2011 Lscm Lesson2 Customer Service

8/12/2019 2011 Lscm Lesson2 Customer Service

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Customer Service:Customer Service:

A Key Element in Logistics StrategyA Key Element in Logistics Strategy

Chapter 2Chapter 2

Logistics ManagementLogistics Management- Vinod V. Sople- Vinod V. Sople


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ContentsContents

Introduction

Customer Service

Customer Service for Competitiveness

Customer Service Phases / Elements

Importance of Customer Service

Objectives of Customer Service

The Perfect Order

Seven R Rule

Customer Service Strateg

Customer Service !udit


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IntroductionIntroduction

Customer service is a measure of the

effectiveness of a logistical sstem in creatingtime"and"place utilities

#ar$eters vie% customer service %ithin thelarger conte&t of building customer relationship

'ence organi(ations constantl strive to deliversuperior customer value through customerservice) %hich is a $e element in the logistics

strateg In the conte&t of *ogistics) customer service is

more than just transportation of a shipment

from point ! to point +


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... Introduction... Introduction

The goal as a company is to have customerThe goal as a company is to have customer

service that is not just the best but legendaryservice that is not just the best but legendary

- Sam Walton- Sam Walton

In the conte&t of logistics customer service is

about

, Providing customers %ith information) options -e&pertise to ma$e the right decision

, 'elping the supplier understand trends anddnamics of mar$ets

, .or$ing %ith the customer to deliver the bestpossible value for their mone


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Customer SericeCustomer Serice

Customer Service is a set of activities and

programs) designed and implemented b abusiness firm to ma$e customers buinge&perience more re%arding

, These activities enhance the value of a productor service the customer gets from the seller

, 0ood customer service builds customer loyaltycustomer

loyalty%hich generates positive %ord"of"mouth

communication %hich attracts ne% customers, 0ood customer service is the bases for all

Customer Relationship Management (CRM)Customer Relations

hip Management (CRM)programs that man leading firms implement


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Customer Serice "or CompetitienessCustomer Serice "or Competitieness

Customers base their evaluation of a service on their

perception These perceptions are affected b

, The actual service provided 1realit2

, Intangible elements of service aspects %hich areusuall ver difficult to evaluate accuratel

Thus there gaps bet%een client perceptions andactual service provided

These gaps ma arise due to, Communication

, Standards adopted

, Service deliver

, Customer $no%ledge


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... Customer Serice "or Competitieness... Customer Serice "or Competitieness

CommunicationCommunication

, The actual service provided mabe different from%hat is communicated through advertisements -promotional campaigns

Standards AdoptedStandards Adopted

, Service standards adopted mabe different fromcustomers e&pectations

Service DeliveryService Delivery

, Services provided mabe different from servicestandards of the firm

Customer knowledgeCustomer knowledge

, The firm ma fail to understand customers perceptionof the service standard


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3irms that can identif these gaps and bridgethem) can succeed in

, Enhancing customer satisfaction levels

, Remaining competitive, Stimulating repeat purchase

Some elements that affect client perception are

, Competence

, !ccess

, Reliabilit

, Responsiveness

, Transaction Securit

, Trust%orthiness


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CompetenceCompetence

, The manner - accurac in %hich information is providedb the firm through product brochures) manuals) %ebsites)sales tal$ about the compans products and the serviceofferings

AccessAccess

, The ease %ith %hich the customer %ill have access toinformation on products - services before placing anorder) status of the order placed) status of product

complaints) claims - damages in the post"sales phase

ReliabilityReliability

, 4eliver of the product / services as promised in terms ofplace) time - 5ualit


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ResponsivenessResponsiveness

, Returning customer calls) e"mails) letters etc ontime

, Resolving customer problems or complaints %ith

speed during all three phases of transactions

Transaction SecurityTransaction Security

, The confidentialit of customer information -

transactionsTrustworthinessTrustworthiness

, +uilt through evolving policies on product return)

%arrant and guarantee and honoring commitments


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*ogistics helps in creating time - place utilities of

the product that satisfies customers needs In todas competitive mar$ets) the competitiveness

of a firm is judged b ho% efficientl - effectivel itmanages creation of time - place utilities to

, !vail of sales opportunities

, Create ne% opportunities for repeat sales to thesame customers

'ence logistics competenc is critical to customerservice planning and needs to be developed as acore competenc for sustainable competitiveadvantage for survival - gro%th


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Customer Serice 'hases ( )lementsCustomer Serice 'hases ( )lements


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... Customer Serice 'hases ( )lements... Customer Serice 'hases ( )lements

Customer service is a measure of ho% logistics createstime - place utilities for products - services

