Fourth lecturer


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Fourth lecturer

  1. 1. Customer service
  2. 2. Who is customer?  In the term of logistics, “ The customer is any delivery destination”.  Taking into consideration of supply chain management customer are divided into two part internal and external.
  3. 3. Customer service  Customer service is a process which takes place between the buyer, seller and a third- party.  The process results in addition of value to the product of service exchanged.  The value added in exchange process might be short term in a single transaction or long term as in a contractual relationship.
  4. 4. Feature of Customer Service  It is a strategic process for providing value added services to the customer  It keeps the customer happy and loyal.  It generally start with an order entry and ends with the delivery of goods to customers.  It brings about a competitive advantage in the marketplace, increase sales and improves profits
  5. 5. Reason for better logistical service  Growth in customer expectation.  Freshness or date of manufacturing of product are becoming a very important issue in most of the purchase decision.  Market have become more service centric.  Customer retention.  Product are unable to retain brand loyalty in stock-out situation resulting into availability of product is a vital factor.
  6. 6. The Logistics (Strategic) Planning TriangleThe Logistics (Strategic) Planning Triangle Which mode? Which carrier? Which route? Shipment size and frequency? Where?, How many? What size? Allocation? Strategy/Control system? How much? Where?
  7. 7. Element of customer service  Pre-Transaction element  Written statement of customer service policy  Order contact point  Organisational structure  Method of ordering  Order size constraints  System flexibility
  8. 8. Cont…  Transaction element  Order cycle time  Order preparation  Inventory availability  Delivery alternative  Delivery time  Delivery of complete order  Condition of goods  System accuracy
  9. 9. Cont…  Post-Transaction element  Invoicing procedure and accuracy  Product warranty  Return policy  Customer complaints and claim procedures
  10. 10. Component of Customer Service  In respect of customer as a business partners:  Strategic  Logistics  Non-logistics
  11. 11. Strategic component 1) Best return of investment 2) Long term association 3) Continuous improvement of quality of service.
  12. 12. Logistics Component 1) Availability of products 2) Offer fixed replenishment cycle time 3) Zero-defect delivery 4) Point to point information 5) Consistency in service
  13. 13. Non-logistics component 1) Financial support 2) Credit facility 3) Training programmes 4) Authority power for spot decision 5) Fare trade practices
  14. 14. Internal communication Gap Customer service need for Competitive advantage Present Customer Service level Prevailing Customer Service level In industry Corporate vision about customer service Service expectation Of customer 3 1 4 2 Major Gap Minor Gap
  15. 15. Inventory management
  16. 16.  Inventory is any stored resource that is used to satisfy a current or future need.  Raw materials, work-in-process, and finished goods are examples of inventory.
  17. 17.  Inventory control means keeping track of your stock.  Knowing how much was sold and how much is left.  To know when to order.  To keep records of losses and gains.  To know consumption rates of high demand and low demand.
  18. 18. Purpose of inventory  Smooth-out variations in operation performances.  Avoid stock out or shortage.  Availability of Fund.  Safeguard against price changes.  Take advantage of quantity discounts.
  19. 19. Types of Inventory  On the basis of nature of material.  Production inventory  MRO inventories  In-Process Inventories  Finished Goods Inventories
  20. 20. Cont…  On the basis uses of Materials  Transaction Inventory  Speculative Inventory  Precautionary Inventory
  21. 21. Function of inventories  Working Stock  Safety Stocks  Anticipation Stock  Pipeline Stock
  22. 22. Element of Inventory cost  Procurement cost  Carrying cost  Stock-out cost
  23. 23. Procurement cost  Cost of order processing.  Cost of transmission of an order from purchase department to supplier (Postage, follow up, fax).  Cost of transportation, including freight, Octroi, transit insurance, protective packaging.  Cost of invoice pricing, including checking, approval, book entries and payment.
  24. 24. Inventory carrying cost  Rent for storage  Cost of working capital  Cost of insurance of goods  Cost of spoilage in the quality of goods in storage.  Cost of wastages due to passes of time and change in weather.  Cost of obsolescence of goods or depreciation.
  25. 25. Stock-out cost  The stock-out is the economic consequence of either an external or an internal shortage.  Internal shortage occurs when an order of a group/department within the organisation is not filled.  External shortage incurs back order cost, present profit loss due to loss of potential sale, and future sales loss due to loss of corporate image affecting future sales.
  26. 26. Customer Response 1) Customer says” I will be back” 2) Customer says" call me when it’s in” 3) Customer buy substitute product which yields a higher profit for seller. 4) Customer goes to competitor.
  27. 27. Just in Time Just in Time Inventory is the Minimum inventory that is necessary to keep a system perfectly running.
  28. 28. Cont…  A corporate system designed JIT to produce output within the minimum lead time and at the lowest total cost by continuously identifying and eliminating all forms of corporate waste and variance.  With just in time (JIT) inventory, The exact amount of items arrive at the moment they are needed, Not a minute before OR not a minute after.
  29. 29. Cont…  To achieve JIT inventory, Managers should Reduce the Variability Caused by some Internal and External Factors. Most variability is caused by tolerating waste (inventory). For example – Transportation waste, Process Waste, Inventory Waste, Waste from product defects, Waiting time, Overproduction
  30. 30. Objective of JIT  Reduce inventory carrying cost.  Produce only customization product.  Production in minimum lead time.  Reduction of wastage.
  31. 31. Function of JIT  Elimination of Waste  Synchronized manufacturing  Reduce inventory size  Reducing the order batch size can be a major help in reducing inventory.
  32. 32. Limitation of JIT  Applicable in growth to maturity phases of Product Life Cycle  standard product • standard/fixed pay-rate • problems with piece-rate scheme
  33. 33. Kanban System  Developed at Toyota 1950s to manage line material flows.  Kanban ( Kan=card, Ban= signal )  Kanban = an authorization to produce more inventory  We thus limit the amount of inventory in process.  A card is used to signal the need for material in a work center.
  34. 34. Cont…  Sending a card authorizes the previous work center to send its finished batch to the subsequent work center.  Batches are typically very small. Such a system requires tight schedules and frequent set-ups for machines.  Server only delivers components to client work station as & when needed (called/pulled).
  35. 35. Kanban Control System production kanban Material Flow Card (signal) Flow Bin Part AMachine Center Bin Part A Assembly Line
  36. 36. What does look like.  Kanban No.Kanban No. 56789905678990  part No:part No: 66789X66789X  descriptiondescription 16ga. Copper Wire16ga. Copper Wire  unitsunits Ft.Ft.  reorder/lot qtyreorder/lot qty 2020  store locationstore location Row 12, Bin 6Row 12, Bin 6  suppliersupplier BICCBICC  supplier telsupplier tel 0208-891-01210208-891-0121  supplier partsupplier part RT45502RT45502  routing process  Name/location of next process  Name/location of preceding process  container type & capacity  number of containers released
  37. 37. Thank You