It is known to us, “in each industry, the customer is god, is operator’s food and clothing parents. ” This tells us that customers are important to organizations.
With the current intense competition in logistics nowadays, most companies can provide high quality goods, even are willing to cut down prices if reasonable. However, how can suppliers gain a competitive advantage when high quality is expected and price must be maintained at a level to generate a reasonable return?In our views, it is no doubt that how various supplier service activities are valued by customers, more specifically, that is, the ability of logistics management to satisfy customers. There are four dimensions of customer service, which are time, dependability, communication, and convenience. If companies have an understanding of what customers want in terms of these four dimensions of customer service, we believe that they can then offer such services to create a competitive advantage for their firms.
Here we will show the four dimensions of customer service respectively as the following. The first dimension is time.The order cycle is a major component of the time dimension of customer service. At the risk of sounding redundant, businesses today are looking to reduce order cycle times-longer cycle times translate into higher inventory requirements.
The time factor is usually order time from the perspective of seller looking at customer service. The buyer usually refers to the time dimensions as the lead time or replenishment time. Successful logistics operations today have high degree of control over most, if not at all, of the basic elements of lead time, including order processing, order preparation and order shipment.By effectively ensuring that order cycles will be of reasonable length and consistent duration, the seller firms have improved customer service levels.
Here is a case to illustrate the point. Procter ; Gamble is the world’s largest consumer goods companies. In 1992, Procter & Gamble entered the Chinese market. Its products needed timely and quickly transported to the market and to quickly seize the important part of the Chinese market.
P&G’s demand for logistics services on the response time, service reliability and quality rotection system in a very high demand. Around the logistics needs of Procter ; Gamble, Paogong Company designed and developed the business processes, strict process management system, established a logistics network throughout China, and the whole processes for P;G is to provide value-added services. For the planning, Paogong designed the implementation of logistics management systems, optimized business processes, integrated logistics supply chain to ensure that the goods in the same methods, models and standards to operate during transport.After the goods were send to the destination, there were uniform employees which have been trained in a vocational tanning received, unloaded, delivered the goods, provide P;G door to door and “one-stop” service, and though the quality management according to strict GMP standards and SOP procedures for operational management, products were quickly, accurately and timely send to sales outlets across the country.
By promoting of the cooperation between the two companies, Paogong established a high standard of information technology systems to help manage and provide comprehensive and effective information platform.Storage, transportation and other critical logistics information in real-time online tracking have been achieved. P;G achieved the seamless electronic data so that P;G and Paogong effectively integrated the processes and information. Therefore, it made the logistics more efficient, streamlined, and systematic.
The strict and high quality logistics services of Paogong, greatly reduced the logistics cost for Procter ; Gamble, cut down the order cycle and delivery time, and improve customer service level of Procter ; Gamble.In reverse, P;G promoted the continuous improvement of logistics services of Paogong which has been the today’s leading third-party logistics company. Secondly, dependability. Dependability means reliability, that is, how the company are performing and completing their promised service, quality and accuracy within the given set requirements between the company and the customer.
Dependability is just as important as a goof first hand impression, because every customer want to know if their supplier is reliable and fulfill the set requirements with satisfaction.Dependability is just as important as the first hand impression, because every customer wants to know that their supplier of what it may be are reliable and give the service agreed including great quality within the given timeframe without compromising on the quality. Dependability includes three elements, which are consistent order cycles, safe delivery and complete delivery. First of all, we talk about consistent order cycles.
Consistency is one of the most important weapons in the customer service arsenal.Without consistency everything starts falling apart and confusion abounds. Stay consistent on the inside of the business so that you remain consistent on the outside where it’s most important. Why is consistency so important? Why should we care so much about it? Well, it’s simple.
One of the most aggravating complaints a customer can have is: One hand doesn’t know what the other hand is doing in this place! When the departments of a business aren’t working together to produce a quality product it drives customer crazy.The customer has to deal with being routed and transferred all around the company in order to get what they are looking for and if one department does one thing and another department does another, it becomes incredibly difficult. For example: in the hotel industry one of the most common problems is making a reservation. Hotels brands are huge these days, they are worldwide and they have a countless amount of people working for them in different respects.
When a customer wants to make a reservation they have a few different options and all of these options must remain consistent with each other.They can go online through the brand website to make a reservation, they can call central reservations to make the reservation, or they can speak directly to the hotel to make a reservation. If any of these has a different procedure or quotes the customer a different rate than one of the others, the customer is going to pick up on that and wonder what is going on. Consistency makes customer routine easier, it enables the customer to feel that the company is reliable because they work the same way no matter who he is talking to.
Safe delivery means the products may lost or damage which may cause out of stock. Also, incomplete deliveries will cause negative customer ramifications, just like out of stock. It is not like that loss and damage can be evaluated, because orders are picked and assembled, they are handled and every time product is handled, we cannot ensure that it will not damage or loss. Besides, even if a company has highly accurate demand forecasting, it is impossible to achieve a 100 percent fill rate.
For a simple example, suggest that one of my friends goes to Fair Price with me.We placed an order for 200 package of bread, although the supermarket has ability to fill this order, the inventory needed to fill it meant that a lot of other orders for bread went unfilled, at least until the next scheduled delivery of goods. This is a good example to illustrate my point. Thirdly, communication.
