Supply Chain Management Customer Service Operations LB I Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

10-2 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

10-3 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

10-4 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

10-5 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

10-6 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

10-7 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

10-8 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

10-9 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

10-10 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

10-11 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

10-12 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

10-13 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

10-14 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

10-15 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

10-16 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

10-17 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

10-18 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

10-19 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)

10-20 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

10-21 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

10-22 Order Tracking and Monitoring

10-23 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

10-24 Issue Resolution Requires Professionalism Courtesy Speed to resolution Quality Final Result Customer Service is as important as the cost of the product or service

10-25 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

10-26 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

10-27 Technology Technologies is used to support effective and efficient returns Technology that supports the Order Management process include: Phone, Fax, / Internet / Electronic Data Interchange / Bar Coding / Point of Sale Technology / Order Management System

10-28 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

10-29 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

10-30 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

10-31 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

10-32 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

10-33 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

10-34 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)