MISS AARFA.

TYBMS, CHINAI COLLEGE

LOGISTICS INTERFACE WITH MARKETING

MARKETING LOGISTICS INTERFACE Product development

Personal selling Obtaining demand

Advertising

Sales promotion Marketing offset

Channel of distribution

Pricing

Transportation

Warehousing

Service demand

Inventory

Materials management Service level Utilization

L O G I S T I C S

Communications

MISS AARFA. S

TYBMS, CHINAI COLLEGE

LOGISTIC AND PRODUCT CYCLE

To plan marketing strategy in an dynamic context. Manager offer use life cycle modeling. Emphasis marketing mix varies according to the stage of product life cycle. Stage 1. Introduction 2. Growth 3. Maturity 4. Decline Emphasis in marketing mix Promotion Distribution Price Cost reduction

The level of logistic required by marketing varies as a product maove through the different stages of PLC. In the early stages timely cost-effective fulfillment of orders is a major requirement in ensuring initial acceptance of the product. Later as sale become slow and product moves into the maturity and saturation edges. The emphasis changes to trimming cost as the product faces stiff price competition. Unless logistic manager understand want marketing is trying to achieve in each product, they cannot hope to provide appropriate levels of logistic support for the marketing effort The marketing mix consists of the price, product, promotion and physical distribution. The interface of logistic with marketing as depicted by John Gattoma brings out the interaction between the two. Marketing through its activities centers of: Product development Personal selling Advertising Sales promotion Channels of distribution Pricing These create demand fr th product/service. But if this created demand is to be capitalizing then is should be serviced promptly and effectively. Here in comes the importance / contribution of logistic. Logistic which consist of the activities of the centers namely: Transportation (inbound/outbound) Warehousing Inventory

MISS AARFA. S Material management Unitization Communication

TYBMS, CHINAI COLLEGE

It contributes towards servicing marketing effort. Marketing objective is to allocate resources to the marketing mix in such a manner as to maximize the long run profitability of the firm. Logistic objective is to minimize the total cost given the customer service objective, where , total cost equals transportation costs, warehousing costs, order processing and information costs, lot quantity costs, inventory carrying costs. Marketing and logistic effort are highly complimentary. Product base decision unitization concepts have to be supportive of each other. Channels of distribution decision will greatly depend on the transportation and warehousing policies of the firm. Sales promotion measures must be in coordination with the level logistic competency of the firms. Competitive pricing decision can easily reach at; it through efficient management of the activity centre of the logistic least cost level is maintained. Thus, if marketing and logistic manager begin to think strategically the coordination built in will create a competitive edge for the firm over its other competitors.

MISS AARFA. S

TYBMS, CHINAI COLLEGE

INTERGRATED LOGISTICS BENCHMARKING

Benchmarking Defined In quest of quality, firms today have turned to benchmarking as a method to improve their operational performance. In order to have a logistics process that is efficient and effective and one whose output is a continuous quality process, it is mandatory that benchmarking be an element of the overall success. Benchmarking is part of the overall total quality management (TQM) concept. TQM's philosophy is to continually seek to improve quality of performance in all business processes of which integrated logistics is one. Benchmarking is used to understand the various processes. It simply identifies performance gaps between a firm and the best practice and then assists that firm in closing the gap. A formal definition is : "The continuous process of measuring products, services and practice against the toughest competitors or those companies recognized as industry leaders." Some believe that benchmarking is new, but this is far from the truth. The concept has been around for a long time. Wright Brothers were inventing the airplane, they first studied the flight of birds and then model airplanes .Based on their observations, they designed an airplane .Every time they failed in flight, they compared the calculations they had set for that particular flight against what actually happened and then made adjustment. They located performance gaps and closed them. They did not even know that they were benchmarking. Benchmarking is really comparing your product car, stereo, computer, house etc ;against someone else's and then deciding what you can do to upgrade to whatever you consider to be better . The term "bench marking" did not appear in the literature until around 1979 when XEROX adopted the process in their manufacturing operations. By 1981 they had adopted the concept company wide. Then in 1983, XEROX, announced at its annual meeting that the no.1 priority was to achieve industry leadership through quality. Bench marketing was included as a method to accomplish this. Bench marketing is utilized in integrated logistics to analyze customer service offerings .In today's environment, customer service has the ability to provide sustainable, strategic competitive advantage that differentiates one firm from another. Therefore,

