1. Customer Relationship Management Its impact on SCM
Customer service
What is the customer service?
Ensuring that a customer’s needs are well care of before, during and
after the purchase of a product or service is customer service
Good customer service creates feeling of trust and loyalty in the
customer and is dependent on how well a company can mould itself
to the needs of the customer. This ability is in turn, crucial to an
organization's ability to generate income and revenue
2. Customer Relationship Management Its impact on SCM
Aspects of Customer service
Order delivery on time
Crucial to customer service are:
Responsiveness (Variety and volume)
Price
Quality
Pre and post sale service
4. Customer Relationship Management Its impact on SCM
Linking Strategies to SCM
Successful supply chain
management lowers product
cost through efficiencies in
supply and delivery and
offers competitive prices to
the customer
It groups customers
according to their needs
and then effectively
tailors services to meet
those specific needs
Companies traditionally grouped customers by industry, product, or trade
channel and then provided the same level of service to everyone within a
segment. Effective supply chain management groups customers by distinct
service needs and then tailors services to those particular segments. For
example not everyone who wants to buy a car has the same requirement so the
supply chain needs to bring to each specific market segment the number and
kind of car that segment requires.
5. Customer Relationship Management Its impact on SCM
The retail Model
An effective retail model may include:
Best prices from
suppliers who
can deliver in
bulk and on time
Cross docking which
involves little inventory
holding thus keeping
costs down. This is used
effectively by companies
State of the art technology
to forecast demand and
predict inventory level
6. Customer Relationship Management Its impact on SCM
Core process
Core business process are:
Customer Relationship Management
Product Innovation
Supply Chain Management
Supply chain information means developing a
collaborative workflow among all departments and
components involved, to maximize efficiencies and
build a lean supply chain that eliminates all kinds of
waste including the waste of time, inventory and
money
7. Customer Relationship Management Its impact on SCM
Sales Channels
The more important methods that the sales process may use that affect
customer relationship management are:
Direct Sales
Channel Sales
E-Commerce
For each link in the chain the next link is the customer and the supply
chain must be managed according to meet their needs
8. Customer Relationship Management Its impact on SCM
Direct Sales
Companies prefer direct sales when the product is:
Complex – needing a
detailed explanation to
customers by experts
Is of high value
Has a long sales cycle
consisting of several
steps
9. Customer Relationship Management Its impact on SCM
Channel Sales
When do companies have direct sales?
When the attributes are:
Simple- Use the power of
brand
Low value(But may include
premium categories e.g. soaps
Short sales cycles
Product availability and brand image very important
10. Customer Relationship Management Its impact on SCM
Channel Sales-II
Channel sales could be through various conduits like:
A typical channel supply chain might look this:
Supplier Manufacturer Wholesaler Retailer Consumer
11. Customer Relationship Management Its impact on SCM
Channel Sales-III
Channel sales must be designed with an eye to afford the company a differential
advantage:
Set and coordinate distribution objectives Specify distribution
Evaluate variable affecting channel structure
Evaluate variable affecting channel structure Choose the best channel structure
Select the channel members
12. Customer Relationship Management Its impact on SCM
E-Commerce-I
Customers want to buy your product or service when it is convenient
for them
Details about products online is driven
by customer demand
The customers wants to be able to
instantly purchase the product and get it right
away
Customers want the ability to manage
all aspects of the purchase and their
relationship with you through this means.
Order execution to the customer must
be simple, quick and seamless
14. Customer Relationship Management Its impact on SCM
SCM CUSTOMIZATION
In designing their supply chain management
network, companies need to focus on the
service requirements and profitability of the
customer segments identified
Planning must take the entire supply chain into
consideration and be attuned to early warning
signals of change in demand and supply so as
to minimize lead time, i.e. the time from the
receipt of a customer order to delivery of the
product
15. Customer Relationship Management Its impact on SCM
SCM Do’s
Important ‘Musts’ in managing the supply chain are:
Keeping it flexible
Not stockpiling products but being prepared for product
differentiation in immediate response to customer need
Ensuring that suppliers are committed to a win – win
relationship
Using information technology appropriately for decision
making
16. Customer Relationship Management Its impact on SCM
CRM and the sales process
Allows companies to prioritize
their marketing focus on
different customer groups
according to each group. Adds
long term value to the
company or supply chain
CRM
Presents a multi-company,
unified response system to the
customer whenever
complaints, concerns,
questions, or comments are
voiced
Sales Process
17. Customer Relationship Management Its impact on SCM
The sales process
A sales process is the approach a company takes towards a product or
service
A well defined process ensures:
Seller and buyer risk management
Standardized customer interaction
Scalable revenue generation
CRM is largely focused on sales process and is often integrated with
SCM to allow both systems to function smoothly together
18. Customer Relationship Management Its impact on SCM
Basic steps in the sales
Preparation: Knowledge of product/service and of the target customer
Definition: How do customers buy? What do they really need?
