that there is no long-term storage; ideally, full truckload shipments arrive and they are immediately moved "across the dock" onto outgoing trailers/containers - Cross-docking allows for product mixing; Wal-Mart has been famous for its use of cross docks to take full truckload shipments from suppliers and then sort these shipments for outbound stores

Distance

- Directly contributes to variable expenses Labor, Fuel, and Maintenance - Cost curve starts above zero because of fixed costs associated with pickup and delivery regardless of distance - However, rate of cost decreases as distance increases This is called the tapering principle

Drivers of Transportation Costs

- Distance - Weight - Density - Stowability - Handling - Liability - Market

Transportation Regulation

- Economic Regulation - Social Regulation

Benefits of a WMS

- Enhanced data capturing and sharing for: Service Improvement Fewer Errors Only promises that can be met are extended - Improving order picking -Improved visibility or warehouse activity - Improved tracking or internal and external inventories - Improved planing and optimization of asset utilization (integration of forecasts)

Uses of the Partnership Model

- Evaluate a potential new partnership - Analyze a portfolio of relationships - Diagnose relationships - Increase specific performance aspects of relationships - Structured approach to relationship management

Public Warehouse

- Facility operated by a third party that typically involves short contacts, less customization, and the facility simultaneously serves multiple customers

Pipeline

- Have the highest fixed cost and lowest variable cost of all modes - Unique transportation mode Can operate 24 hours a day, 7 days a week No empty container or vehicle to return - Not flexible, and limited to liquids and gases - Accounts for about 68% of all crude petroleum ton-mile movements in US

Symptoms of Poor Inventory Management

- High inventory levels and frequent stockouts - Inventory transfers between units in the same firm - Time needed to find items - High variance in turnover rate for different stocking locations - frequent sales to reduce inventory levels - Suppliers with long or unreliable delivery times - Purchase based on quantity discounts - Buyers evaluating on the basis of purchase price - Production planning based on batch sizes

Type of Warehousing: Consolidation Warehouse

- In this setup, the warehouse receives product from many different locations and then combines these incoming shipments to send to one or few outbound locations, Consolidation allows firms to take advantage of transportation economies to reduce costs - Example: a fresh produce buyer may have a consolidation warehouse in California to combine the shipments from several small farms to aggregate shipments into full truck or container quantities before sending the produce to several processing facilities

Reasons for Forecasting

- Increasing customer satisfaction - Scheduling production more efficiently - Lowering Safety Stock Requirements -Reducing product Obsolescence Costs -Improving pricing and promotion management -Negotiating superior terms with suppliers -Making more informed pricing decisions - Reducing Stockouts -Managing shipping better

Trucking

- Key Benefits Include: Speed of transit Ability to operate door-to-door - More efficient than rail for small shipments over short distances - Dominate freight moves under 500 miles and from manufacturing to wholesalers to retailers - Many companies run their own truck fleets as well (e.g. Walmart)

Private Disadvantages

- Less flexibility to change facility location or facility size - Capital tied- up in facilities

Logistics and GSCF Model

- Logistics considerations such as on-time pickup and delivery could arise within the order fulfillment process as well as being monitored by the customer service management process - Logistics decisions support of a new product might surface in: Manufacturing flow (inbound flows of new raw materials) Demand Management (forecasted transportation requirements for a product rollout) Product development and commercialization (packaging considerations) processes - Reverse logistics is a key consideration for the returns management process

Logistics and SCOR Model

- Logistics has some involvement in both sourcing and making - Logistics can be involved in delivering and returning - Logistics is also a key area of consideration within SCOR's planning and enabling processes

General Factors Influencing Facility Location

- Natural Resources Pure Materials Weight- losing products Weight- gaining products - Population Characteristics - Market for Goods - Population Characteristics - Labor Availability - Taxes and Incentives Inventory Tax Incentive Packages - Transportation Considerations - Proximity to Industry Clusters - Trade Patterns

Perfect Order

- No-fault performance from the time of order receipt through customer delivery - Defined differently by different customer/ customer segments Requirements: - Quality throughout process - Clear communications within firm and with customer - Willingness to stand behind the promise ("immaculate Recovery" if necessary) - Example measurement (OTIFEF) On-time: 90& In-Full: 80% Error Free: 70% ---Perfect Order Achievement: 50.4%

Water

- Percentage of ton-miles has stayed between 19 and 30% since 1960s - Ranks between rail and truck in fixed cost - Right of way (canals and rivers) maintained by Federal Government