MISS AARFA. S

TYBMS, CHINAI COLLEGE

firms wishing to increase market share, productivity, etc; looks to customer service to provide the necessary ingredients to compete effectively in the market place and their components. THE BENCHMARK PROCESS Benchmark process consist of number of steps as shown in the figure: It is straight forward process and the step need to be followed in the order presented. Following steps can help integrated logistics manager opting the goal of superior performance in addition to the following benefits. Gain awareness of industry best practices. Establish real objectives and goals. Guide strategy, structure and tactical action plan. Focus resources on high impact opportunities. Improve service quality. Control cost effectively. More adequately meet end user customer requirements. Determine true measures of productivity. Attain a competitive position.

STEP 1 Select areas to Be benchmarked

PLAN BENCHMARKING Identify Additional Data Source

Identify Benchmark candidates STEP 2

PLAN BENCHMARKING Determine Gap Project Future Performance Level

Measure Own Operations

Collect Benchmark Data STEP 3 STEP 4

PLAN BENCHMARKING PLAN BENCHMARKING Plan Improvements Improvement

Set Goals STEP 5

PLAN BENCHMARKING

MISS AARFA. S

TYBMS, CHINAI COLLEGE

Selecting the right firms to benchmark against

Most firms start their benchmarking efforts internally (internal benchmarking) and then begin to branch out and benchmark against their direct competitors. Possibly then will expand their benchmarking efforts by comparing themselves against the" best of the best" in any industry (functional benchmarking) and ultimately begin process benchmarking. However, in the beginning it is very important in competitive benchmarking that the firm choose competitors that are comparable to its own integrated logistics operations. It is frustrating and many times useless to perform benchmarking if the firm is not comparing "apples to apples. It is recommended that firms determine what organizational structure stage they are in stage 1 through 5 and then locate competitors in the stage to compare against. Then, after this process the firm can start comparing firms in more advanced stages to help determine hoe they evolved from one stage to another. Another issue is what exactly to benchmark. There Are Four Levels Of Benchmarking: Internal Benchmarking: It looks at subsidiaries or divisions. Competitive Benchmarking: The firm compares itself with its closest competitors. Functional Benchmarking: It looks at competitors/ industry leader no matter the industry. Generic Benchmarking: It compares like processes across industries.

MISS AARFA. S

TYBMS, CHINAI COLLEGE

MARKETING

AND

LOGISTIC

INTERFACE

The interface between logistics and marketing is critical to the delivery of customer service. Practitioners and researchers have long recognized the importance of customer service in achieving customer satisfaction. Indeed, organizations often succeed or fail depending on their levels of customer service. However, achieving outstanding customer service levels is complex and challenging because it involves interfunctional co-ordination, especially between the logistics and marketing functions. Without the successful link of logistics and marketing customer services, the firm may be unable to meet customer expectations, resulting in a dissatisfied customer or a lost sale. Logistics customer service activities provide place, time, and form utility, by ensuring the product is at the right place, at the time the customer wants it, and in an undamaged condition. Marketing customer services facilitate possession utility by creating awareness of the product, offering a mechanism such as price, by which the buyer-seller exchange can take place, and often offering follow-up service and warranty on the product. Interfunctional co-ordination is important since outstanding customer service requires all of the above activities. Logistics is usually concerned with satisfying the supply of the customers needs and wants in the marketing channel (or a distribution channel or a supply channel), while marketing usually focuses on satisfying the demands of customers
Logistics is often referred to as Marketing's other half; sometimes even as Marketing's better half or even vice versa. However, such evaluation is not necessary because both professions are dealing with the same issue, i.e. putting product into the hands of the ultimate user. If we look at the traditional marketing mix: price, product, promotion, and place, obviously Logistics needs to be taken into account at least in respect of the matter of place. After all,the buyer cannot buy, no matter how much he or she has been motivated to buy with advertising and other promotional programs, if the product is not physically and conveniently available for purchase. Likewise, it is difficult to manage and control inventory investment when the sales program is so erratic that customers give up trying to buy because the sales outlets maintain erratic or unclear business hours. One cannot buy a product if the sales outlet opens on an irregular and unpredictable schedule. While on the matter of place, perhaps the logistics department is better able to influence customer satisfaction, it is likewise well able to provide useful input in the planning and execution of the other utilities in the marketing mix, i.e. price, product, and promotion. We must disabuse ourselves of the mistaken notion that Logistics is only the science of transportation; it is far more than a science and certainly far more inclusive than transportation. Price: Of course Logistics costs have a strong bearing on the final selling price of a product, but two important questions must be asked: what are the logistics costs, and are they under control? Certainly, the direct, mile per mile, or pure freight costs are part of the calculation, e the logistics costs?

