Customer service

Who is customer?

In the term of logistics, “ The customer is any delivery destination”.

Taking into consideration of supply chain management customer are divided into two part internal and external.

Customer service Customer service is a process which takes

place between the buyer, seller and a third-party.

The process results in addition of value to the product of service exchanged.

The value added in exchange process might be short term in a single transaction or long term as in a contractual relationship.

Feature of Customer Service It is a strategic process for providing value

added services to the customer It keeps the customer happy and loyal. It generally start with an order entry and

ends with the delivery of goods to customers.

It brings about a competitive advantage in the marketplace, increase sales and improves profits

Reason for better logistical service

Growth in customer expectation. Freshness or date of manufacturing of

product are becoming a very important issue in most of the purchase decision.

Market have become more service centric. Customer retention. Product are unable to retain brand loyalty

in stock-out situation resulting into availability of product is a vital factor.

The Logistics (Strategic) Planning TriangleThe Logistics (Strategic) Planning Triangle

Which mode?Which carrier?Which route?Shipment size and frequency?

Where?, How many? What size?Allocation?

Strategy/Control system?How much?

Where?

Element of customer service Pre-Transaction element

Written statement of customer service policy

Order contact point Organisational structure Method of ordering Order size constraints System flexibility

Cont… Transaction element

Order cycle time Order preparation Inventory availability Delivery alternative Delivery time Delivery of complete order Condition of goods System accuracy

Cont…

Post-Transaction element

Invoicing procedure and accuracy Product warranty Return policy Customer complaints and claim

procedures

Component of Customer Service

In respect of customer as a business partners:

Strategic

Logistics

Non-logistics

Strategic component

1) Best return of investment

2) Long term association

3) Continuous improvement of quality of service.

Logistics Component

1) Availability of products2) Offer fixed replenishment cycle time3) Zero-defect delivery4) Point to point information5) Consistency in service

Non-logistics component

1) Financial support2) Credit facility3) Training programmes4) Authority power for spot decision5) Fare trade practices

Internal communication Gap

Customer service need for

Competitive advantage

Present Customer

Service level

PrevailingCustomer

Service levelIn industry

Corporate vision about customer service

Service expectationOf customer

3

1

4 2

Major Gap Minor Gap

Inventory management

Inventory is any stored resource that is used to satisfy a current or future need.

Raw materials, work-in-process, and finished goods are examples of inventory.

Inventory control means keeping track of your stock.

Knowing how much was sold and how much is left.

To know when to order. To keep records of losses and gains. To know consumption rates of high

demand and low demand.

Purpose of inventory

Smooth-out variations in operation performances.

Avoid stock out or shortage. Availability of Fund. Safeguard against price changes. Take advantage of quantity discounts.

Types of Inventory On the basis of nature of material.

Production inventory

MRO inventories

In-Process Inventories

Finished Goods Inventories

Cont…

On the basis uses of Materials

Transaction Inventory

Speculative Inventory

Precautionary Inventory

Function of inventories

Working Stock Safety Stocks Anticipation Stock Pipeline Stock

Element of Inventory cost

Procurement cost Carrying cost Stock-out cost

Procurement cost Cost of order processing. Cost of transmission of an order from

purchase department to supplier (Postage, follow up, fax).

Cost of transportation, including freight, Octroi, transit insurance, protective packaging.

Cost of invoice pricing, including checking, approval, book entries and payment.

Inventory carrying cost Rent for storage Cost of working capital Cost of insurance of goods Cost of spoilage in the quality of

goods in storage. Cost of wastages due to passes of

time and change in weather. Cost of obsolescence of goods or

depreciation.

Stock-out cost The stock-out is the economic consequence

of either an external or an internal shortage.

Internal shortage occurs when an order of a group/department within the organisation is not filled.

External shortage incurs back order cost, present profit loss due to loss of potential sale, and future sales loss due to loss of corporate image affecting future sales.

Customer Response

1) Customer says” I will be back”

2) Customer says" call me when it’s in”

3) Customer buy substitute product which yields a higher profit for seller.

4) Customer goes to competitor.

Just in Time

Just in TimeInventory is the Minimum inventorythat is necessary to keep a systemperfectly running.

Cont… A corporate system designed JIT to produce

output within the minimum lead time and at the lowest total cost by continuously identifying and eliminating all forms of corporate waste and variance.

With just in time (JIT) inventory, The exact amount of items arrive at the moment they are needed, Not a minute before OR not a minute after.

Cont…

To achieve JIT inventory, Managers should Reduce the Variability Caused by some Internal and External Factors.Most variability is caused by tolerating waste (inventory).For example –Transportation waste, Process Waste, Inventory Waste, Waste from product defects, Waiting time, Overproduction

Objective of JIT

Reduce inventory carrying cost. Produce only customization product. Production in minimum lead time. Reduction of wastage.

Function of JIT

Elimination of Waste Synchronized manufacturing Reduce inventory size Reducing the order batch size can be

a major help in reducing inventory.

Limitation of JIT

Applicable in growth to maturity phases of Product Life Cycle

standard product • standard/fixed pay-rate • problems with piece-rate scheme

Kanban System Developed at Toyota 1950s to

manage line material flows. Kanban ( Kan=card, Ban= signal ) Kanban = an authorization to

produce more inventory We thus limit the amount of inventory

in process. A card is used to signal the need for

material in a work center.

Cont… Sending a card authorizes the previous

work center to send its finished batch to the subsequent work center.

Batches are typically very small. Such a system requires tight schedules and frequent set-ups for machines.

Server only delivers components to client work station as & when needed (called/pulled).

Kanban Control System

production kanban

Material Flow

Card (signal) Flow

Bin Part AMachine

Center

Bin Part A Assembly

Line

What does look like. Kanban No.Kanban No. 5678990 5678990 part No: part No: 66789X66789X description description 16ga. Copper Wire16ga. Copper Wire units units Ft.Ft. reorder/lot qty reorder/lot qty 2020 store location store location Row 12, Bin 6Row 12, Bin 6 supplier supplier BICCBICC supplier tel supplier tel 0208-891-01210208-891-0121 supplier part supplier part RT45502RT45502 routing process Name/location of next process Name/location of preceding process container type & capacity number of containers released

Thank You