Traditional Warehousing Operations

- Receiving and unloading - Storage Placement - Order Selection (Picking) - Package/ Final Processing - Checking and verification of orders - Staging, consolidation & containerization - Loading and shipping - Clerical/ Administration - Housekeeping - Maintenance of material handling equipment

Objectives of Materials Handling

- Reduce the number of times goods are handled - Minimize movement into, within and out of warehouse - Increase the warehouse facility's usable capacity - Minimize aisle space while avoiding aisles narrow enough to impede movement in the warehouse facility - Automate heavy- labor/ high- frequency movements of regular-shaped products - Effective materials handling can contribute to a cost minimization program by increasing productivity - more and faster throughput

Barrier to Supply Chain Management

- Regulatory and political consideration - Lack of top management commitment - Reluctance to share, or use, relevant data - Incompatible information systems - Incompatible corporate cultures - Globalization

ABC Analysis

- Some customers and products are more profitable than others -A company should maintain higher levels of customer service for the most profitable customer-product combinations -Profitability should be measured on a contribution basis and consider trends and potential growth

Handling

- Special equipment may be needed to load and unload trucks, railcars, or ships - How products are grouped together in boxes or pallets will also impact handling cost

Operating Characteristics Used to Classify Transport Modes

- Speed (is the elapsed movement time from origin to destination) - Availability (is ability of mode to service any given pair of locations) - Dependability (is the potential variance from expected pair of locations) - Capability (is the ability to handle any load size or configuration) - Frequency (is the quantity of scheduled movements a mode can handle)

Private Warehousing

- The focal organization operates its own warehouse Important: "Private: has nothing to do with the ownership of the building... the focal company can lease the facility or own it outright; private refers to who is operating the warehouse

Contact Warehousing

- Third party-managed facilities that involve longer term contracts, higher levels of customization and tailored solutions, and typically one client per facility

Why Partner?

- To gain the advantage of vertical integration while still maintaining organizational independence - To take advantage of "Best in class" expertise - To achieve service improvements - To gain operational efficiencies - To respond to competition

Railroads

- Track mileage has declined by over half since 1970 - Traffic shifted from broad range of commodities to hauling specific freight in traffic segments Car Load Intermodal Container - New technologies include articulated cars, unit trains and double-stack cars

Market

- Transport lane refers to movements between origin and destination points Carriers must find a backhaul load or vehicle is returned empty - Imbalances in volume between shipping points can result in higher transport costs

Density

- Volume is important because vehicles are typically constrained more by cubic capacity than by weight loaded - Cost per unit of weight declines as product density increases Higher density products allow fixed transport costs to be spread over more weight

Lesson Learned:

- You must be willing to look at things differently - Most companies have a lot more in common than they think - Visibility is key to building trust - Mistake happen, the problem is not learning from them - A well structured plan that is closely monitored is key for ensuring results

High Inventory Levels Yield

-Better customer service (1) stock out proctection (+ wide variety and selection) (2) Short lead times (since it's available) -Lower costs per unit purchased, made, transported (1) large lot production and transportation economies (2) Quantity discounts and inflation hedging

Formally establish the policy

-Critical for the firm to set believable performance standards and penalties for not meeting such standards - Absolutely essential to honor the penalties in order to establish credibility

Pre-Transactional Elements

-Establish a Written Customer Service Policy -Communicate/give the policy statement to customers -Formally establish the policy

Type of Warehousing: Breakbulk

-Exact opposite of the consolidation warehouse; break-bulk warehouse receives few large deliveries and then breaks these deliveries down to deliver to many customers -Example: Freight forwarders receiving imports from other countries into the U.S.; these firms receive full container-load shipments that are then broken down for delivery to many customers - "End of Line" (EOL) terminals in the less-than-truckload segment serve this function; they receive full truckload shipments bound for the region and then break this shipment down into individual deliveries

Impediments to an Effective Customer Service Strategy

-Failing to segment markets in terms of service offered - Misuse of customer service by sales people -Failing to measure the cost-effectiveness of service levels -Inability to determine competitive service levels -Inadequate customer service research

Low Inventory Levels Yield

-Lower holding costs -Easier and more accurate control of inventory -A focus on quality execution