MISS AARFA. S

TYBMS, CHINAI COLLEGE

strong bearing on the final selling price of a product ,but tilities in the marketing mix. ava but in Logistics, we prefer to look at the total cost of Logistics. Thus, we would include, for purposes of comparison, the total cost of holding inventory and, as well, the cost of money while it is frozen in a large inventory holding and further, the cost of being out of stock. It is the latter, the cost of being out of stock that holds very low esteem among merchants in this part of the world. While Logisticians worldwide aim to minimize the cost of holding inventory and, indeed the size of inventory itself, they still try to enable the merchant to satisfy the customer, but it does seem here that customer satisfaction is a non-existent sentiment. Doubtless, this attitude emanates from the old days when buyers had to be satisfied with whatever was offered for sale, like it or not. It is, of course, difficult to estimate with any certainty the real cost of being out of stock. One may suppose that many merchants could quickly estimate the cost of losing one sale because of being out of stock. That one sale may not be very costly at all. However, suppose the out of stock condition of the merchant repeats until, finally, the customer decides that it is not worth the effort to patronize this merchant any longer. Now the merchant has lost not one sale but the customer as well. How much is this loss actually going to cost the merchant? It is difficult to say, but imagine, in addition, the merchant losing several customers in this fashion during a short period. Again, it may be difficult to place a dollar value on these customers, but one may assume that the loss can be substantial. Product: As to product decisions, again the Logistician on the team can be of more help than one might first expect. Such issues as type and bulk of consumer packaging may impinge directly on the pure freight costs of distribution and thus warrant input from the Logistics department. I am reminded of a manufacturer of glassware. The sales department had long ago decreed that all of the various shapes and sizes of glassware should be presented in a carton of uniform size; one carton designed to hold any and all of the firms products. Of course, one result of this decision was that in a carton of 12 glasses, there might be considerable unused space, while in the case of another shape or size of glassware, the carton might be full right to capacity; but what does the consumer care about that? It was a convenience to the sales department because there was less in the way of promotional decision-making to be concerned about. In addition, the firm was thus able to buy the one size and style of carton in large quantity, thus providing a benefit according to the theory of economies of scale. Only the Logistics Manager was aware that, in fact, the uniform size carton was costing the firm an enormous amount of money. How? The Logistics Department made it a point to ship product in full container loads for reasons of product safety and economy. However, with the uniform size carton, regardless of how many items of product were being shipped, or their sizes or shapes, every container was shipped with only 70 percent of capacity being utilized by saleable product, i.e. each carton contained more air than product. Thus, one can calculate easily enough that the firm was paying for but not using 30 percent of its shipping capacity. In spite of this obvious waste, for several years sales was the ruling member of the management team and no one was able to effect change. Finally, an outside auditor raised

