Great, now let's run through the third complement of supply chain logistics management, which
is customer relationship management.
As you can see for yourselves on your screens, I again, like the previous subheads, divided
this one also under five major subheads, and we are going to be running through them one
by one.
Let's go for an illustration.
Now take a look at your screens and see for yourself what has been listed out here.
Fine.
So these are the five complements of customer relationship management.
It starts off with customer focused marketing, customer service, and then moves on to customer
satisfaction, customer success, and finally you have a customer relationship strategy,
right?
So let's run through all of them one by one in some detail so that you understand the
basic gist about all these sub-complements.
So when we talk about customer focused marketing, you know, the basic principles of customer
focused marketing have their roots in the marketing concept, which is basically a business
philosophy that suggests that the focal point of a business's strategy must be the customers
it intends to serve, and rightly so.
And it holds that for any organization to achieve its goals, it must be more effective
than competitors in identifying specific customer needs and focusing resources and activities
on these customer requirements.
So it's very clear that many aspects of a firm's or a business's strategy must be integrated,
and logistics is only one of these, right?
So the marketing concept builds on the four fundamental ideas.
Customer needs and requirements are more basic than products or services.
Different customers have different needs and requirements.
Products and services become meaningful only when available and positioned from the customer's
perspective, which is the focus of logistics strategy, and sales volume is secondary to
profit.
Fine.
Now the belief that customer services are more basic than products or services places
a priority on fully understanding what drives market opportunities and the key to understand
and develop the combination of products and services that will meet those requirements
basically.
So if we really want to be talking about, you know, all these situations, we need to
run through the various other subheads.
So if we talk about customer-focused marketing, let's talk about transactional versus relationship
marketing, right?
So traditional marketing strategies basically focus on obtaining successful exchanges or
transactions with customers to drive increases in either revenue or profit or both.
Now in this approach, termed transactional marketing, companies are generally oriented
towards short-term interaction with their customers.
Now in parallel to the development of supply chain management concept, there has been a
shift in philosophy regarding the nature of marketing strategy.
Now what is that?
Now this shift has generally been acknowledged as relationship marketing, right?
The first one was transactional marketing.
Second one is relationship marketing, and relationship marketing focuses on the development
of long-term relations with key supply chain participants, such as consumers, intermediate
customers and suppliers in an effort to develop and retain long-term preference and loyalty,
right?
So the ultimate in market segmentation and relationship marketing is to focus on the
individual customer.
This approach is sometimes referred to as micro-marketing or one-to-one marketing, right?
For example, although Walmart and Target are both mass merchandisers, their requirements
in terms of how they desire to interact logically, logistically with suppliers differs significantly,
right?
And then let's talk about supply chain service outputs.
Now imagine a society in which every individual is totally self-sufficient.
Think about it, right?
Each individual would produce and consume all the products and services necessary for
survival.
So there will be no need for any economic activity related to the exchange of goods
and services between individuals.
It's an exotic concept, right?
No such society can be found today, nowhere across the globe.
In reality, as individuals begin to specialize in the production of specific goods and services,
a mechanism must arise for the exchange of those goods and services to satisfy the consumption
needs of individuals.
Now to do so effectively and efficiently, businesses must overcome three problems.
Can you guess?
Number one would be discrepancy in space.
Two would be discrepancy in time.
And the third one would be the discrepancy in quality and assortment.
Now discrepancy in space refers to the fact that location of production activities and
the location of consumption are seldom the same.
And discrepancy in time refers to the difference in timing between production and consumption.
And then if you move on to discrepancy in quantity and assortment, it refers to the
fact that manufacturing businesses typically specialize in producing large quantities of
a limited variety of items, right?
And that brings us, you know, to some details like, you know, like special convenience.
When we talk about special convenience, right, the first service output refers to the amount
of shopping time and the effort that will be required on the part of the consumer.
On the other hand, let's talk about the lot size.
The second service output is lot size, right, which refers to the number of units to be
purchased in each transaction.
And then we have the waiting time.
Now waiting time is the third generic service output.
