1. Chapter 3 Demand Management & Customer Service

2. Inbound vs. Outbound Logistics Systems
Inbound Logistics (_____________________)
The set of processes that precede and ________ value-adding activities such as manufacturing, assembly, and so on.
Outbound Logistics (_____________________)
Early attention was given after WWII.
The emphasis is on the logistics process toward __________ to increase levels of _________________.
It is very similar to inbound logistics,
It is different from IL because it is often ____ complex than IL and, thus, requires greater managerial attention.

3. Business Philosophy The Marketing Concept
The goal of businesses is to _____________ to satisfy customers
______________________
Integrated Logistics
A part of the marketing concept, which is an umbrella philosophy
_______________________________________________

4. Customer Service Defined
“Customer service is a process for providing significant value-added benefits to the supply chain in a cost-effective way.” (Council of Logistics Management 1988)
A firm’s capability to be ________ and ________ in ________ changing __________________________ _____________ (Christopher 1994)
A firm’s ability to provide core services and ___________________ that promote, differentiate, and facilitate the basic “core” product/service offering of the firm (La Londe and Zinszer 1976; La Londe, Cooper, and Noordewier 1988)

5. Customer Service in Marketing
Product
Price
Promotion

6. The Importance of Customer Service in Marketing Mix
An example – eBay shoppers

7. Customer Service Trends and Observations
Expectations and Perceptions of Customer Service May Differ Between Suppliers and Customers
Q: Customer Service More Critical When:
A market is ____________ a. competitive, b. monopoly
Products are ______ substitutable a. highly b. not
Timeliness is strategically _______ a. significant, b. not important.

8. Logistics Customer Service
________________
in-stock rate and percent orders, units, and lines filled out completely, etc.
consistent delivery, lead time, average delivery time, order cycle time reliability, and minimum order cycle time, etc.
minimum damage in transit and order-filling accuracy, etc.
_________________________
inventory availability information, advance information on cancellations/delays, projected delivery date, etc.
Low cost distribution
cross-functional cost-tradeoffs are explicitly considered

9. Customer Service Performance
___________
Elements
__________
_____________
Inventory availability
Target delivery dates
Written statements of policy
Management Services
Order status
Order tracing
Backorder status
Shipment shortages
Shipment delays
Product substitutions
Routing charge
Expediting

10. Customer Service Elements for the Food Industry
Recreated by Coyle, Bardi, and Langley (2003).

11. Order Cycle Time Analysis: an Example
© 2003, Coyle, Bardi, and Langley.

12. Order Cycle Length and Variability

13. Determining the Optimum Customer Service Policy
Revenues
and
Costs ($)
Customer Service Level
100%

14. Inventory vs. Customer Service
Levels
(Cost) 0%
100%
50%
Level of Customer Service

15. Issues in Customer Service
_______________________________.
__________________________________.
Consult with customers on policies and standards.
Measure, monitor, and control customer service standards.
All customer accounts are not the same.
__________ and added value can “lock up” customers.

16. Customer Service Check Lists
© 2003, Coyle, Bardi, and Langley.

17. Demand Management
Defined as “focused efforts to __________________ _________________, with the intention of using this information to shape operating decisions.” (Blackwell and Blackwell 1999)
Recent _____________________ makes difficult for manufacturer to determine what, where, when, and how many of the sale will happen.
Complicated ____________ between manufacturing and consumption requires demand management.
Demand management will likely result in benefits flowing through the supply chain.

18. Demand Management Objectives
_________________________________________
e.g., customer requirements and solutions, market trends, etc.
Channel functions/responsibilities are divided based upon expertise levels
Maximize effectiveness and efficiency.
Sharing with other supply chain members market information for:

19. Demand Management Objectives
Collaboration – plan/implement/control
___________________________
Developing and executing the best logistics and distribution methods to deliver products and services
____________________________
Bottom line:
Better match of demand to product availability.
______________________________
___________________________ is the key

20. Demand Management Objectives
_______________________________________ _______________________________________
Developing and executing the best logistics and distribution methods to deliver products and services to consumers in the desired format.
Primary emphasis should be on using demand information to create likely scenarios of the future as they relate to product supply alternatives.
Resulting business successes will be a outcome of the better match of demand to product availability.

