Supply Chain Management

Customer Service OperationsLB I

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• The Order Process• Customer Relationship Management (CRM)• Managing Challenging Customers• Effective Customer Communications• Return and Reverse Logistics• Performance Metrics

Key Elements of Customer Service Operations

LO1

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Interactions With Customers

• Buyer / Seller Interactions Differ from Industry to Industry• B2C – Business to Customer

•Seller selling to an end customer• B2B – Business to Business

•Business sells to another business

LO1

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The Order Management Cycle

• The order management cycle occurs when customers interact with suppliers• It involves all work directly involved with

receiving and fulfilling customer demand

LO1

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Steps In The Customer Order Cycle

• Customer Request / Arrival Process• B2C – Supply Chain starts at customer

arrival or inquiry

• Inquiries Include:• Pricing / Availability• Delivery Times• Product Specifications

LO2

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Steps In The Customer Order Cycle

• Customer Request / Arrival Process• Clothing Store: Provide options and advice• Telemarketing Center: Provide Product

Specifications, pricing, delivery time• Web: User-friendly Search Capabilities

• Goal of the Customer Request / Arrival process in B2C is to treat customer with courtesy and provide a selection of products leading to an order

LO2

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• Customer Request / Arrival Process• B2B - Order interaction starting process

varies•Sales representative cold call or site

visit•Access suppliers website or catalog •Travel to a showroom or distribution

center

Steps In The Customer Order Cycle

LO3

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Customer Order Entry

• Customer signals to retailer/supplier products they wish to purchase• Shopping Cart at a clothing store• Shopping cart online

• Goal of the Customer Order Entry process is to make sure that the order entry is accurate and carried out in a timely fashion

LO4

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Customer Order Fulfillment

• Refers to orders being filled and sent to the customer on:• Time / In the correct quantities• Undamaged / Within a specified delivery time

• Customer order fulfillment generally takes place from supplier inventory

• Goal is to ensure that orders are provided to customers on time at the lowest cost possible

LO4

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Customer Order Receiving

• Involves customer receiving and accepting the order• Customer will check for quantity and quality of delivered products• Incomplete or damaged orders are:• Recorded and supplier notified• Payment is withheld by customer• Corrective action report is completed• A record of customer receiving the order is made

LO5

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Customer Order Invoicing

• For goods shipped to a customer, invoice normally accompanies goods

• Invoice states:• The amount owed / Payment terms / Penalties• Any agreed reduction in costs / Forms of Payment• Pcard allows goods & services to be purchased

and avoids the need to issue an invoice.• Pcards are often used for lower value goods and

services

LO5

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Order Fulfillment

• Customer order fulfillment includes receipt of:• The correct product• The correct quantity• At the correct time• Appropriate level of quality

• It includes:• Order entry / filling the order / invoicing /

shipping / tracking / returns

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Order Fulfillment

• Order fulfillment process can also include after-sale services

• Goal is to satisfy a promised delivery date at the right quantity and condition while managing total costs

• Demand and supply planning stresses planning

• Customer order fulfillment stresses supply chain execution

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Order Fulfillment and the Value Chain

• Characteristic of value-creating process in order fulfillment:• Relationship between effective demand

planning and the ability to satisfy customer orders• Planning and execution meet at Fulfillment

in Supply Chain• Excellent demand and supply planning

makes customer order fulfillment easier

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Order Fulfillment and the Value Chain

• Customer order fulfillment can lead to a company being more competitive against other companies• Forecast and build a base product• Final configuration will take less time• Furniture Industry• GE Locomotive engines• Quick delivery of revenue generating asset

• Key: Speed, Responsiveness, Product variety

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Improving the Order Fulfillment Process

• Process redesign reduces wasteful and non-value added activities• Provide volume flexibility and reduce

lead time• Results in costs being removed from

the supply chain

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Information Systems and Order Fulfillment

• Electronic Systems support Inventory Control and Order Fulfillment• Successful Inventory Control leads to

Record Integrity• Record Integrity comes from processes and

procedures that ensures that the amount of material on hand equals the amount of material on record in the computer system

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Lead Time and Performance Measures

• KPI – Key Performance Indicators measures how well a company is meeting customer order expectations and include:• Order fill rate / Order Cycle Time / On-

time Delivery / Inventory Accuracy Indicators / Order-to-cash Cycle Time

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Order Management & Processing

• The Order Management Process starts with a customer request regarding:

• Product Specifications / Price / Availability / Potential Discount

• Orders are placed in person, via phone, or e-mail

• Orders are entered manually or via the internet (e.g. Amazon.com)

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Order Management Systems

• OMS – Order Management System helps speed up the order process and is used in:• Retail / Telecommunications / Health Care /

Pharmaceutical Industries / Financial Industries

• OMS provides information on orders such as:• Inventory Available / List of Suppliers / List

of Customers / Information on Invoicing and Payments / Customer Returns and Refunds

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E-Commerce Management

• E-commerce involves buying and selling goods or services and fund transfers using the internet• E-commerce helps firms improve:• Order Processing / Track Inventory /

Sell Online• Online retail businesses used Order

Management Software

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Order Tracking and Monitoring

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Key Metrics

• If you can’t measure it, you can’t manage it. Metrics focus on customer needs and expectations. • Metrics include:• Order picking errors / Product shipping

errors / Time it takes to complete and order / Average time to complete an order / Number of orders returned• Key overall metric is cost

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Issue Resolution

• Requires• Professionalism• Courtesy• Speed to resolution• Quality• Final Result• Customer Service is as important as the

cost of the product or service

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Customer Relationship Management

• CRM includes all the interactions an organization has with its customers• CRM is a relationship between a

customer and a business• CRM also describes computer software

used to manage sales leads, contacts, contracts, and ongoing customer rate of satisfaction

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CRM Strategies

• Successful CRM strategies understand:• Who the customers are (Range of products

versus a single product)• How both parties can benefit from the

relationship (Understand expectations , products or services desired, normal hours versus after hours for support)• IN CRM, people build relationships while

systems support it

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Technology

• Technologies is used to support effective and efficient returns• Technology that supports the Order

Management process include:• Phone, Fax, e-mail / Internet / Electronic

Data Interchange / Bar Coding / Point of Sale Technology / Order Management System

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Technology

• Phone, fax and mail are traditional means of taking, confirming, querying and tracking orders• Fax and mail are now being

superseded by the use of the internet

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Technology

• Internet is a worldwide network that supports businesses.• It is used for order placement and

tracking• Used for business to business and

business to customer transactions

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Technology

• EDI – Electronic Data Interchange involves the direct exchange of information between computers• EDI has replaced faxing and

mailing of paper documents in most companies

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Technology

• EDI transactions include:• Buying company Transmitting Order

Specifications such as product numbers, quantities, desired receipt dates to a selling company• Selling company transmitting Order

Invoice information such as cost and Payment terms to a buying company

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Technology

• Bar-code is a visual pattern read by machines• A barcode scanner reads black and white

bars that represent a set of characters• Barcodes are used in stores, vehicle

manufacture, document tracking, time control, security access and throughout supply chain

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Technology

• POS - Point of Sale technology (aka checkout)is where the sale transaction is carried out• Retailers use scales, scanners, electronic

and manual cash registers in conjunction with the POS• Modern POS technology updates

inventory throughout the supply chain

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Good Order Management Practices

• An optimized (automated) OM process can reduce costs and increase customer satisfaction• Good practices include:• Communication with customers• Consolidation of orders• Managing Inventory (should be linked to

real-time inventory information)