LOGISTICS - CUSTOMER SERVISE PART 1 . The aim of this lecture is to define customer service, its components and starting points in developing its strategy Šárka Čemerková Lecturer Logistics - Customer Service Part 1 . Logistics activities Customer Service Definition Customer Service Components Starting points of customer service strategy Structure of the lecture CUSTOMER SERVICE (CS) • •process that takes place between the buyer, seller and possibly third party (logistics companies) •result of this process is the added value (short and long term) that increases the value of the product or service being exchanged •cost effectiveness •https://www.youtube.com/watch?v=bL_D-qyva0c •https://www.youtube.com/watch?v=tYUXK2Rb-PY • • How can be CS understood? •Activity to be managed •Performance in certain parameters •Business philosophy CS Components • 1.Pre-sales phase 2.Sales phase 3.After-sales phase 1. Pre-sales components •mostly relate to the organization's policy or strategy •have a major impact on how customers perceive the organization and what their level of satisfaction is •do not always have to be directly related to logistics •formulated and available before an enterprise starts implementing and performing customer service activities •are provided independently and outside the normal order cycle •relatively stable, long-term nature •provide some assurance in terms of customer expectations • I. Written declaration of customer service policy • •definition of service standards in response to customer requirements •it includes measures to monitor and evaluate service performance, including how often results are reported II. Handing over customer service declarations to customers •enterprise makes the customer aware of what he can expect to avoid exaggerating expectations •in this form the customer should learn how to proceed in cases where the expected level of service is not met by the enterprise III. Organization structure •ensures that customer service goals are achieved •there are no universal rules •it must allow both internal and external communication policy, performance and, where appropriate, corrective actions •customers should have easy access to people who are directly involved in meeting their needs and can answer their questions IV. System flexibility •plans for a random or unforeseen event that would allow the organization to respond flexibly when such exceptional situations occur V. Management services •assistance in advertising sales •assistance in stock management •assistance with ordering •provided in the form of various manuals, seminars, or personal consultations •free or paid • 2. Sales components • •services that are usually associated with the term customer service • I.Stock depletion level • •measures the availability of a particular product •stock depletion level should be monitored by product and by customer •maintains customer confidence when stocks are exhausted (replacement product, delivery from another source) II. Order status information •information about the status of ordered goods in stock •order status information •information about the expected or actual delivery date •information about the status of pending orders •customers pay increased attention to any delivery problems or variations in delivery • • • III. System accuracy •order cycle uniformity •special delivery solutions •movements of goods •ease of ordering •product substitutability IV. Order cycle evenness •customers attach more importance to maintaining order cycle evenness than absolute cycle length •need to monitor actual performance achieved in supply evenness and if necessary taking corrective measures V. Special delivery solutions • •delivery that cannot be delivered within the usual distribution system •costs of these deliveries significantly exceed the costs of standard deliveries •necessity determines which types of customers or situations are eligible for this special treatment and which are not VI. Goods redistribution • •moving goods between different distribution points •aim is to prevent the depletion of stocks •where there are several distribution points, the rules for such transfers should be laid down VII. Ease of ordering • •How easy is it for the customer to order? •user friendly preference •ordering problems need to be monitored VIII. Product substitutability •if the goods ordered by the customer are not in stock but can be replaced: odifferent size/packaging of the same product oanother product that has similar or better user properties o 3. After-sales components • •provide product or service support after the customer has received it •are the most neglected • I. Installation, warranty, modifications, repairs, spare parts • •important consideration in virtually any purchase, but especially in the purchase of investment products •they must be given the same attention and investigation as the sales parts II. Product tracking •form of registration - which products were sold to which customers •this information can be extremely important (e.g. need to inform customers about a potential problem) III. Handling complaints, returned goods •importance of online IS •reverse logistics •setting clear rules IV. Temporary product replacement •for some products it is necessary to keep in stock backup products that can be offered to the customer during the service of the product (cars, mobile phones,…) •minimizing customer trouble and the ability to significantly increase customer loyalty CS STRATEGY •market and business analyzes mainly in the following areas: odetermination of the level of CS following customer response in the event of depleted stock at retail level ointerdependencies between costs and revenues oABC analysis ocustomer service audit • Determination of the level of service following customer response in the event of depleted stock •is difficult for the manufacturer to determine the impact of stock depletion on end-users •depletion of stocks at the producer level does not necessarily mean that stocks at the retail level are depleted •when goods are not available, the customer can: obuy another size / packaking of the same brand obuy another brand ogo to another store •proper understanding of the behavior of subjects at different levels of the distribution channel is critical for the right strategy formulation (e.g. infant food) •the starting point for customizing the order cycle, order fulfillment reliability, transport options and other elements of the logistics system Cost links in the logistics system ABC analysis •some customers (products) benefit the enterprise more than other customers (products): oA: the most important (85%) oB: less important (15%) oC: the least important (5%) Customer Stock availability standard (%) Order cycle time standard (hr.) Standard for completeness of supply (%) A 100 48 99 B 95 72 97 C 90 96 95 Example: different service levels Summary of the lecture You can: •Define customer service •Describe the individual components of customer service •Define the bases of customer service strategy •Clarify customer´s response in case of stock depletion •Use ABC analysis to create a customer service strategy