MISS AARFA. S

TYBMS, CHINAI COLLEGE

the issue in connection with the firms annual audit. Executives busied themselves running around in circles trying to assign blame. Meanwhile, the Logistics manager removed from a dusty file the estimates he had made some time earlier. He brought them up to date and was finally able to convince management that the economies of scale were in fact quite illusory when compared with the reductions in transport cost resulting from making use of purpose-designed cartons for each size and shape of glass ware. From then on, containers were sailing at 90 percent of capacity. Promotion: Problems of promotion and their relation to the Logistics Department are too numerous to recount in full. They most often, but not exclusively, concern the frequent running of a major promotion by the sales department without informing Logistics and Production that a large supply of product would be needed at a specific time period in the near future. The result of these occurrences is usually a failure of the promotional effort due to lack of product at the right place at the right time. The Viagra experience provides a useful illustration of how the close relationship among the functional departments of a firm can be profitable and useful in avoiding disaster. Here the production department realized that it would be unable to have product available on the date being advertised by the marketing department worldwide for the introduction of the new product. The marketing department was facing a debacle because it had placed the reputation of the entire firm on the line in its promotional efforts and the anticipated embarrassment resulting from non-performance would be devastating. However, the Logistics department, by rearranging the production scenario, changing a sequential operating scheme to a simultaneous one, and introducing carefully coordinated, operations was able, despite the tardiness of the production department, to meet the advertised dates for introduction of the new product in world markets. This was an extreme case I grant, but one from which much valuable knowledge could be derived. Place: Issues of Place are a bit more ambiguous than the other utilities as Place includes issues of both transactional and physical distribution. The transactional decisions usually involve a decision as to whether a manufacturer will deal directly with retailers or deal only with intermediaries. Serving the market through intermediaries can work out relatively easily in respect to domestic market opportunities, but on the international level, such an arrangement can produce a variety of intractable problems. We might make these issues a bit clearer if we first understand that issues of Place are not limited to the matter of transport, but rather to the time the product spends locked within the delivery pipeline. If we ask how long it takes from the time the buyer decides to buy and the time the buyer actually receives the product and is able to offer it for sale, we might be a bit shocked. I have deliberately set the starting point for this order cycle time examination at the time the buyer decides to buy. Actually, the starting point might well be set back a bit to include the time it takes for the buyer to make his decision to buy; the time involved for the taking of physical inventory and the time taken in deciding how much product to buy. However, assuming a decision has been made, we may contemplate a worst-case scenario of a firm, which is still somewhat the norm, in which job descriptions present very narrowly defined duties so that

MISS AARFA. S

TYBMS, CHINAI COLLEGE 10

each mini-task passes through separate hands, with a multiplicity of tasks and a multiplicity of hands. In such a firm, one also finds a management philosophy that often dictates that clerical (some might call them administrative) tasks take precedence over the matter of selling product to customers. Observation might force one to conclude that the real raison d'tre of the firm is not to sell product, but rather toper form miscellaneous clerical functions during which the customer is forced to patiently await some minimal service. With this ultra specialization in small and often meaningless tasks ,notions of customer service fade so far into the background as to be non-existent. Witness for example, the sad case of a firm that had been negotiating for foreign representation in a foreign market which marketing had determined would be a very profitable endeavor. Negotiations had progressed to the point where the foreign firm had requested a sample shipment of the firm's products. The manufacturer agreed and the shipment was picked and packed. However, the shipment was never made. Why? There was a delay in actually delivering the shipment to the airport for transport to the destination. The delay was caused by two sad facts: 1) No one at the firm knew how to prepare a simple invoice. That was the only document the firm had to prepare, but they were unable to do so. Finally, someone was found who was able to prepare the document. 2). By this time, the one and only executive who had possession of the official seal of the firm had gone out to lunch and did not return for three hours. Before things could be corrected, the plane had left without the samples and the foreign potential buyer declined to talk further saying: If this is the way you do business, I prefer not to talk any further. To be fair, one must examine the rather frequent and mysterious out-of-stock condition from which so many merchants seem to suffer. I have been personally quite interested in the stock situation of the pharmaceutical industry and have been quiteshocked, as both a researcher and a consumer with what I have found.

MISS AARFA. S

TYBMS, CHINAI COLLEGE 11

Cusomer service and customer retention:

Customer ser vice is a process for providing significant value added benefit to the supply chain in a cost-effective way. 2. Pre-transaction elements : customer service factors that arise prior to the actual transaction taking place. Transaction elements: the elements directly related to the physical transaction and are those that are most commonly concerned with logistics .Post-transaction elements: these involve those elements that occur after the delivery has taken place. 3. written customer service policy; organizational structure; method of ordering; single order contact point; accessibility of order personnel; order size constraints; system flexibility 4. condition of goods; inventory availability; order preparation; service/order cycle time; delivery alternatives ;delivery time; delivery reliability; delivery of complete order; order status information. 5. invoicing procedures ;invoicing accuracy ;product tracing/warranty returns policy; availability of spares ;call-out time; customer complaints and procedures. 6. 1. Time usually order fulfillment cycle time;2. Dependability guaranteed fixed delivery times of accurate, undamaged orders;3. Communications ease of order taking, and queries response;4. Flexibility the ability to recognize and respond to a customers changing needs. 7. Service quality is a measure of the extent to which the customer is experiencing the level of service that he or she is expecting. Service quality is the match between what the customer

