Customer Service Driven Insert Your Thesis Title …...Distribution Wholesale Retail Project Sub dealer Transformer Building Housing Estate Home owner Local contractor Individual House

Prakit Worawattananon

22 MAY 2008

Advisor: Dr. Larry Lapide

Insert Your Thesis TitleCustomer Service Driven

Supply Chain Segmentation

2Prakit Worawattananon

Company X- Business Context & ChallengeObjective - Developing a Segmentation FrameworkData & InformationAnalysis & Model Development

- Push-Pull ModelOpportunities for Future Research

AgendaAgenda

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Business Context Business Context –– Company XCompany X

Company X

Manufacturing

Cement Chemical

Building Paper

Distribution

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Business Context Business Context –– DistributionDistributionCompany X

Cement Chemical

Building Paper

Distribution

Outside Company X

Wholesale

Retail

Project

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SituationHigher Competition: Domestic & InternationalSaturated Domestic Market

ChallengeChallenge

SolutionDevelop New Supply Chain Strategy

Understand Customers

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ObjectiveObjective

Supply Chain Segmentation: “the process enabling business to formulate the right product or

service to its customers”

Developing a Framework for Supply Chain Segmentation based on Customer Service

Understand Customer Needs

Classify Customers for Segmentation

Propose Services to Match the Customers

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Data & InformationData & Information

78 Customer Surveys

600,000 Sales Data Record

6 Interviews with Sales & Marketing Managers

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Analysis & Model DevelopmentAnalysis & Model DevelopmentCustomer Channel

Distribution

Wholesale

Retail

Project

Sub dealer

Transformer

Building

Housing Estate

Home owner

Local contractor

Individual HouseIndividual House

Contractor

Project owner

Infrastructure

Industrial

9Prakit Worawattananon

Factor Wholesale Retail Project

Buying Behavior

- Slow Buying Decision - Focus on Relationship

- Convenient to Buy - Small Lot Buying

- Big Lot Buying- Focus on Product Specification

Product Characteristic

- Low Product Variety- Brand Preference

- High Product Variety- Brand Preference

- High Product Variety- No Brand Preference

Major Next- tier Customer

- Sub dealer- Transformer

- Home Owner- Local Contractor

- Project Owner- Contractor

Price Sensitivity

Medium Sensitive Low Sensitive High Sensitive

Segmentation Factors

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“Company’s Perspective”• Contribution • Loyalty • Potential

Push Factors“Customer’s Perspective”

• Product • Order Process • Logistics • Financial Support

Pull Factors

Service Set 3

Service Set 2

Service Set 1

Customer Service Sets

Push-Pull Segmentation Model

3

2

1

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Dealer Contribution Potential Loyalty Group

Code($) Level Class

P-001 828,900 2 A No 3

P-002 372,400 3 A Yes 3

P-003 507,900 2 B No 3

P-004 2,574,700 1 A No 3

P-005 249,800 3 A No 4

P-006 1,526,500 1 A Yes 1

P-007 396,100 3 C No 4

P-008 554,500 2 B No 3

P-009 2,881,800 1 B Yes 2

P-010 3,876,900 1 A No 3

P-011 538,100 2 A Yes 2

P-012 685,900 2 B No 3

Push Segmentation Factor

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Pull Segmentation Factor

Pull Segmentation FactorProduct Price Service Logistics Financial

Support- Variety- Availability

- Quotation Response- Price Discount

- Technical Support- Damage/Claim Handling - Training & Seminar - Co-Approach End User - Relationship Activity

- Urgent Order Delivery- On time Delivery - Status Tracking Inf.