+uers loo$ for value for mone the spend

The seller tries to deliver superior customer service andstri$ing a balance bet%een customer satisfaction -

costs #eaning of customer service varies %ith the

organi(ation) product being mar$eted and transactionphase the purchase is going through

There are 6 phases to the customer service process

4egree of importance of each phase varies %ithorgani(ation) depends on the product - customerre5uirements


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re!transaction phasere!transaction phase

Phase related %ith setting polic for defining theservice level - related activit) in 5ualitative -5uantitative terms

! non"routine activit

Provides guidelines to operating people regarding thedos / donts - limitations of the customer servicesprovided b the organi(ation

Creates a service platform to serve customers so asto

, +uild credibilit in the mar$et

, Create of good image %ith e&isting - prospectivecustomers


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""" re!transaction phase""" re!transaction phase

Important elements of this phase

7 Customer service polic

7 Organi(ation building

7 Structuring the service

, Customer service policyCustomer service policy

7 Provides the service policy statement in written formservicepolicy statement in written form

7 Indicates the service standards of the organi(ation

7 !t this stage) organi(ation %ill have to evolve a policframe%or$ for performance measures) evaluationmethods) reporting structure - re%ard structure

7 Customer education

7 Sstem design


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, #rgani$ation building#rgani$ation building

7 'erein the service policy statement is implementedservicepolicy statement is implemented

7 Organi(ation %ill have to

Create relevant hierarch) reporting structure)

delegate authorit) allocate responsibilit

Provide customers %ith contact persons name /phone numbers for information on order status)dispatch status) %arrant claims etc

Contact person to be given full authorit in ta$edecisions on customer service %ithin their domain)made accountable for decisions ta$en

Implement a proper re%ard sstem to motivate

emploees involved in customer service


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, Structuring the serviceStructuring the service7 +asic service structure depends on customer

standards) industr standards and the servicestandard the organi(ation %ants to $eep

7 !lso depends on the tpe of product / service) stage ofP*C the product is in , %hen the product is in maturitstage) competition is fierce) firm can gain competitiveadvantage through superior customer service

7 Service innovation is a must for sustainablecompetitive advantage

7 Important element of service is its deliver %hichvaries %ith the product - clients need " firm %ill have

to allocate and coordinate resources for this purpose


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, """ Structuring the service""" Structuring the service

7 e8g8

E&ide Industries *td8 introduced +at"#obile Service %hichoffers free van service for batter related problems of vehiclesirrespective of brand of batter

Service provided in all metro cities to vehicles stranded onhigh%as

E&ide Industries *td8 operates this service through its o%nfleet of vans %ith e5uipment installed in them - technicians

carring an inventor of ne% batteries dedicated to the service

#onitoring) coordinating - controlling the movements of vansis a tedious logistics service tas$

This value"added service has borne results in the form of

customer loalt - customer shift from competitors to E&ide


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, Customer educationCustomer education

7 Re5uired for minimi(ing customer complaints on productdeliveries) product operations) maintenance) spare partsinventor) service centers) freight charges) transitdamages) product recall) limits of %arranties / guarantees

7 9suall done through user manuals) training) seminars -%or$shops

, System designSystem design

7 Involves developing a sstem %hich ans%ers all possible5ueries in the customers mind before order placement

7 Sstem mabe manual or full automated

7 Essential to implement fle&ibilit to ta$e care of unplanned

events


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Transaction phaseTransaction phase

Customer service during this phase is associated%ith routine tasks per%ormed in the supplyroutine tasksper%ormed in the supplychainchain

:eed to be coordinated for the entire sstem to beeffective - efficient in delivering the desiredstandard of customer service

;arious elements involved in this phase

7 Order fulfillment reliabilit

7 4eliver consistenc

7 Order convenience

7 Order postponement

7 Product substitute


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... Customer Serice 'hases... Customer Serice 'hases

""" Transaction phase""" Transaction phase

, #rder %ul%illment reliability#rder %ul%illment reliability

7 #ost important factor herein is reliability to fulfill thereliability to fulfill theorder within the promised time period, with respect toorder within thepromised time period, with respect toquality & quantity of product orderedquality & quantity of product ordered

7 This re5uires close coordination - management of thevarious components of the order ccle vi( orderprocessing) material planning) allocation) pic$ing)pac$ing - transportation

, Delivery consistencyDelivery consistency7 Organi(ation must ensure deliveries happen

consistentl

7 Inconsistent deliveries ma result in customer

dissatisfaction or production disruptions at customer end


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""" Transaction phase""" Transaction phase, #rder convenience#rder convenience

