final supply chain

Customer Relationship Management

• Transforms the people, processes, and technology required to become a customer-centric organization

• Philosophy of putting the customer first

• Partnering with SELECTIVE CUSTOMERS to create superior value

Why do Companies need CRM

1. Acquire New Customers

2. Retain their Existing Customers

3. Meet the Changing Expectation of Customers

Loyal customers are the source of most profits, and a relatively small percentage of those customers may generate most of the profits for the company.

Strategically Significant Customers

• Customers with high lifetime value, i.e., customers that will constantly buy the product(s) or use the service(s) in the long term.

• Customers who serve as role models or benchmarks for other customers.

• Customers who inspire change in the supplier or the supply chain.

CRM does not work for everyone, only with those who have Brand Loyalty

True

Key Tools and Components of CRM

• Predicting Customer Behaviour

• Personalizing Customer Communications

• Segmenting Customers

• Target Marketing

• Event-Based Marketing

• Cross-Selling

• Up-Selling

• Relationship / Permission Marketing

• Customer Defection Analysis

• Churn Reduction

• Customer Lifetime Value (CLV)

Predicting Customer Behaviour

• Collecting customers’ buying history, preferences, and trend information, which could be used to forecast buying behaviors

• Also determine if marketing or advertising and their budget is effective or needs change

Personalizing Customer Communications

• Language aimed at specific groups of customers is likely to result in greater sales and shows that they care

• Clickstream: tracking how customers navigate a website

Segmenting Customers

• Dividing a customer base into groups of similar individuals or grouping customers based on demographics, etc.

• Allows them to sell a specific product or define it for the group more efficiently

Target Marketing

• A segment or group of customers the company has decided to AIM its marketing efforts towards

• More effective than mass marketing, more efficient, less labor and costs

Event-Based Marketing

• Identifies key events in the customer and business lifecycle

• When an event occurs, a specific marketing activity is undertaken

• Holiday seasons, birthdays, marriage, or graduations

Cross-Selling

• Complimentary

• Sells an additional related product or service to an existing customer after the initial purchase

• ex: would you like fries with your burger

Up-Selling

• Upgrade or add-on to increase price

• Ex: super-size order / make the order a meal

Relationship / Permission Marketing

• Customers SELF-SELECT or agree to receive the type of marketing communication they want

• ex: “opt-in” emails, permits the company to send them emails

Customer Defection Analysis

• Analyzing the customers who have stopped buying to determine why

Churn Reduction

• Efforts to stop losing customers to competition

• Goes in hand with customer defection analysis

5% improvement in customer retention can result in 75% increase in profits

Customer Lifetime Value

• A prediction of the net profit attributed to the entire future relationship with a particular customer

• CLV is an essential metric for determining how much money a company is willing to spend on acquiring new customers and how much repeat business a company can expect from particular customers.

Order Management

• Receiving and accepting orders, then shipping, invoicing, and updating the customer about order status

Order Management Steps
1. Receive and validate the order to confirm accuracy.
2. Check inventory to see when the order can be shipped.
3. Acknowledgement to the customer with a target ship date.
4. Schedule the warehouse picking of the order (also called Waving).
5. Pick and pack the order.
6. Prepare all the paperwork needed for the shipment.
7. Arrange for transportation.
8. Confirm shipment to the customer.
9. Produce and send an invoice to the customer.

Omnichannel

• Multichannel approach to sales that provides seamless shopping experience

• Successful omnichannel = dynamic inventory system and consistent pricing

ordering method: online, in store

delivery method: pickup, deliver

payment method: card or cash

Customer Service

• Philosophy: commitment to providing customer satisfaction

• Activity: order processing, billing, returns handling

• Performance Measure: percentage of orders deleivered on time, number of orders etc.

Customer Service Elements

• PRE-transaction elements

• Transaction elements

• POST-transaction elements

Seven R’s

1. right product

2. right quantity

3. right quality

4. right place

5. right time

6. right customer

7. right costs

+ right documentation = PERFECT ORDER

Call Centers

• Links an organization and its customers together to provide technical support

They can:

• categorize calls

• increase customer satisfaction

• provide input to forecast future demand

• increase productivity

• can be outsourced

Reverse Logistics or Returns Management

• Backwards flow of goods from customers in the supply chain

Five R’s of Reverse Logistics

1. Returns

2. Recalls

3. Repairs

4. Repackaging

5. Recycling

Problems w/ Reverse Logistics

• 4-5x more expensive

• Unwanted supply chain activity

• Quality or compliance issue

Green RL Programs

• Recycling, reusing materials or products, or refurbishing unused products

Measuring Customer Satisfaction

• Surveys, phone calls, etc, asking customers opinions

• Very little value until it is acted upon

Website Portals

• Customers can access their account information, ask questions, get shipping info, etc.