MISS AARFA. S

TYBMS, CHINAI COLLEGE 12

expects and what the customer experiences. Service quality = Perceived Performance x 100 Desired Expectations

RETENSTION
Customer retention is an invaluable strategy for every business alike. Many bosses use many ways to do customer retention. - Offering them discounts. - Giving them freebies. - Providing free advice in times of needs. - Meet up for tea. - Give vouchers for either their own products or for others like Starbucks vouchers for example. What about freight forwarding? How does a freight forwarding company deal with customer retention? I notice that in the freight business, customers want a no-nonsense policy when dealing with their cargo. They want a few yet important things that you have to provide in order to win them over. 1) Fast. What does it mean by fast? Simple; Be quick to respond, be quick to reply, be quick quick quick. They want quotations fast. They want the items shipped fast. Any delays, they want an explanation fast. If you can be faster than them, you win. Provide them information before they ask. Proactively tell them where is the goods currently located at. The key word here is to be PROACTIVE. 2) Precise. You need to provide accurate and to-the-point quotations. Never be too far off from the actual amount in the invoice you will charge to them. This is a fact I learnt whilst working as a developer a few years back. I was required to provide my delivery times to make sure that I deliver my projects on time. Initially I set my deadline too quick, and was lectured. After that I cowardly set super long deadlines. Of course I completed the task before schedule, but then was lectured again on the waste of presumed man hours. ALWAYS BE AS ACCURATE AS POSSIBLE. If you want to give a pre-quote to your customer, always refer to past figures. If you don't have any, make sure you get the exact figures before quoting! Do not punch yourself by quoting too much or too little, and when the real amount appears, your customer will not be satisfied at all.

MISS AARFA. S

TYBMS, CHINAI COLLEGE 13

3) Explanation. Explain clearly what are the things that he/she is paying for. List down in detail each charge he/she is required to pay. Then provide a total figure at the bottom. This is a win-win, because some customers want to go through every figure. (Note: All those shipping terms, make sure you know them! They will ask about it!) Other customers only want to see the total. If the total figure is within their budget, they are good to go. 4) 24/7/365 Customer Service. Customers like to do sudden knee-jerk actions. (Actually they don't, but they tend to do shipping-related things at the last minute) Always be ready to clear their doubts, confirm the shipments, etc. Knowing how customers think is a very valuable resource! Key is to know thy customer. You need to be 1) Quick to ensure super customer service. 5) Reliability. If you speak like a pro, they will know you are reliable. They will feel all cozy inside because your authoritative voice will clear their doubts and guide their cargo to safety (their destination). No harm being a 'big brother' to them! Always suggest alternative cost-saving ways to keep their shipping expenses to a minimum. Of course.. don't ever do a loss-business. Don't sacrifice your earnings to make the customer happy. Instead, try to provide them good tips to ensure that their shipment will arrive safely, on schedule, and inexpensively. I can tell you, the customers probably shipped more items of that specific kind than you. So they know what is the acceptable figure and what's not. If you can offer a good rate to them, keep it up! Be there for them like you are there for your love-of-your-life!:) These 5 key points are enough to keep customers satisfied. Remember, the freight business is unique. The business model isn't your regular company that could offer discounts at any time because in freight, your cost is much higher than regular businesses. Servicing lorries? Maintaining ships? They need money. Your bakery bread costs a few cents but sold for a few dollars right? See the percentage they earn! Doesn't apply for freight!

MISS AARFA. S

TYBMS, CHINAI COLLEGE 14

SERVICE DERIVEN IN LOGESTICS SYSTEM

INTRODUCTION:Logistics is the management of the flow of resources between the point of origin and the point of destination in order to meet some requirements, for example, of customers or corporations. The resources managed in logistics can include physical items, such as food, materials, equipment, liquids, and staff, as well as abstract items, such as time, information, particles, and energy. The logistics of physical items usually involves the integration of information flow, material handling, production, packaging, inventory, transportation, warehousing, and often security. The complexity of logistics can be modeled, analyzed, visualized, and optimized by dedicated simulation software. The minimization of the use of resources is common motives.