7 Refers to the ease %ith %hich customer can

place an order7 +arriers to convenience are paper%or$

re5uired b supplier) compliance to variousprocedures) comple& pament terms) poor

communication net%or$ and lac$ ofcoordination in the suppliers sales net%or$

7 In competitive mar$ets this could result in loss

of sales orders - reduction in customer base

i h ( lC S i 'h ( )l


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""" Transaction phase""" Transaction phase

, #rder postponement#rder postponement

7 3or some reason) customer ma re5uire part or anentire order to be postponed or deliveries to happen in aphased manner

7 This ma cause production reschedules at supplier end

7 The organi(ation must be fle&ible enough to cater to this

, roduct substituteroduct substitute

7 If a condition arises %herein the product ordered cannot

be shipped due to some manufacturing or 5ualitproblems) supplier ma offer a substitute product ofsimilar or better 5ualit) in order to retain the customer

7 3or obtaining customers consent for a productsubstitute) supplier needs a closer interaction - clearcommunication %ith the customer


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ost!Transaction phaseost!Transaction phase This phase deals primaril %ith customercustomer

satis%action & building a long term relationshipsatis%action & building a long term relationship

Involves commitment of resources to offer desired

level of service ;arious elements involved in this phase

7 Order status information

7 Customer complaints) claims - returns

7 Product installation) commissioning - technicalsnags

7 Customer education - training


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""" ost!Transaction phase""" ost!Transaction phase

, #rder Status 'n%ormation#rder Status 'n%ormation7 !fter an advance part / full pament of the product)

customers need constant information on order status

7 3or this purpose organi(ations provide consignment trac$ingon their %ebsites

7 Organi(ations can provide order status information throughmore modern modes such as emails / sms alerts

, Customer Complaints Claims & ReturnsCustomer Complaints Claims & Returns

7 The sellers role / responsibilit does no end %ith dispatch ofproduct to customer

7 Organi(ations must provide mechanisms to handle postsales activities such as complaints) goods damaged intransit) incomplete / incorrect shipments) product recalls

7 Implemented through reverse logistics


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""" ost!Transaction phase""" ost!Transaction phase

, roduct installation commissioning & technicalroduct installation commissioning & technicalsnagssnags

7 Several technical products need supplier to provideafter"sales service such as installation - commissioning)

servicing product brea$"do%ns / failures during %arrantperiods

7 Implemented through a separate set"up for after"salesdepartments / teams

, Customer education & trainingCustomer education & training

7 In case of technicall comple& products) it is necessarto educate - train customers

7 Implemented through product manuals) training%or$shops - demonstrations


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*+,ecties o" Customer Serice*+,ecties o" Customer Serice

Objectives of customer service are

, 4elivering perfect orders

, Creating competitive value b delivering Seven R ;alueto customers

'er"ect *rder'er"ect *rder ! percentage of occasions on %hich customersre5uirements are met in full

Is a customer order measure for logistical 5ualit)

%hich in turn indicates abilit to provide customerservice

Is a customer order %hich is fulfilled in all respects vi(time) place) 5uantit) fault free installation anddocumentation

" * d' " t * d


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... 'er"ect *rder... 'er"ect *rder

, Represents ideal performance

, #eets the follo%ing standards

7 4elivered complete? all items delivered in the5uantities re5uested

7 4elivered on time) using the customer@sdefinition of on"time deliver

7 Complete and accurate documentation

1including pac$ing slips) bills of lading) andinvoices2 to support the order

7 4elivered in perfect condition and in the correctconfiguration to be used b the customer /

faultlessl installed

' " t * d' " t * d


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... 'er"ect *rder... 'er"ect *rder

Perfect order as a percentage is usuall measured across allcustomers over a period of time

Can also be measured at individual customer level or for customersegment or for individual emploee or for distribution center or countr

! common measure of perfect order is on!time in!%ull and error!%reeon!time in!%ull and error!%ree

To calculate the actual service level using the perfect order concept

re5uires performance on each element to be monitored - then thepercentage achievement on each element is multiplied together

e8g8 if the actual performance across all orders for

Error"free B =>

!ctual perfect order achievementF => G D=> G => F *+",-*+",-

FH the li$elihood that a perfect order %as achieved during the periodunder revie% %as onl =8J>

S lSe en le


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Seen uleSeen ule

States that the follo%ing seven factors must all be satisfiedto create the perfect order

, Right roductRight roduct

, Right .uantityRight .uantity

, Right laceRight lace

, Right ConditionRight Condition

! misstep in an of the above can result in customerdissatisfaction

Competitive advantage can be gained b creating anorgani(ation that routinel satisfies Rs

To provide higher levels of customer service)organi(ations see$ to fulfill Rs through the 6 phases of

customer service

, Right TimeRight Time

, Right CustomerRight Customer

, Right CostRight Cost

iC S i S


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Customer Serice StrategCustomer Serice Strateg