6 Steps of a Successful CRM Program

1. Create the CRM plan

2. Involve CRM users from outset: involve employees since it will affect them

3. Select the Right Application and Provider

4. Integrate Existing CRM applications: centralized database or data warehouse

5. Establish Performance Measures

6. Provide CRM Training for All Users

Trends in CRM

1. Customer Data Privacy

2. Social Media

3. Cloud Computing

Pure Services

• Offers very few or no tangible products to customers

• ex: education, consulting, storage space, etc.

End Product Services

• Offer tangible components along with the service component

• ex: restaurants, food with sevice

State Utility Services

• Directly involve things the customer owns

• ex: car repair, dry cleaning, haircuts, healthcare

Difference between Goods and Services

• Services cannot be inventoried

• Services are produced and consumed simultaneously

• Services have high customer interaction

• Services are decentralized, must be near customer base

Service Productivity

• Improving service productivity is challenging because of:

  • High labor content

  • Customized services

  • Difficulty of automating services

  • Problem of assessing service quality

Cost Leadership (Service Strategies)

• Lowest cost service provides

• Requires a lot of investment in equipment and efforts to control

Ex: route planning, UPS optimization

Differentiation (Service Strategies)

• Unique service created based on customer input and feedback

ex: sunday car servicing made for those who are working on weekdays

Focus (Service Strategies)

• Serve a narrow niche better than other firms

ex: person doing grocery shopping for you

Service Delivery System

Low Customer Contact Systems

• Mass prodouced

• ex: ticket kiosks, vending machine, ATM

High Customer Contact Systems

• Highly customized

• ex: personal shopper, hair stylist, manager

Blended Delivery

• Customer centric and no contact

• ex: restaurant

Explicit Services

• Availability and access to the service

• Consistency of service performance

• Training of service personnel

• ex: vault, safe deposit boxes, loans

Implicit Services

• Attitude of servers

• Atmosphere

• Waiting time

• Privacy and security

Facilities and Equipment

• Location

• Layout

• Equipment

• ex: ATMS, drive up ATMS

Facilitating Goods

• Tangible elements consumed or used by the customer along with the service

• ex: spoons, forks, or napkins at a restaurant

Service Location Strategy

• Make it easy for customers to find store

• And once they are there, make it easy for them to find or do what they want like pick up or drop off

Layout Strategy

• Maximize closeness and reduce distance traveled

Service Response Logistics is managing:

1. Service Capacity

2. Waiting Times

3. Distribution Channels

4. Service Quality

Long Range Service Capacity

• Market is too small for 2 competitors, so you are the first to capture all the business possible

Short Range Service Capacity

• Lack of short range planning capacity will lead customers to go to competitors

Capacity Utilization Formula

CU = Actual customers served per period / Capacity

Level Demand Strategy [SRL]

• Capacity remains constant regardless of demand

if demand exceeds, queue management tactics help

Chase Demand Strategy [SRL]

• Capacity varies with demand

if demand exceeds capacity, having more lines or calling workers for help is helpful

if Demand Exceeds Capacity [SRL]

1. Turn customers away aka lose business

2. Make them wait until help is available

3. Increase service capacity aka more workers and more infrastructure

hiring, training people is 75% of operating costs so we can:

• use cross trained employees to help

• have part time employees

• use tech

if Capacity Exceeds Demand [SRL]

• do other jobs

• do cross-training

• shift demand from peak times to non peak times with discounts or incentives

Queueing Systems [SRL]

• Helps control the flow and prioritize people expecting to receive a service

Structured Queues

• Set in a fixed position such as an airport or bank

• take a ticket number allows person to walk around

Unstructured Queues

• when people form queues informally in different directions and locations

• ex: people waiting for a taxi, ATM, or retail stores

Mobile Queues

• formed virtually with technology

• ex: real time electronic queue

Queue System Assumptions

• Balking: when customer refuses to join the queue

• Reneging: when customers decide to leave the queue

Single Channel, Single Phase

• Customer at the head of the line proceeds to single service provider who completes the service