Effective communication should be a two-way exchange between seller and customer, with the goal of keeping both parties informed. It requires the information flow in logistics management must be fluent, effective and direct.Once the order has changed, or other information updates, the change must be sure that informing to every relevant participant. Therefore, the communication channels must be constantly open and readily accessible to all customers.
Moreover, effective communication requires that the correct parties be involved in the process. For example, I am a buyer, and want to purchase 1000 computers from China, but I do not know how to ship the computer to Singapore in time and economically. Of course, I can ask the supplier to help me.But the best and effective way is to look for help from freight forwarder or 3rd party logistics company.
The company can provide more detail and more professional information about the shipment, such as custom clearance, insurance and transit time. Furthermore, customer service can be enhanced if complete information is exchanged between the participants, a delivery address can be helpful, but outstanding characteristics of the delivery address would be even more helpful. The communication aims to make sure that both the participants are clear what do they need to do, how to do.As illustrated by the case of transportation company that was responsible for delivering the components from supplier to Toyota.
Toyota is known for implementing JIT system, which requires the suppliers to ship their products to the factory at right time, right place, right product, and right quantity. There are so many factories and so many departments in Toyota. So when the purchaser in Toyota signs a purchase order to suppliers, the PO must involve the exact location information, such as the factory address, the exact department, the detailed berth.Based on the specific location, the transportation operator can deliver the products as soon as possible.
It also enhances the efficiency of JIT. Two-way communication between seller and customer has certainly benefited from technological advances such as cell phones, personal digital assistants and the Internet. These technological advances allow for less cost and more frequent contacts between the two parties. It should use the IT, the computer system to improve the service further.
Those computer systems can be connected with so many departments via internet, even satellite, transferring information to relevant participants, improving efficiency of management. For example, Schneider National can determine if a trailer is going to be late for a delivery by using data from its Qualcomm satellite system. This information is communicated to the fleet manager, who is responsible for notifying the consignee of the potential delivery delay. This allows the receiving location to take measures to minimize the resulting problems from the late shipment.
The last one is convenience. Convenience means logistic service levels must be flexible. From the logistic operation stand point, having one or few standard service levels that applies to all customers would be ideal, but this is based on the assumption that all customers would be ideal, this is based on the assumption that all customers logistics requirement are homogenous which may not be the case always in reality. The idea, raised by majority of organizations is that convenience is extraordinary vital factor to attract new customers and maintain loyal old customers.
Modern society is a competitive society, every organization think of more effective and efficient ways to attract customers. We can view some facts that happen around us, when people come to Singapore for the first time to study or work, they must choose a bank to save deposits. And the survey illustrates us most people choose the DBS bank or POSB bank (POSB bank belong to DBS bank). Why customers prefer to choose these two banks rather than others? The reason is that DBS bank and POSB bank provide more ATM machines in Singapore which make the customer feel very convenient.
Another outstanding example is about 7-11 shop, which is a popular convenient store all over the world. Customers can go to 7-11 shop buy goods in the all day, in a word, 7-11 shop famous for its convenience in the reason that it has a large of quantities and opened for 24 hours. Although goods in 7-11 shop are more expensive than other retailers, people also willing to buy something from 7-11 shop especially at night. Although convenience benefits organization, but sometimes we can not deny the fact that certain costs may be associated with convenience.
For example, the Pizza Hut need to charge for the delivery cost when customers ask the Pizza Hut to send these foods to their residence. If Pizza Hut does not want to be responsible for the logistics cost, it may make customers feel dissatisfied, then they will look for other fast food brand which can provide them more convenient. Nevertheless, the organization should have foresight. Because the free delivery cost may be attract more new customers to buy Pizza Hut’s foods.
Today, more and more organizations have been built for providing convenience to customers.For example, the Taobao website which is a shopping online website from China, the website is very popular in China nowadays, the reason is that people can buy goods online and choose a better logistics company online, it provides a convenient way to customer, along with more and more people shopping in Taobao website, more and more organizations use the convenience of internet to expand their sale scale, therefore, some companies set their net shop in the Taobao, for a simple example, the common carriers, then people can pay their bill online, it is very convenient.The action result in a fact that attract more and more new customers and expand the business scale. In conclusion, as the description of four dimensions which we’ve showed above, clearly, we can see that customer service levels can influence a firm’s sales success.
In the competitive industry nowadays, if competitors can gain significant advantage if they are able to offer products satisfying customer needs earlier than we are able to, that is, they have the ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience, it will adversely impact our sales and results of operations.Unanticipated delays in implementing the introduction of new products or expansion plans resulting in delays in capacity enhancements or new product launches could adversely impact our results of operations. In addition, there can be no assurance that the market acceptance of our future products will meet our expectations, in which case we could be unable to realize the intended economic benefits of our investments and our results of operations may be adversely affected.In a word, these four dimensions are all important to customer service.
If companies have a good understanding of what customers want in terms of these four dimensions of customer service, we believe that they can offer such services to create a competitive advantage for their firms, also, it will help their companies run in a successful way and grow fast.