Reasons For Holding Inventory

-Maintaining customer service requirements - Leverage economies of scale for production Ex: More efficient to produce long runs of steel beams that produce smaller batches due to energy requirements for heating the iron -Take advantage of purchase discounts - Take advantage of transportation discounts Ex: Ordering full truckload quantities rather than that LTL shipment sizes -Act as a buffer for demand variability -Hedge Against Risk Supply chain disruptions due to natural disasters, supplier failure, quality defects, etc. (for example Mattel's issue with lead paint from a third-tier supplier

Stowability

-Odd packages shapes and sizes can waste cubic capacity - Items with rectangular shapes are easier to stow

Establish a Written Customer Service Policy

-Should be based on the customer's perspective (i.e. consult customers on what the important elements are to them) May discover the different segments have different needs and define accordingly - Define the service standard and how they will be measured, how frequently they will be measured, and who they should be reported to

Modes

A mode identifies basic transportation method form: Rail Highway Water Pipeline Air

Partnership

A partnership is a tailored business relationship based on mutual trust, openness, shared risk and shared rewards that results in business performance greater than would be achieved by two firms working together in the absence of partnership

Humanitarian Logistics

As the process and systems involved in mobilizing people, resources, skills, and knowledge to help people who have been effected by either a natural or a human-made disaster.

Intra- Functional Logistics

Attempts to coordinate materials management and physical distribution in a cost - efficient manner that supports an organization's customer service objections

Inter-functional Logistics

Balance each functions to ensure that none is stressed to the point of breaking

The Growing Power of Retailers

Both manufactures and retailers agree that retailers wield greater power in the manufacturer- retailer arrangement, and both parties agree that the retailers' power will increase in the future

Total Cost Approach

Built on premise that all relevant activities in moving and storing products should be considered as a whole. Cost Trade Offs: changes to one logistics activity cause some costs to increase and others to decrease Importantly, an understanding of logistical cost trade-offs recognize that the costs of certain logistical activities generally move in opposite directions .

Center of Gravity Location Methods

Can be used for location a single facility so that the distance to existing facilities is minimized.

Communicate/ give the policy statement to customers

Critical to properly align Expectations

Humanitarian

Demand Pattern: Demand is generated from random events that are unpredictable in terms of timing, location, type, and size. Demand requirements are estimated after they are needed, based on an assessment of disaster characteristics Lead Time: Approximately zero lead time requirements (zero time between the occurrence of the demand and the need for the demand), but the actual lead time is still determined by the chain of material flow Distribution Network Configuration: Challenging due to the nature of the unknowns (location, type and size of events, politics, and culture), and "last mile" considerations Inventory Control: Inventory control is challenging due to the high variation in lead times, demands, and demand locations Information Systems: Information is often unreliable, incomplete or non-existent Strategic Goals: Minimize loss of life and alleviate suffering Performance Measurement System: Primary focus on output performance measures, such as time required to respond to a disaster or ability to meet the needs of the disaster (customer satisfaction) What is "Demand": Supplies and People

Commercial

Demand Pattern: Relatively stable, predictable demand pattern. Demand occur from fixed location in set quantities. Lead Time: Lead time determined by the supplier-manufacturer- DC-Retailer Chain Distribution Network Configuration: Well-defined methods for determining the number and locations of distribution centers Inventory Control: Utilizes well-defined methods for determining inventory levels based on lead time, demand and target customer service levels Information System: Generally well-defined, using advanced technology Strategic Goals: Typically: to produce high quality products at low cost to maximize profitability and achieve high customer satisfaction Performance Measurement System: Traditionally: focused on resource performance measures, such as maximizing profit or minimizing costs What is "Demand"?: Products

Sources of Uncertainty

Demand: We don't expect Sales = Forecasts Performance Cycle: We don't expect logistical execution at a constant rate We hold safety stock to buffer against such uncertainties -- safety stocks are positioned with the intention of never being touched

Drivers

Drivers are strategic factors which result in a competitive advantage and which help to determine the appropriate level of a business relationship.