It's defined as the amount of time that the customer was wait between ordering and receiving
products.
The lower the waiting time, the higher the level of supply chain service quality.
And the fourth is the product variety and assortment.
Now product variety and assortment are the fourth service output, right?
Different supply chains offer different levels of variety and assortment to consumers and
end users.
And supply chains provide additional service outputs to the consumers in addition to the
four generic service outputs as I've discussed with you sometime back, right?
That brings us to customer service.
Now the foundations of logistics commitment is to provide customer service in a cost-effective
manner, right?
Although most, you know, business leaders or even senior managers agree that customer
service is important, they sometimes find it extremely difficult to explain what it
is and what it does.
While common expressions of customer service include easy to do business with and responsive
to customers, to develop a full understanding of customer service, a more thorough framework
is required, right?
Now it is clear that outstanding customer service adds value throughout a supply chain.
And the critical concern in developing a service strategy is does the cost associated with
achieving specified customer service performance represent a sound investment, fine?
Now the fundamental attributes of basic customer service are identified as availability, operational
performance and service reliability.
Now if we talk about availability, availability is the capacity to have inventory when desired
by a customer, right?
And if we talk about stock-out frequency, right, a stock-out as the term suggests occurs
when a firm has no product available to fulfill customer demand.
And then we have fill rate, you know, fill rate measures the magnitude or impact of stock-outs
over time.
When we talk about orders shipped complete, the most exacting measure of performance in
product availability and delivery is orders shipped complete.
It views having everything that a customer orders as the standard of acceptable performance.
And then that brings us to operational performance, right?
Operational performance deals with the time required to deliver a customer's order.
So whether the performance cycle in question is customer service, manufacturing support
or procurement.
Operational performance is specified in terms of speed of performance, consistency, flexibility
and of course malfunction recovery, right?
So if you talk speed, the performance cycle speed is the elapsed time from when a customer
places an order until the product is delivered and is ready for consumer use.
And when we talk about consistency, you know, order cycle consistency is measured by the
number of times that actual cycles meet the time plan for completion.
And flexibility involves a firm's ability to respond to special situations and unusual
or unexpected customer requests.
And finally to cap it all when we talk about malfunction recovery, you know, regardless
of how fine tuned a business's logistical operations are, malfunctions will occur.
The continuous performance of service commitments on a day in day out basis is a difficult task.
That brings us to the complement known as service reliability.
Now service reliability involves the combined attributes of logistics and concerns a firm's
ability to perform all order related activities as well as provide customers with critical
information regarding logistics operations and status, right?
And if you really are curious about a perfect order, you know, the ultimate in logistics
service is to do everything right and do it right the first time.
It's not sufficient to deliver a complete order, but to deliver it late, nor is it sufficient
to deliver a complete order on time, but to have an incorrect invoice or to incur product
damage during handling and transportation.
So it's a Pandora's box out there basically fine.
In the past, most logistics leaders or managers or supervisors evaluated customer service
performance in terms of several independent measures, you know, like fill rates were evaluated
against a standard for fill, on time delivery was evaluated in terms of percentage of deliveries
made on time relative to a standard, damage rates were evaluated relative to a standard
for damage.
And when each of these separate measures were acceptable relative to a standard or all service
performance was considered acceptable, right?
However, recently logistics and supply chain executives have begun to focus attention on
zero defect or six sigma performance.
So as an extension of the total quality management efforts within organizations, logistics processes
have been subject to the same scrutiny as manufacturing and other processes in a firm.
So the notion of a perfect order is that an order should be delivered complete, delivered
on time, at the right location, in the perfect condition with complete and accurate documentation.
Fine.
So it's clear that the resources required to implement a perfect order platform are
substantial.
Fine.
So if we talk about the basic service platforms, you know, to, to basically implement a basic
service platform, it's necessary to specify a commitment level to all customers in terms
of availability, operational performance, and reliability.
You know, basically the fundamental question, how much basic service should the system provide
is not easy to answer.
You can, you can make an attempt fine.
So that gets us to customer satisfaction.