DEFINITION:Logistics is the art and science of management, engineering and technical activities concerned with requirements, design and supplying, maintaining resources to support objectives, plans and operation. --- Society of logistics engineers (sole) 1974.

ADVANTAGES OF LOGISTICS CUSTOMER SERVICE:Logistics customer service is mainly around the customers expect goods, the expected delivery time and the desired quality and carried out, in the business have a large role. With the development in particular, competition among enterprises has weakened below the limit, the center of its competition is the competition of logistics services.

MISS AARFA. S

TYBMS, CHINAI COLLEGE 15

THE ROLE OF LOGISTICS CUSTOMER SERVICE MAINLY IN THE FOLLOWING AREAS.

INCREASE SALES
Customer service is often an important element of the logistics business, which is directly related to the logistics of marketing. Logistics activities through time and space utility to meet customer demand, the output of the logistics business function, or the final product. Logistics and customer service, whether for production logistics, logistics or market-oriented, and its final product is to provide a service to meet the needs of logistics customers.

IMPROVE CUSTOMER SATISFACTION

Customer service is a business to buy their products or services provided by a range of activities. From the modern point of view the concept of marketing products, meet consumer demand, customer service has three levels of meaning that is the core product, the form of augmented products. As a customer of his concern is to buy all the products, the products of the kind and value-added products. The logistics customer service is important to provide these valueadded activities; it has an important impact on customer satisfaction. Good customer service will increase the value of products, improve customer satisfaction. Therefore, many logistics companies logistics customer service as an important feature. TO CREATE BEYOND THE SINGLE ENTERPRISE VALUE OF THE SUPPLY CHAIN:Logistics services as a unique way to merchandise for the media, the suppliers, manufacturers, wholesalers and retailers of organic components from production to consumption, a whole process flow system, and promote the smooth flow of goods; the other hand and logistics services through its own unique system facilities (POS, EOS, VAN, etc.) continue to merchandise sales, inventory and other important information back to the distribution channels in all enterprises, and by continuously adjusting

MISS AARFA. S

TYBMS, CHINAI COLLEGE 16

operational resources, so that the whole process of continuously coordinated response to the circulation changes in the market, thereby creating a flow of the pipeline beyond the individual enterprise supply chain value. RETAIN CUSTOMERS:-

Customer is a source of profit. In the modern market economy, enterprise customers and their needs is the establishment and development. How to better meet customer needs is key to business success. In the past, many companies will focus on new customer development, while research on how to retain existing customers less. In fact the strategy to retain customers is more important. Because customers and the company has a very high profit margin between the correlation retain old customers to retain business, while amortization of the customer sales and advertising costs are low, especially satisfied customers will provide business intermediaries.

MOST IMPORTANT CUSTOMER SERVICE ELEMENTS: On-time delivery Order fill rate Product condition Accurate documentation.

MISS AARFA. S

TYBMS, CHINAI COLLEGE 17

SERVICE DRIVEN LOGISTICS SYSTEMS:An effective starting point for logistics system design is the marketplace, in other words, companies must fully understand the service needs of the various markets that they address and then seek to develop a low cost logistics solution. The ideal logistics strategies and systems should be devised in the following steps

IDENTIFYING CUSTOMERS SERVICE NEEDS:It is important that no two customers will ever be exactly the same in terms of their service requirements. However it will often be the case that customers will fall into groups or segments which are characterized by a broad similarity of service needs. These groupings might be thought of as service segments. The logistics planner therefore needs to know just what the service issues are that differentiate customers. Market research can be of great assistance. The approach to service segmentation suggested here follow a three step process:

MISS AARFA. S

TYBMS, CHINAI COLLEGE 18

Identifying the key components of customer service

Establishing the relative important of customer service components STEP1:- IDENTIFYING THE KEY COMPONENTS OF CUSTOMER SERVICE: Identifying customer service segments

The first step in search of this type is to identify the key sources of influence upon the

purchase decision. Ideally once the decision making unit in a specific market has been identified; an initial, small scale research program should be initiated based upon personal interviews. The purpose of interviews is to elicit in the language of customers, which are the key components of service. Once these dimensions are defined, it can identify the relative importance of each one and the extent to which different types of customers are prepared to trade- off one aspect of service with another.