Communication

Effective communication should be a two-way exchange between seller and customer, with the goal of keeping both parties informed. Moreover, effective communication requires that the correct parties be involved in the process Customer service can be enhanced if complete information is exchanged between the participants

Changes in Consumer Behavior

Examples: (Customized Customer, Changing Family Roles, and Rising Customer Expectations) Customized Customer: Signifies that the customer desires a product offering that is highly tailored to the customer's exact preferences. (Mass customization) Changing Family Roles: One consequence of changing family Roles has been an increased emphasis on convenience associated with a family's grocery shopping experiences. Rising Customer Expectations: Customer Expectations tend to increase through time, which means that a satisfactory level of performance in the past might not be considered as so today

A Reduction in Economic Regulation

Government Deregulation provided flexibility which was important to logistics for several reasons: (1) It provided companies with the ability to implement the tailored logistics approach, in the sense that companies could specify different logistics service levels, prices could be adjusted accordingly (2) The increased pricing flexibility allowed large buyers of transportation services to reduce their transportation costs by leveraging large amounts of freight with a limited number of carriers Privatization of commercial airports has been found to improve their operational efficiency relative to government owned and/or operated airports

Mass Logistics

In which every customer gets the same type and levels of logistics service

Tailored Logistics

In which groups of customers with similar logistical needs and wants are provided with logistics services appropriate to these needs and wants

Systems Approach

Indicates that a company's objectives can be realized by recognizing the mutual interdependence of the major functional areas of the firm, such as marketing, production, finance, and logistics. One implication of the systems approach is that the goal and objectives of the major functional areas should be compatible with the company's goals and objectives. This means that one logistics system does not fit all companies because goals and objectives vary from one firm to another. A second implication is that decisions made by one function area should consider the potential implications on other functional areas

Total Logistics Concept

Integration of all activities into a unified whole that seeks to minimize distribution cost in a manner that supports an organizations customer service objectives

Components

Joint activities and processes that build and sustain the partnership Managerial controllable elements of a partnership Partnerships normally include the following elements or components - Planning - Joint Operating Controls - Communication - Risk/ Reward Sharing - Trust and Commitment - Contract Style - Expanded Scope - Financial Investment

CRM (Customer Relationship Management) and SRM (Supplier Relationship MAnagement) Critical Linkage

Linked through: Customer Service Management Demand Management Order Fulfillment Manufacturing Flow Management Product Development and Commercialization Returns Management

Logistics Definition (According to CSCMP)

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

Existing Customers Are More Loyal

Loyalty is not simply satisfaction; it is developing an affective cognitive commitment that leads to repurchase intentions Loyalty has been linked to market share

Globalization of Trade

Many factors, such as rising standards of living and multi country trade alliances, have contributed to the growth of global trade. The shipping container: a uniform sealed reusable metal box in which goods are shipped- is often championed as an important catalyst for the growth in global trade International logistics is much more challenging and costly than domestic logistics (As for costs, the greater geographic distances tend to result in higher transportation costs, and documentation requirements can be quite costly as well)

Materials Managment

Movement and storage of materials into a firm

Supply Chain Management (SCOR) Definition

Plan- Processes that balance aggregate demand and supply to develop a course of action which best meets sourcing, production, and delivery requirements Processes: Source- Processes that procure goods and services to meet planned or actual demand Deliver- Processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management. Return- Processes associated with returning or receiving returned products for any reason. These processes extend to post delivery customer support Enable- Processes that manage relationships, performance, and information for a supply chain. These processes interact with all other internal and external processes associated with supply chain Plan Source Make Deliver Return Enable

Warehouse Management Systems (WMS)

Receiving-- - Confirms receipt - Creates putaway label - Directs stock to active or reserve location Order Picking-- - Prioritizes Orders - Prints pick tickets for best sequence - Prints labels for packing operations Verification-- -Uses bar code scanning to verify order -Print label for shipping carton contents Shipping-- -Suggests Shipping route -Creates shipping documents -Calculates shipping cost

Form Utility

Refers to a product's being in a form that: (1) can be used by the customer (2) is of value to the customer Ex: to achieve production economies (i.e. lower cost per unit), a soft drink company may produce thousands of cases of a certain type of soft drink. You're not likely to purchase diet cola by the thousands of cases but rather is smaller lot sizes, such as a six pack. Through allocation, logistics can break the thousands of cases of diet cola into the smaller quantities that are desired by customers

Place Utility

Refers to having products available where they are needed by customers; products are moved from points of lesser value to points of greater value Ex: Place Utility is increased by moving soda from a point of lesser value (Stored in a warehouse) to a point of higher value (super market self)

Dependability

Refers to the reliability of the service encounter and consists of three elements, namely, consistent order cycles, safe delivery, and complete delivery. An increasing number of companies are trading off order cycle speed for order cycle consistency

Possession Utility

Refers to the value or usefulness that comes from a customer being able to take possession of a product. Possession Utility can be influenced by the payment terms associated with a product