- Credit Line- Credit Term

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Group 1

Total Integrated Solution: - Approach Project Owner - Fast Approval + Proposal, - Collaborative Planning & Execution (Demand + Production + Logistics) - Financial Support

Group 2

Special Service Solution: - Approach Project Owner, - Fast Approval + Proposal, - Logistics - Financial Support

Group 3 & 4 No Special Service

Proposed Services

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Measure Customer NeedsProgram Feasibility StudyResources Sharing among BUs

Opportunities for Future ResearchOpportunities for Future Research

Prakit Worawattananon

22 MAY 2008

Advisor: Dr. Larry Lapide

Insert Your Thesis TitleCustomer Service Driven

Supply Chain Segmentation

Q&AQ&A

17Prakit Worawattananon

Thank YouThank You

18Prakit Worawattananon

Appendix

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Group Contribution Potential Loyalty

1 1 A Y

2 1 B Y

2 B Y

3 1 A N

1 B N

1 C Y

2 A N

2 B Y

2 B N

2 C Y

3 A Y

3 B Y

Criteria for Push Segmentation Factor Ranking

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Group Contribution Potential Loyalty

4 1 C N

2 C N

3 A N

3 B N

3 C Y

3 C N

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Deale r

Gro up Product Price Service Logistics

Financial Support

Code

Variety

Availability (C

SL)

Quotation R

esponse

Price D

iscount

Technical Support

Dam

age/Claim

Handling

Training and Seminar

Co-A

pproach End U

ser

Relationship A

ctivity

Urgent D

emand D

elivery

Ontim

e Deliver

Status Tracking Inf.

Credit Line ($M

illion)

Credit Term

(Days)

P-001 3 60%95 %

2 Days N On Site < 5 Days

Selectiv e Y

Mediu m No 95% N 0.3 30

P-002 3 60%95 %

2 Days N On Site < 5 Days

Selectiv e Y

Mediu m No 95% N 0.3 30

P-003 3 60%95 %

2 Days N On Site < 5 Days

Selectiv e Y

Mediu m No 95% N 0.3 30

P-004 3 60%95 %

2 Days N On Site < 5 Days

Selectiv e Y

Mediu m No 95% N 0.3 30

P-005 4 50%95 %

3 Days N Call < 7 Days

Selectiv e N

Mediu m No 95% N 0.2 30

P-006 1 80%99 % 1 Day

5 % On Site < 1 Day 100% Y High Yes 99% Y 1 45

P-007 4 50%95 %

3 Days N Call < 7 Days

Selectiv e N

Mediu m No 95% N 0.2 30

P-008 3 60%95 %

2 Days N On Site < 5 Days

Selectiv e Y

Mediu m No 95% N 0.3 30

P-012 3 60%95 %

2 Days N On Site < 5 Days

Selectiv e Y

Mediu m No 95% N 0.3 30

Project Channel: Services Needed by Dealer

22Prakit Worawattananon

MIT Excellence Supply Chain Framework to design Supply chain processes that best deliver the Business strategies

Go-To Market Strategy

Supply ChainStrategy

OperatingModel

Centralize vs.

Decentralize

Performance Objectives

Identify the best way to manage from order taking to product delivery and after sales services (end-end supply chain strategy)

Define system and work process

Identify performance metrics (KPIs) with priority

Decision to centralize for synergy or decentralize for individual value creation

Define the Business’s Marketing strategies to bring products and services to target customers

23Prakit Worawattananon

Group 1 & 2

•Integrated IT •Platinum Service•Knowledge Sharing

Group 3

•Integrated IT •Logistics Service: Warehouse & Transportation Consolidation

Group 4•Logistics Service: Warehouse & Transportation Consolidation

Group 1

Total Integrated Solution: Approach Project Owner, Fast Approval + Proposal, Collaborative Planning & Execution (Demand + Production + Logistics), Financial Support

Group 2

Special Service Solution: Approach Project Owner, Fast Approval + Proposal, Logistics, Financial Support

Group 3 & 4 No Special Service

Retail

Project

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Collaborative ActionService Customers (Dealers) Company

Integrated IT - Computer Desktop - Internet Network

- Network Infrastructure - Software - Technical Support

Express Service

- Loyalty Program Membership- Readiness to Receive Cargo - Proof of Loss or Damage

- Customer Call Center- Mobile Technicians- Special Truck Fleet

Fast Service - Readiness to Receive Cargo - Proof of Loss or Damage

- Customer Call Center- Mobile Technicians- Special Truck Fleet

Logistics Service

- Wider Delivery Window Allowed

- Consolidation Planning & Operation