STEP2:- ESTABLISHING THE RELATIVE IMPORTANT OF CUSTOMER

SERVICE COMPONENTS: One of the simplest ways of discovering the importance a customer attaches to each element of customer service is to take the components generated by means of the process described in step 1 and to ask respondents to rank order them from the most important to the least important. For example, asking respondents to place a weight from 1 to 10 against each component according to how much importance they attached to each element.

STEP3:- IDENTIFYING CUSTOMER SERVICE SEGMENTS

Having determined the importance attached by different respondents to each of the service attributes previously identified, the final step is to see if any similarities of preference emerge. Cluster analysis, by trying to much respondents across as many dimensions as possible, can identify the customer service segments.

MISS AARFA. S

TYBMS, CHINAI COLLEGE 19

DEFINE CUSTOMER SERVICE OBJECTIVE AND PRIORITIES:

The whole purpose of logistics strategy is to provide customers with the level and quality of service that they require and to do so at less cost to the total supply chain. The definition of appropriate service objectives is made easier if the concept of the perfect order is adopted. Perfect order is achieved only when each of those service needs meets the customers satisfaction. One frequently encountered measure of the perfect order is on- time, in- full, and error- free. In order to calculate the actual service level using the perfect order concept, performance on each element is to be monitored and then the percentage achievement on each element to be multiplied together. Customer service is usually measured in terms of: The level of availability, The speed and consistency of the customers order cycle, and The communication that takes place between seller and customer.

The customer service level should be established after carefully studying the customers needs to find the appropriate level. Availability can be seen as the number of available products in stock compared to the products out of stock within a specified order cycle. The order cycle is the time that passes between the customers order and the time customers receives the product. Communication refers to the firms ability to supply timely information to the customer regarding factors such as order status, order tracking, back-order status, order confirmation, product substitution, product shortages, and product information requests. After setting the customer service objectives, it is also essential to set the customer service priorities because the objective of any logistics system is to provide all customer with the level of service they require. The Pareto rue of 80:20 can be effectively used to provide the basis for setting customer priorities and to formulate effective customer service strategy.

MISS AARFA. S

TYBMS, CHINAI COLLEGE 20

Pareto analysis is a statistical technique in decision making that is used for the selection of a limited number of tasks that produce significant overall effect. It uses the pare to principle (also known as the 80/20 rule); the idea that by doing 20% of the work one can generate 80% of benefit of doing the whole job. Or in terms of quality improvement, a large majority of problems (80%) are produced by a few key causes (20%). Fundamentally, the service issue is that since not the all customers are equally profitable nor are the products equally profitable.

(PARETO PRINCIPLE 80:20 RULE)

SETTING AND IMPLEMENTING CUSTOMER SERVICE STANDARDS:Setting and implementing the customer service standard is very important for the firm. A firm following steps to successfully set and implement the customer service standards.

MISS AARFA. S

TYBMS, CHINAI COLLEGE 21

Setting performance standard

Deciding management philosophies

STEP: 1 SETTING PERFORMANCE Develop STANDARDS: policies and standards The first step in implementing the customer service standard is to set/adopt easily achievable performance standards such standards may be too low to be of practical value. While setting and adhering to a meaningful standard help to differentiate the firm Evaluation and should Review the competition, setting standards at unrealistically low levels will not help to establish a competitive advantage. If service performance is to be controlled then it must be against predetermined standards. 100% achievements refer to the conformity to customer expectations. Some of the key areas where standards are essential to be set in logistics are follows: Order cycle time Stock availability Order size constraints and convenience Frequently of delivery and delivery reliability Claim procedures Technical support Order status information.

