Therefore knowing and understanding what your customer wants and desires is vitally important to providing superior customer service.
How do you know what the customer wants? Answer ASK
There's no point providing services that are not valued by your customers. It's, therefore, important that you develop a good understanding of their needs.
Some ways of achieving this are:
- Regularly asking your customers about your business services.
- Provide feedback forms for your customers to complete.
- Phone or visit customers at critical points, eg after the initial sales, and ask if your product or service meets their needs.
- Consider using an outside agent to get feedback from your customers.
- Welcome customer complaints and manage these promptly and positively to avoid loss of customers and negative word-of-mouth.
- Keep a list of customer complaints to identify any patterns and the cause of dissatisfaction.
- Learn what your competitors are doing to achieve customer satisfaction.
Customer feedback is most effective when:
- You hear both positive and negative feedback;
- You obtain feedback regularly;
- Feedback is focused on what the customer wants or doesn't want.
- Getting Close to the customer
“You must know what your customer is thinking…. always. You must understand his business, his operations.” (Mullin P. 2001, p43)
Getting close to the customer involves gathering facts and knowledge about your customers, and turning these into an awareness of what customers want from you and how they perceive your company and services.
This awareness must then be acted on to ensure that you continually meet customer demands and ensure long-term survival and profitability.
Advantages of being close to your customer
Being close to your customers will enable you to:
* be more responsive to changes in demand and in the market
* act on facts rather than hunches or intuition
* develop a product or service better tailored to suit the customers needs
* achieve improved sales and gain new business
Extreme emphasis on customer relationships:
“The goal is to become so close to your customer that he considers you to be a extension of his own business, a key integral part that he would never contemplate being without.” (Mullin P. 2001, p44)
Going well beyond the traditional, limited view of customer service, to the point where employees actually anticipate customers' needs - proposing accurate solutions to problems the customer may experience, but hasn't yet articulated.
Section 2: Customer Service within the Supply Chain
“Supply chain management has emerged as the most significant business development of the 20th century. Managing the supply chain has become the number one business process.” (Christopher M. 1997)
2.1 Placing the Supply Chain centre stage
Supply chain business process integration involves collaborative work between buyers and suppliers, joint product development, common systems and shared information.
According to Lambert and Cooper (2000) operating an integrated supply chain requires continuous information flows, which in turn assist to achieve the best product flows.
However, in many companies, management has reached the conclusion that optimizing the product flows cannot be accomplished without implementing a process approach to the business. The key supply chain process which is, Customer .
Therefore making customer service central to the supply chain has become the key to success.
- The customer order driven supply chain
“Real competitive advantage comes from a combination of loyal customers, committed customers and a superior supply chain” (Christopher M. 1997)
In a customer driven supply chain, demand drives all activities among trading partners.
Customer driven supply chain distinguishes between actions that provide with real value, and actions which just add costs. It facilitates and possibly maximizes collaboration with .
It reduces throughout time, and decision points. It increases machine and transport effectiveness.
It provides quick and easy access to for sales and service. It reduces excess inventory, stock-outs, shrinkage, and order delays, as well as automates inventory data transfers between stores and . It reduces purchase order errors and accelerates time to market.
The whole process starts and ends with the customer order.
Section 3: _ Superior Customer Service as a competitive tool
The search for Competitive advantage is the modern imperative for survival.
3.1 _ The Pursuit of Competitive advantage
Never before has competition between suppliers been so fierce, many companies manufacture and produce similar and often identical products.
This means suppliers need to find ways to try and differentiate their products and services in order to gain a competitive advantage over their rivals.
One of the most effective ways of doing this is by offering superior customer service to win business ahead of the competition.
Placing the customer order at the heart of the supply chain has become the way of doing business, and delivering what the customer wants when he wants it is now what superior customer service is all about. To do this we must focus on Logistics Management.
3,2 Logistics Management
“Making the product available when the customer wants it and how he wants it has become the major focus of Logistics” (Mullin P. 2001, p97)
Exploiting logistics services and performances to set you apart from your competitors, can be a strategy to gain competitive advantage.
Make logistics excellence a core competency. Incorporate logistics as a critical element for success. Effective logistics can significantly contribute to positioning yourself as a Preferred Supplier.
Product, promotion and price have been used for years by companies to develop recognition. Logistics, as the base for a business strategy to grow the business and to gain market share. Customers would perceive that you provide superior value and a competitive service. That is a strong foundation for growth.
Logistics presents a way to market you to customers. There is only so much that can be done with promotion and price. A value-added logistics strategy is a strong way to become a preferred supplier because you are showing your customers you are committed to doing business with them.