The OSU Framework

Right Side: Forces of Change -> Vulnerabilities Left Side: Management Controls -> Capabilities Center: Balance-> Optimal Resilience -> Improved Performance Goal is Balanced Resilience

Existing Customers are Often Considered "Cheaper" to Sell to

Rule of Thumb is that it is 5x more expensive to acquire new customers than have repeated purchases Why? : Sales calls may not be required (Customers simply call in order) promotional requirements not necessary

Economic Regulation

Seeking to make transportation equally accessible and economical to all without discrimination Government created infrastructure (roads, canals, ports) Intended to prevent carriers from taking advantage of suppliers while ensuring long-term financial stability for carriers

Customer Satisfaction

Simultaneously achieving possession, form, place, and time utility goes a long way toward facilitating- but not guaranteeing- customer satisfaction

Economic Order Quantity

Square Root of : 2PD/ CV P= The Order Cost (Dollars Per Order) D= Annual Demand or Usage of the Product (Number of Units) C= Annual Inventory Carrying Costs (as a % of product cost) V= Average Product Cost of One Unit of Inventory

Physical Distribution

Storage of finished product and movement to the customer

Facilitators

Supportive environmental factors that enhance partnership growth Additional facilitators which may be present and which strengthen the likelihood of success: - Shared competitors - Physical proximity - Potential for exclusivity - Prior relationship experience - Shared end user

Technological Advances

Technological Advances have influenced channel design by allowing companies to offer alternate distribution channel (or alternate distribution channels) to already existing channels. In some cases, this alternate channel is direct (i.e., no intermediaries between the producer and the final customer) in nature because the final customer orders directly from the producer rather than through an intermediary. Technological advances can also improve the productivity of the order picking process. (For example: RF terminals can reduce pick errors by approximately 60 percent compared to paper picking) Shipping Tracking

Customer Service

The ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience

Convenience

The convenience component of customer service focuses on the ease of doing business with a seller. The convenience dimension also plays a key role in the consumer's purchasing decision.

Outcomes

The extent to which performance meets expectations Partnership Outcomes: - Factors which reflect the performance of the partnership - Global performance outcomes Enhancement of Profits Leveling the flow of profits over time - Process outcomes Improved Service Reduced Costs - Competitive Advantage Positioning Share Knowledge

Supply Chain Management (GSCF) Definition

The integration of key business processes from end user through original supplier that provides products, services, and information that add value for customers and other stakeholders Process: Customer Relationships Supplier Relationships Customer Service Relationships Demand Management Order Fulfillment Manufacturing Flow Product Development Commercialization Includes involvement in all business functions

Order Fill Rate

The percentage of orders that can be completely and immediately filled from existing stock, is one way of measuring the completeness of delivery As is the case with loss and damage, incomplete deliveries result in negative customer ramifications, such as out-of-stock situations

Disintermediation

The removal of intermediaries between producer and consumer- This can clearly affect the design of logistics systems in the sense that there could be changes in both number and location of fixed facilities such as warehouse and distribution centers.

Time

Time refers to the period between successive events, and clearly the order cycle is and excellent example of the time dimension of customer service. Many businesses today are looking to reduce order cycle times- longer cycle times translate into higher inventory requirements

Economic Utility

Which is the value or usefulness of a product in fulfilling customer needs or wants. Four General Types: Possession Form Time Place Logistics clearly contributes to time and place utilities

Time Utility

Which refers to having products available when they are needed by customers

Social Regulation

Which takes measures to protect public safety and environment Department of Transportation (DOT) (1966) has active role in hazardous material safety and driver safety Hazardous Materials Transportation Uniform Safety Act (1990) took precedence over state and local regulations

Existing Customers Often Buy More

Why?: focal firms develop a better sense of their needs and can better tailor offerings

Existing Customers are a Good Source for referrals

Word of mouth is the most effective advertising a firm can get Average transaction value (X) Yearly Frequency (X) Customer "Life Expectancy"

Multichannel marketing systems

separate marketing channels to serve customers Ex: A retailer can facilitate customer purchasing with brick-and-mortar stores (one channel) as well with a website (another channel). The convenience dimension in multichannel marketing systems is increasingly manifested through customer orders in one channel (online) and customer delivery in another channel (in the store)

Big-Box Retailers

stores with large amounts of both floor space and products from sale (trendsetters with respect to environmental and social issues in logistics)