Demonstration of how responsive your product/service is to their
need
19. Customer Relationship Management Its impact on SCM
The structure of the Distribution channel
To structure a distribution channel:
Learn about the available channels
Understand and evaluate their potential customers
Match distribution strategies to your objectives and
to customer needs
Select channel partners who share your business
philosophy
Manage the channel performance
20. Customer Relationship Management Its impact on SCM
Distribution channels
In deciding upon the distribution channel a company has to consider
several elements. Among these are:
The nature
and type of
the product
The nature of
the target
market
Spending
capability
A company has to choose a channel of distribution for its product that
is flexible and effective. Costs, sales volume and profits expected from
alternative channels of distribution must all be compared before a
decision is made.
And of course, the capacity of the company spend is also a major
consideration in deciding on the distribution channel
21. Customer Relationship Management Its impact on SCM
Distribution strategies: Product considerations
Value of the product
E.g. Grocery Items
Range of products
E.g. large retailers
Perishability
E.g. items currently
in demand which
may not remain
desirable for an
extended period-
latest fashions,
movies,etc.
Products of low unit value and of common use are
generally sold through middlemen while expensive
goods are sold directly by the producer himself
Products subject to changes in style must be shipped
to destinations with immediacy and follow
relatively shorter routes. Industrial products
requiring installation and after sale service are
often sold directly to consumers.
If a company has a wide range of products it may find it economical to set its own
retail outlets and sell directly. On the other hand, firms producing a narrow range of
products may distribute through wholesalers and retailers
22. Customer Relationship Management Its impact on SCM
Distribution strategies: Target market considerations
The kind of user
The number of
customers
Size of Orders
If the product is meant for industrial users, the channel of distribution is
usually a short one while in the case of domestic consumers, middlemen
may be involved. If the number of perspective customers is small or the
market for the product is a limited geographical area, direct selling is
more suitable
If the customers place orders for the product in large quantities, direct
selling is preferred but, if the product is sold in small quantities,
middlemen may distribute the products
23. Customer Relationship Management Its impact on SCM
Marketing concept
Customer needs are basic to success
Products and services must be made
available and positioned from the
customer’s perspective
Volume is secondary to profit
24. Customer Relationship Management Its impact on SCM
SCM In the sales process - I
At all stages it
supports the
efficiency and
effectiveness crucial
to the sales process
25. Customer Relationship Management Its impact on SCM
SCM In the sales process - II
Three modern day concepts that make SCM crucial to
customer satisfaction are:
The concept of ‘Customer focus’ (Where the customer may
be anyone internal or external)
The importance of logistics to customer satisfaction
Flexibility of logistics practice in terms of product life cycle
requirements
26. Customer Relationship Management Its impact on SCM
SCM In the sales process - II
Customers must be easily able to obtain the product or service that
they want three parameters are:
Generated in the
manufacturing
process
Information
regarding ease of
availability
Ensured by an
effective logistics
component
28. Customer Relationship Management Its impact on SCM
Product Life Cycle
During the introduction phase of a product, high availability and logistics
flexibility are required. Logistics costs tend to be high as shipment
volumes are small and customers are just testing the waters. New
products may also have unique packaging and handling requirements.
Products may become more specialized as the market for it steadies.
At the growth stage of the life cycle, requirements are more stable.
Managers will need to determine and accordingly design their customer
service commitment to maximize profitability. The nature phase of the
product life cycle is usually high competitive as more players appear
with versions of the successful product. The channels to reach
Merchandise to customers increase and companies establish distribution
warehouses and companies establish distribution to cater to the
requirements of several different channels. Minimum cost and low risk
becomes the focus of logistics during the decline phase.
29. Customer Relationship Management Its impact on SCM
Importance of logistics to sales
Strategically using logistics to gain a distinct competitive advantage is
based on a commitment to customer focused marketing. The more
customized the logistics operation the greater the move from.
Customer
Service
Customer
Satisfaction
Customer
Success
30. Customer Relationship Management Its impact on SCM
The stages in a logistics supply chain evolution
Cost Effectiveness
Stage 1
Market Access
Market Extension
Stage 2
Stage 3
Market Creation
Stage 4
31. Customer Relationship Management Its impact on SCM
Summary: Customer service
Customer service is a key element in an SCM strategy
Fundamental to sales are the concepts of:
Customer needs
Relevancy of customer context to products
Volume not being as central as profits
Core business processes must work in tandem to achieve
excellence in customer service
32. Customer Relationship Management Its impact on SCM
Summary: CRM and SCM
Distribution strategies must consider the nature and type of the
product and of the target market besides the companies spending
capacity
In designing their SCM network, companies need to focus on the
service requirements and profitability of the customer segments
identified
CRM is largely focused on sales processes which are
fundamentally linked with SCM to allow both systems to function
smoothly together
33. Customer Relationship Management Its impact on SCM
Summary: Logistics
Logistics performance must be viewed within the context of the
product life cycle and so cannot be static
Excellence in logistics can deliver benefits to the entire supply
chain
A cost benefit analysis is crucial to designing a customer service
offering
The strategy of delivering the ‘perfect service‘ is oriented
towards doing whatever is needed to ensure the success of key
customers and partnering with them for significant long term
gains.