'aving a %ell thought out and planned customer

service strateg is critical to the development of astrong service culture

Organi(ations need to incorporate customer serviceinto their business goals) and into emploee goals to

help the organi(ation reach their corporate objectives

Steps to developing a customer service strateg

, Customer Service ;ision

, !ssessment of Customer :eeds

, 'iring the Right Emploees

, Customer Service 0oals

, Training

, !ccountabilit

, Re%ard - Recognition

C t S i St tCustomer Serice Strateg


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... Customer Serice Strateg... Customer Serice Strateg

, Customer Service /isionCustomer Service /ision

7 Communicating the customer service vision to emploees

7 Emploees need to understand %hat the vision and goal forcustomer service is and understand their responsibilit to helpachieve that vision

, Assessment o% Customer 0eedsAssessment o% Customer 0eeds

7 In order to meet the needs of their customers) organi(ations musthave a good understanding of customer needs and e&pectations

7 !n assessment is done b soliciting customer feedbac$ through

customer focus groups) satisfaction surves) or customer commentcards) and developing a comprehensive plan to meet and e&ceedthe customer needs

7 Organi(ations must $eep in mind that customer needs ande&pectations $eep changing " .hat a customer %ants toda %ill be

ver different from %hat the customer %ants a ear or ears later

C stomer Ser ice StrategCustomer Serice Strateg


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, 1iring the Right 2mployees1iring the Right 2mployees7 Screening emploees and ensuring that the possess

the disposition and s$ill set to help support a strongcustomer service environment is important

7 S$ills can be taught but attitude and personalit cannot

, Customer Service 3oalsCustomer Service 3oals

7 !fter customer needs and e&pectations are identifiedand customer satisfaction is measured) ne&t step is tocreate goals for achieving customer satisfaction

7 Emploees need to understand %hat the target is so thecan help the organi(ation reach their corporateobjectives



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, TrainingTraining

7 Emploees must be trained regularl to ensure customer servicesare in $eeping %ith the organi(ations standards - re5uirements

7 #uch of the training should be practical teaching for ho% theorgani(ation %ould li$e the emploee to behave in ever situation)ho% to respond to customer complaints) ho% to be responsive to

customers) ho% to meet customer needs) being empo%ered toperform service recover) ho% to ans%er the phone and customerservice standards

, AccountabilityAccountability

7 Emploees need to be held accountable for achieving customer

satisfaction goals

7 This is part of a comprehensive performance management sstemand should be culturall e&pected

7 Emploees should have a good understanding of ho% their service

to the customer affects the organi(ation@s overall performance



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, Reward and RecognitionReward and Recognition

7 There should be a %ell thought out sstem forac$no%ledging and re%arding emploees for goodcustomer service

7 Emploees need positive reinforcement %hen the

demonstrate the desired behaviors of a strong customerservice culture

'aving a strong vision and strateg for customer service isa critical componentcritical componentto the success of an organi(ation

Organi(ations need to identif %ho their customers are)%hat the %ant and develop strategies to achieve thosecustomer re5uirements

! strong customer service strateg is %hat separates the

successful organi(ations from the rest

C t S i / ditC t S i / dit


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Customer Serice /uditCustomer Serice /udit

!ssignment

" "


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e"erencese"erences

httpB//en8%i$ipedia8org/%i$i/SamK.alton

Seven R Rule httpB//boo$s8google8com/boo$sLidFDM#N%9Ks+c=C-pgFP!6D-lpgFP!6D-d5Fr

>Asofcustomerservice-sourceFbl-otsFpppc4NbP-sigFD!s6gTf(c5j$:R"b(5;$4ef$!-hlFen-eiFbQjKTbAN4sG#re*6*4c4%-saFG-oiFboo$Kresult-ctFresult-resnumFN-vedF=CEN!E%+vFonepage-5-fFfalse

Customer Service Strateg

httpB//thethrivingsmallbusiness8com/articles/"steps"to"creating"a"customer"service"strateg/

httpB//%%%8aberdeenshire8gov8u$/about/customerservice/CustomerServiceStrateg8pdf

Objectives of Customer Service - Perfect Order

Elements of *ogistics - Suppl Chain #anagement , ;ishal #ehta - #ihir #ehta

*ogistics - Suppl Chain #anagement , #artin Christopher
http://www.aberdeenshire.gov.uk/about/customerservice/CustomerServiceStrategy.pdfhttp://www.aberdeenshire.gov.uk/about/customerservice/CustomerServiceStrategy.pdf

2011 Lscm Lesson2 Customer Service

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