• ex: ATM

Single Channel, Multiple Phase

• Customer proceeds to initial provider and then is passed of to next service provider and it keeps happening until entire service is completed

ex: to hostess to waiter to chef to waiter

Multiple Channel, Single Phase

• Customer proceeds to the first available service provider from a group of service provider which completes the service

ex: bank teller

Multiple Channel, Multiple Phase

• Customer proceeds to first available service provider and then is passed off to next provider until service is completed

ex: first available to take order to cook to server

First and Second Rules of Service

1. Satisfaction = customer perception >= customer expectation

2. It’s hard to play catch-up

Waiting Time Management Techniques

• Keep customers occupied

• Start the service quickly

• Relieve customer anxiety

• Keep customers informed

• Group customers together

• Design a fair waiting system

Managing Distribution Channels [SRL]

1. Eatertainment: combines restaurant and entertainment ex: rainforest cafe

2. Entertailing: combines retail with entertainment ex: malls

3. Edutainment: combines learning with entertainment ex: science center

Franchising

• Allows businesses to expand quickly

ex: fast food restaurants

International Expansion

• Operate or partner with firms that are familiar with the locations market

• Can help address language and culture barriers

5 Dimensions of Service Quality [SRL]

1. Reliability

2. Responsiveness

3. Assurance

4. Empathy

5. Tangibles

Offshore Factory

• Manufacturing in a country where raw materials or labor is less expensive

• Low labor costs

• Minimal technical or managerial resources

ex: Clothing in India or Bangladesh

Source Factory

• Manufactures products at low cost with skilled workers

• More managerial resources like supplier selection and product planning

ex: HP producing calculators and keyboards in Singapore

Server Factory

• Takes advantage of government incentives like tariffs by making minor improvements

• Reduces taxes and logistics cost

• Set up to serve local market

ex: Coca Cola bottling; mix final ingredients to take advantage of taxes

Contributor Factory

• Focuses on product development for products they already make

ex: 973 Sony built a Server factory in Wales and
then 15 years later got involved in development
planning, etc. and now is a Contributor factory

Outpost Factory

• Factory set up in area with abundant and advanced suppliers, competitors, research facilities, etc.

ex: Silicon Valley, California

Lead Factory

• Source of innovation and competitive advantage for the whole company

• World-Class

ex: Intel factory in Penang, Malaysia opened in mid
1970’s, now is a lead factory.

“This is your “Go-To” factory

12 Pillars of Competitiveness

1. Institutions

2. Infrastructure

3. Macroeconomic stability

4. Health and primary education

5. Higher education and training

6. Goods market efficiency

7. Labor market efficiency

8. Financial market sophistication

9. Technological readiness

10. Market size

11. Business sophistication

12. Innovation

Taxes and Incentives [GLF]

• Designed to protect local businesses

• Countries with high tariffs discourage importing and encourage to produce locally

Currency Stability [GLF]

• Impacts business costs and location decisions

Access and Proximity to Markets [GLF]

• Trend —> being in delivery proximity of your customers

• Even more important in the service industry

Labor Issues [GLF]

• Labor availability, productivity, and skill.

• Unemployment/underemployment rates

• Wage rates; turnover rates; labor force
  competitors.

Right to Work Laws [GLF]

• 28 states have laws protecting
  employees’ right to join or
  support a union.

Access to Suppliers and Cost [GLF]

• Supplier proximity influences the delivery of materials and the
  effectiveness of the supply chain.

Utility Availability and Cost [GLF]

Environmental Issues [GLF]

Land Availability and Costs [GLF]

• As land and construction costs in big
  cities continue to escalate, the trend is
  to locate in the suburbs and rural areas.

Quality-of-Life Issues

Business Clusters

World Trade Organization

Weighted-Factor Rating Model

Break-Even Model

When was the Department of Homeland Security established

2003

Global Supply Chain Oppurtunities

Global Supply Chain Challenges

Global Logistics

US Customs Border Protection

Trade Compliance

Import Process

Export Process

Foreign Trade Zones

Deemed Exports

Custom Brokers

Move global shipments through customs and handle documentation