Part 9- Order management and customer relationship management Flashcards
After planning for demand and supply + transportation + warehousing:
Order management and customer relationship management comes into play
Order management:
Set of activities that occur between the time a company receives an order from the customer and the time a warehouse is notified to ship the goods to fill that order, they are sent to the customer and are received in good order
Order time/lead time –> the time it takes to perform these activities
Order management’s four stages:
1) Order placement
2) Order processing
3) Order preparation and loading
4) Order delivery
Stage 1- order placement
Events that occur between when a customer places an order and the time when the seller receives the order
Stage 2- order processing
Events that occur between the time when the seller receives an order until an appropriate location (ie warehouse) is authorized to fill the order.
Steps included:
1) Check the completeness and accuracy
2) Customer credit check
3) Order entry into the computer system
4) Marketing department credits salesperson
5) Accounting department records the transaction
6) Inventory department locates the nearest warehouse to the customers and advises them to pick the order
7) Transportation department arranges for shipment of the order
Stage 3- Order preparation and loading
It includes activities from when an appropriate location is authorized to fill the order until goods are loaded into the outbound carrier
Stage 4- Order delivery
It is the time from when a carrier picks up the shipment until it is received by the customer
- important to coordinate the picking and preparation of orders with carrier arrival because docks and yards can get congested easily –> trucking companies will charge extra fees for the waiting time
- one of the most critical points for success or failure in the supply chain, as in many cases delivery is performed by third party companies and it is also the last point of physical contact with the customer
Customer relationship management
Normally the customer should be the final customer. However, the customer may also be the next step in the supply chain (ie for a supplier its customer may be the manufacturing company)
Customer service
It is a means by which companies try to differentiate their product, sustain customer loyalty, increase sales and improve profitability.
Its main elements are price, product quality and service.
Multifunctional dimensions of customer service:
Logistics can provide benefits to the customer in:
1) Time (entire order fulfillment cycle time)
2) Communications
3) Flexibility
Transactional elements of customer service
1) Pre-transaction elements
2) Transaction elements
3) Post-transaction elements
The most important customer service elements are logistical in nature (ie speed of delivery, on-time delivery, order fill rate, product condition, accurate documentation etc)
Pre-transaction elements
- written customer service policy
- organizational structure
- method of ordering
- single order contact point
- accessibility of order personnel
- order size constraints
- system flexibility
Transaction elements
- condition of goods
- inventory availability
- order preparation
- service/order cycle time
- delivery alternatives
- delivery time
- delivery reliability
- delivery of complete order
- order status information
Post-transaction elements
- invoicing procedures
- invoicing accuracy
- product tracing/warranty
- returns policy
- availability of spares
- call-out time
- customer complaints and procedures
Service quality and metrics
Service quality is a measure of the extent to which the customer is experiencing the level of service that they are expecting. Customer service objectives should be:
- specific
- measurable
- achievable
- cost-effective.
Other customer service metrics should be:
- percentage of sales on bookorders
- number of stock outs
- percentage of on-time deliveries
- number of inaccurate orders
- order to cycle time
