7-1. What Is The Relationship Between Demand Management, Order Management, And Customer Service?

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Chapter 7 Need Management, Lodge Management, and Customer Service © Pearson Education, Inc. publishing as Prentice Hall

Need Management • Need direction can be divers as "the creation across the supply chain and its markets of a coordinated menses of demand. " Source: John T. Mentzer, "A Telling Fortune", Industrial Engineer, April 2006, 42 -47. © Pearson Pedagogy, Inc. publishing as Prentice Hall 7 -ii

Demand Management • Demand (sales) forecasting – Refers to an effort to project futurity demand – Is a key component in need management – Is helpful in brand-to-stock situations – Is helpful in make-to-order situations © Pearson Education, Inc. publishing equally Prentice Hall vii -3

Demand Management • Three bones types of demand forecasting models: – Judgemental – Time series – Cause and effect (associative) © Pearson Education, Inc. publishing as Prentice Hall 7 -iv

Need Direction • Demand forecasting issues: – Selection of forecasting technique(s) depends on many factors – Selecting an inappropriate technique volition reduce forecast accuracy – Forecast accuracy tin have of import logistical implications – Computer forecasting software unable to completely eliminate forecast errors © Pearson Educational activity, Inc. publishing as Prentice Hall 7 -5

Gild Direction • Order management is the activities that accept place in the period between the time a firm receives an order and the fourth dimension a warehouse is notified to ship the goods to make full that order © Pearson Education, Inc. publishing equally Prentice Hall 7 -6

Order Direction • Order management refers to management of the diverse activities associated with the order bicycle • Guild cycle (replenishment cycle or lead time) refers to the fourth dimension from when a customer places an lodge to when goods are received • Some organizations include order to greenbacks cycle in their order management model © Pearson Pedagogy, Inc. publishing as Prentice Hall 7 -vii

Order Management • Four stages of the guild cycle include: – Order transmittal – Order processing – Order picking and assembly – Social club commitment © Pearson Education, Inc. publishing equally Prentice Hall 7 -8

Club Direction • Society transmittal is the serial of events that occur betwixt the fourth dimension a customer places or sends an order and the time the seller receives the club – Methods of order transmittal • In person • Mail • Telephone • FAX • Electronically © Pearson Education, Inc. publishing as Prentice Hall seven -ix

Order Direction • Club processing refers to the fourth dimension from when the seller receives an social club until an appropriate location (i. e. warehouse) is authorized to fill the order © Pearson Instruction, Inc. publishing as Prentice Hall 7 -x

Order Management • Lodge processing includes: – Checking for completeness and accuracy – A customer credit bank check – Club entry into the computer system – Marketing department credits salesperson – Bookkeeping department records transaction – Inventory department locates nearest warehouse to customer and advises them to pick the lodge – Transportation department arranges for shipment © Pearson Educational activity, Inc. publishing as Prentice Hall 7 -11

Lodge Management • Order picking and assembly includes all activities from when an advisable location is authorized to make full the order until goods are loaded aboard an outbound carrier © Pearson Education, Inc. publishing as Prentice Hall seven -12

Order Management • Order picking and assembly – Often represents the best opportunity to amend the effectiveness and efficiency of an club bike – Can account for upward to 2/3 of a facility'south operating cost and time Source: Susan Lacefield, "Ten Tips for Faster Picking", Logistics Management, July 2005, 71 -76. © Pearson Education, Inc. publishing as Prentice Hall 7 -thirteen

Order Management • Examples of Guild Picking and Associates engineering science: – Handheld scanners – Radio-frequency identification (RFID) – Vocalization-based order picking – Pick-to-light © Pearson Education, Inc. publishing every bit Prentice Hall 7 -xiv

Order Management • Order delivery is the time from when a carrier picks up the shipment until information technology is received by the client. © Pearson Education, Inc. publishing as Prentice Hall seven -15

Customer Service • Customer service is "the power of logistics management to satisfy users in terms of fourth dimension, dependability, communication , and convenience. " Source: Roger A. Kerwin, Steve W. Hartley, and William Rudelius, Marketing, ix th ed. (Boston, MA: Mc. Graw-Loma/Irwin, 2009), Chapter 16. • Customer service is much more difficult for competitors to imitate than price cuts or other competitive strategies © Pearson Education, Inc. publishing as Prentice Hall vii -16

Customer Service • Four dimensions of customer service include: – Time – Dependability – Communication – Convenience © Pearson Education, Inc. publishing as Prentice Hall seven -17

Managing Client Service • Four specific customer service considerations include: – Customer profitability analysis (CPA) – Establishing customer service objectives – Measuring customer service – Service failure and recovery © Pearson Education, Inc. publishing as Prentice Hall vii -18

Managing Customer Service • Customer Profitability Assay (CPA) is the allocation of revenues and costs to customer segments or individual customers to summate the profitability of the segments or customers © Pearson Pedagogy, Inc. publishing as Prentice Hall 7 -19

Managing Customer Service • Customer Profitability Analysis (CPA) – Suggests that unlike customers consume differing amounts and types of resource – Recognizes that all customers are non the same and some customers are more valuable than others to an organization – Tin aid to place when an organization should pursue different logistical approaches for different customer groups – Has been facilitated by the acceptance of activitybased costing © Pearson Didactics, Inc. publishing as Prentice Hall 7 -20

Managing Client Service • Establishing Customer Service Objectives – Specific – Measurable – Achievable – Toll-effective © Pearson Instruction, Inc. publishing every bit Prentice Hall 7 -21

Managing Customer Service • Measuring Customer Service – "you lot can't manage what you can't measure" – Must determine data sources to be used – Must decide what factors to measure – Organizations must resist excessive measurement © Pearson Didactics, Inc. publishing as Prentice Hall 7 -22

Managing Customer Service • Service Failure and Recovery – Situations will occur where actual performance does not see the client'southward expected performance (i. e. service failure) – Examples of order-related service failures include: • • • Lost delivery Belatedly commitment Early delivery Damaged commitment Incorrect delivery quantity © Pearson Education, Inc. publishing as Prentice Hall 7 -23

Managing Customer Service • Service Failure and Recovery – Service recovery • Process for returning a customer to a land of satisfaction after a service or product has failed to live upwards to expectations • Is often plush • May lead to increases customer loyalty • Unsatisfactory service recovery magnifies the initial failure © Pearson Teaching, Inc. publishing as Prentice Hall 7 -24

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