21. How Demand Management Supports Business Strategy
Recreated by Coyle, Bardi, and Langley (2003).

22. Issues in Demand Management
Departmental/organizational silo that results in little or no coordinated efforts.
Too much emphasis on demand forecasts with little attention to collaborative efforts to derive strategic and operational plans from the forecasts.

23. Forecasting: A Starting Point of Demand Management
A major component of demand management is forecasting the amount of product that will be purchased by consumers or end users.
In the integrated supply chain all other demand will be derived from the _______________.
A key objective is to ______________________ _______________ as it occurs in the marketplace.

24. Integration of Forecasting and Production
© 2003, Coyle, Bardi, and Langley.

25. Supply-Demand Misalignment in Traditional Forecasting
© 2003, Coyle, Bardi, and Langley.

26. Collaborative Planning, Forecasting, and Replenishment (CPFR)
CPFR is recognized as a breakthrough business model for planning, forecasting, and replenishment.
Developed by Wal-Mart and Warner-Lambert in 1995.
The plan and the forecast are entered by suppliers and buyers into an _______________________ system.
Creates a direct link between _________________________ __________________________
Emphasizes _______________________ among and between supply chain partners.
Within established parameters, any of the participating partners is empowered to change the forecast.

27. Collaborative Planning, Forecasting, and Replenishment (CPFR)
Collaborative planning improves the quality of the demand signal for the entire supply chain through a constant exchange of information from one end to the other.
CPFR goes beyond the traditional practice.
© 2003, Coyle, Bardi, and Langley.

28. Figure 3-3 CPFR Business Model

29. DM in Order Fulfillment Process
______________________ link between buyers and sellers
_______________________________________
© 2003, Coyle, Bardi, and Langley.

30. Order Fulfillment -- Different Stages of Order Fulfillment --
© 2003, Coyle, Bardi, and Langley.

31. Order Placement/Receiving Automation
© 2003, Coyle, Bardi, and Langley.

32. Electronic Data Interchange (EDI)
EDI is “the _________________________, __________________ exchange of business data in a __________, _________________ format. The purpose of EDI is to _______________ and to improve the ____ and ____ of the information flow by linking computer applications between companies.”
Source: Emmelhainz, “EDI in Logistics,” Ch. 33 in The Logistics Handbook, 1994, pp. 84.

33. EDI vs. Traditional Methods
Purchasing
Buyer’s
Computer
Post Office
Order
Entry
Seller’s
Purchasing
Buyer’s
Purchasing
Application
Seller’s
Order Entry
Application

34. Why Use EDI? __________________________________________
70% of one computer’s input is another computer’s output
25% of a transaction’s cost is data entry and re-entry
_________________________
Greater accuracy and consistency
Time-sensitive
__________________________
Improved effectiveness of inventory management
Decrease in total logistics costs
Competitive Necessity
Requested by Partners

35. Effects of EDI on Supply Chain
Supplier
Mfg
D/C
Retail
End
User
Supplier
Mfg
End
User
D/C
Retail

36. Five Alternative Fulfillment Strategies for E-Commerce
Distributed delivery centers
Partner fulfillment operations
Dedicated Fulfillment centers
Third-party fulfillment centers
Build to order

37. Chapter Summary & Review Questions
Inbound logistics vs. Outbound logistics – how is the focus of each process different?
So, what is a business philosophy?
What is the marketing concept?
So, what is the ultimate goal of your business?
What is integrated logistics concept?
Logistics customer service is …
Demand management is …
How CPFR is different from traditional forecasting?
Why do you care about order fulfillment and management?
EDI is …