The total cost of ownership Acquisition Cost Management Cost Maintenance Cost Technical Support Cost Operating Cost Inventory Cost Training Cost Disposal Cost

Shopper behaviour when faced with a stock-out Source: Corsten, D. and Gruen, T., ‘Stock-outs cause walkouts’, Harvard Business Review, May 2004

The impact of logistics and customer service on marketing Consumer franchise Customer franchise Supply chain efficiency Marketing effectiveness Brand values Corporate image Availability Customer Service Partnership Quick response Flexibility Reduced asset base Low-cost supplier Market share Customer retention Superior ROI

Linking customer value to supply chain strategy Identify value segments What do our customers value? Define the value proposition How do we translate these requirements into an offer? Identify the market winners What does it take to succeed in this market? Develop the supply chain strategy How do we deliver against this proposition?

The ‘Pareto’ or 80/20 rule % Sales/profits ‘A’ ‘B’ ‘C’ 5% 15% % Sales/profits 80% ‘A’ ‘B’ ‘C’ 20% 50% 30% % Products/customers

Customer service and the 80/20 rule Key products, key accounts (protect) A Develop Products B Develop Maintain C Review A B C Customers