STEP: 2 DECIDING MANAGEMENT PHILOSOPHIES:

MISS AARFA. S

TYBMS, CHINAI COLLEGE 22

After decide the management philosophies, some current management philosophies as an total quality or on creation of the perfect order are very critical of any acceptable quality level set below 100%. This does not mean that a firm can achieve 100% performance at all times, for the use f 100% represents an attitude more than a measurement. From a practical viewpoint, however, establishing a desired quality level that is less than 100% will generally limit, rather than encourage, superior performance. STEP: 3 DEVELOP POLICIES AND STANDARDS The firm should develop customer service policies and standards through customer consultation. After adopting these standards, the firm should formally communicate them to customers. Certain firms prefer to keep silent about their customer service standards and avoid letting their customers know their exact policies and performance targets. The best approach, however, is to communicate these policies and standards to customers very openly. STEP: 4 EVALUATION AND REVIEW: The firm should develop procedures to measure, monitor, and control the customer service quality called for by the firms performance measures and standards. Using techniques such as statistical process control (SPC), obtaining feedback, and taking corrective action are essential to success. When customer service standards are ineffective, the firm should not hesitate to amend or discontinue them as appropriate.

DESIGN THE LOGISTICS SYSTEM:

In the final step, ultimate designing the service driven logistics system takes place which is based on the identifying customers service needs, customer service objectives, priorities, and their service standards. Designing the service driven logistics system boosts the morale of intermediaries and the interest of the customers as well due to concentrating on the service levels and thereby adding value at each stage.

BARRIERS TO AN EFFECTIVE CUSTOMER SERVICE:

Defining wrong customer service Overlooking customer profitability Using unrealistic customer service policies

MISS AARFA. S Failing to research Blurring customer service costs Misusing customer service as a sales incentive Blurring lines of authority

TYBMS, CHINAI COLLEGE 23

Equaling the number of warehouses with customer service Adding bodies rather than systems Employing under trained, under compensated personnel Misreading the sellers market

BASIC SERVICE CAPABILITY

Excellent customer service performance seems to add value for all members of the supply chain. Thus, a customer service program must identify and prioritize important to accomplish operating objectives. A customer service program also needs to incorporate measures for evaluating performance. Performance needs to be measure in terms of goal attainment and relevancy. The critical question in planning a customer service strategy remains. Does the cost associated with achieving the specified service goals represent a sound investment and, if so, for what customers. Finally, it is possible to offer key customers something more than high- level basic service. Extra service beyond the basics is typically referred to as value added services, by definition, are unique to specific customers and represent extensions over and above a firms basic service program. Three fundamental dimensions of customer service were identified: availability, performance and reliability. BASIC SERVICE CAPABILITY

Availability Operational performance

Reliability

MISS AARFA. S

TYBMS, CHINAI COLLEGE 24

Availability:Availability means having inventory to meet customer requirements of materials or products consistently without fail. It is the capacity of a firm to have inventory when it is desired by a customer. The usual practice to ensure availability is to stock inventory in anticipation of customer orders. Logistical system design provides for an appropriate number of warehouses, their location and the inventory policy. Generally, higher inventory availability requires grater investment in inventory. But technology provides new ways to achieve high inventory availability without associated high capital investments. For example , technique such as just-in-time, quick response and vendor managed inventory system facilitate higher availability without greater investment in inventory. The inventory policy is based on forecasted demand and may incorporate differential stocking strategies for certain specific items based on brand image critically of the specific item to the overall product line, profitability etc. inventory comprises a base stock to meet the forecasted demand and a safety stock to meet the excess demand and also to safeguard against stock out occurring because delayed deliveries by the suppliers.

CUSTOMER SERVICE AND CUSTOMER SERVICE DERIVEN LOGISTICS.: CUSTOMER SERVICE IS the collection of the activities performed in a way that keeps a customer happy and create a customer mind the perception of the organization that is easy to do business with. IT is an excellent competitive weapon and has an a advantage over a price competition CS IN LOGISTICS

MISS AARFA. S

TYBMS, CHINAI COLLEGE 25

Logistics is a part of the supply chain that plan, implement, and control the efficient , effective flow of the goods, service and related information , from the pt of the origin to the pt of consumption in order to meet customer requirement. The role of CS is to provide the TIME & SPACE utility in the transfer of the goods and service between buyer and seller. LOGISTICS is to make a product or service available Supply chain thinking is the strengthen the link between vendors and the customers Customer service is generally presumed to be a means by which companies attempt to differentiate their product, keep customers loyal, increase sales, and improve profits. Most Important Customer Service Elements On-time delivery Order fill rate Product condition Accurate documentation