1. Supply Chain Logistics Management
Chapter 3: Customer Accommodation

2. Service Outputs: The Value Added
Different supply chains provide different levels of service output to consumers/endusers:
1. Spatial Convenience
2. Lot size
3. Waiting time
4. Product variety (assortment width and depth)
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

3. Strategic Perspectives
High level of Basic Service - The Platform
Targeted Value-Added Satisfaction
Growth through Customer Success
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

4. 3 Levels of Customer Focus
Achieve internal standards (e.g., specified performance cycle of fill rate)
Success
Satisfaction
Basic Service
Meet customer expectations (e.g., arrive on time with right product as measured by the customer)
Customers of choice achieve their objectives (e.g., logistics operation can provide product and service in a manner that ensures long term customer viability)
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

5. Basic Service Elements
Availability
Fill rates
Stockouts
Orders shipped complete
Operational Performance
Speed
Consistency
Flexibility
Recovery
Service Reliability
* damage
* mis-shipments
* etc.
Logistics Customer Service Mix
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6. “Perfect Order” Achievement
The “Perfect Order” Defined
Complete Orders Delivered To Customers Requested Date And Time In Perfect Condition, Including All Documentation.
.97 x.97 x.97 x.97 x.97 x.97 x.97 x.97 x.97 x.97=.73
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

7. WHAT IS CUSTOMER SATISFACTION?
SAT = F (Expectations, perceived performance)
Perceived Performance - Expectations < 0, Dissatisfaction
Perceived Performance - Expectations > = 0, Satisfaction
“Meet or Exceed Customer Expectations”
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

8. A GENERIC PROFILE OF EXPECTATIONS
1. RELIABILITY 2. RESPONSIVENESS 3. COMPETENCE 4. ACCESS 5. COURTESY 6. COMMUNICATION 7. CREDIBILITY 8. SECURITY 9. TANGIBLES KNOWING THE CUSTOMER
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

9. SATISFACTION AND QUALITY MODEL
Word of Mouth Communications
Requirements
Actual Performance
Management Perceptions of Expectations
Performance Standards
Past Experience
Expectations
Perceived Performance
External Communications
SELLER
CUSTOMER
GAP 6
GAP 5
GAP 4
GAP 3
GAP 2
GAP 1
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

10. Customer Satisfaction
Very Satisfied
Satisfied
Dissatisfied LO HI
MED
Expectation
Performance
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

11. WHY CUSTOMER SATISFACTION IS NOT SUFFICIENT
It focuses on customer’s expectations - not their real requirements
Considerable research suggests that “satisfied” customers still are likely to defect
There is a tendency by companies to treat all customers as being equal and identical
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

12. Evolution of Management Thought
Philosophy Focus
Customer Service Meet Internal Standards
Customer Satisfaction Meet Expectations
Customer Success Meet Customer Requirements
Notice that the satisfaction model does not focus on requirements
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

13. Moving to Customer Success
Our
Customer’s
Customer Us
How can we help our customers win?
This is not our problem (WRONG)
We’ll do whatever they tell us they want
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Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

14. Development of Logistical Competency5 10
Gaining Cost-
effectiveness
Market
Access
Extension
Creation
Stage 1
Stage 2
Stage 3
Stage 4
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

15. ACHIEVING CUSTOMER SUCCESS
NOT ALL CUSTOMERS HAVE THE SAME REQUIREMENTS
UNDERSTAND YOUR CUSTOMERS' REQUIREMENTS
KNOW YOUR CUSTOMERS' PROCESSES
HOW CAN YOUR CAPABILITIES ENHANCE CUSTOMERS' PERFORMANCE
NEW PERFORMANCE METRICS
Supply Chain Logistics Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.