Logistics is managing the 7 rights of the supply chain, Right product, Right place, Right time, Right cost, Right Qty, Right quality, Right information.
3.3 Product availability
Looking at it another way, you may have a great product, sound promotion efforts and a good price. But if you are difficult in doing business with, in fulfilling orders and timely and completely meeting customer requirements, you could lose sales and market share with a poor logistics service.
When the customer goes to buy goods eg: a laptop if your company’s laptop is not available to the customer on the day he wants it, he may very well buy other brand! Your competitors’ laptop at a similar price and spec.
Insuring your product is available when the customer enters the supermarket, hardware store etc… is the key to being successful in the modern market.
The customer won’t buy what isn’t there.
3.4 _ Response time
“Speed in making the product available is now the key differentiator, Speed of response to customer demands” (Mullin P. 2001, p97)
Companies must reduce lead times in all areas of their operations from procurement, manufacturing, transportation, distribution and replenishment cycles.
What the modern customer wants he must have it, in the shortest possible time, the quicker your business reacts to what the customer wants the more successful your business will be.
Section 4 : _ Case study
4.1 _ On shelf availability at Wal-mart
Wal-Mart is the world’s largest retailer with fiscal 2005 revenues of $244.5 billion. The company’s international division operates 1,500 units internationally employing more than 330,000 associates.
Logistics planning is the capability that has enabled Wal-Mart to restrict inventory growth, while maintaining a strong in-stock position and filling the shelves of hundreds of new stores each year. For example, Wal-Mart’s sales during the past two years (FY04 and FY05) increased 32% from $165B to $218B, but the value of its inventory at replacement cost increased by just 13% during the same time frame. The trend of leveraging an efficient supply chain to restrict inventory growth was the key. During the Qtr sales increased by 14% but inventories only increased by 3%.
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.Key features of Wal-Mart’s basic business model
Wal-Mart’s basic business model is fairly simple: to sell nationally advertised, well-known brand names at low prices. The brand names draw customers in to the stores. Since brand name products are available at competing chains (Target, K-Mart, etc.), Wal-Mart’s competitive advantage lies in its pricing. “Every Day Low Pricing” or EDLP is the cornerstone of its marketing philosophy. This means that customers don’t have to wait for special sales or markdowns. Everyday store traffic is maximized and promotion expenses are minimized.
Wal-Mart’s business model attempts to create a virtuous cycle – low pricing increases foot traffic, which in turn allows the company to profit from volume, which in turn allows it to buy in bulk from suppliers, which in turn allows it to charge low prices.
- Wal-Mart’s logistics activity
It saves on distribution costs in a variety of ways. Distribution center location is one such factor. Wal-Mart goes against the conventional wisdom in retailing by building scale efficient distribution centers first and then locating stores in close proximity to the distribution center. Cross-docking allows goods to spend minimum time in inventory. The objective metric for this is Wal-Mart’s inventory turns vis-à-vis its competitors: 7.6 in 2003 vs. 6.1 for Target and 5.4 for K-Mart. In the extremely low margin world of discount retailing, Wal-Mart’s low distribution costs prove to be an insurmountable barrier for competitors.
Wal-Mart emphasizes scale efficiencies particularly by enabling the vast majority of square footage in stores to be used for selling. Its stores are huge – discount stores average 98,000 square feet, while Supercenters average 187,000 square feet. By frequently replenishing its stores, Wal-Mart can afford to keep its in-store inventory low and yet not be afraid of stock outs. Once again, objective performance metrics support Wal-Mart’s strategy. Its sales per square foot were $433 vs. $286 for Sears and $184 for K-Mart.
Costs savings also stemmed from its EDLP strategy.
Technology is another area in Wal-Mart’s value chain (Porter M. 1980) that helps explain the retailer’s dominance. Its mines customer data and uses it in decision making. It connects its stores and distribution centers so that there is real-time information flow.
Bibliography:
Mullen Pat, “Logistics Management for superior customer Service” (2001)
Mullen Pat(2001), “Warehousing and Distribution”-- Advanced Certificate in Logistics Management Module 2
Mullen Pat(2001), “Logistics and Transport”-- Advanced Certificate in Logistics Management Module 3
Mullen Pat(2001), “Management and Supervisory Skills”-- Advanced Certificate in Logistics Management Module 4
Lambert, D., Cooper, M, "Issues in supply chain management", (2000)
Porter Michael, “Competitive strategy – techniques for analysing industries and competitors” (1980)
Christopher Martin, “Logistics and Supply chain Management” (2002)
Weblinks:
www.theingeniumgroup.com/news_release/facilitating_competitive_advantage.pdf
http://www.scdigest.com
www.getpeoplesmart.com
