Customer Service Management

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Learning Objectives

LO9-1 Describe how operations management helps establish and fulfill different levels of organizational commitment to customers.

LO9-2 Define the elements of basic service and explain how they are measured.

LO9-3 Describe a model of customer satisfaction.

LO9-4 Explain how a commitment to customer success is the highest level of customer management.

LO9-5 Describe the technological and relational aspects of customer relationship management.

LO9-6 Describe a strategy for segmenting customers and for developing tailored relationships with them.

9–2

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2

Winning the Customer’s Heart: Strategic Alignment at Unilever

Supply Chain Strategy

Business Strategy

LO9-1

9–3

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3

Customer Management

9–4

Intense focus on understanding and providing customers with products/service they desire

LO9-1

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4

Six Basic “Rights” to Customers

LO9-1

9–5

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Basic Customer Service

Right amount

Right place

Right time

Right product

Right condition

Right information

Customer Service – Product Availability

9–6

Product Availability: inventory available when and where desired by customer

Units Lines Orders

Orders Units Lines Delivered Delivered Delivered

1,000 20,000 5,000 19,500 4,800 910

Example 9-1

LO9-2

Unit Fill Rate: Total units delivered / Total units ordered

= 19,500/20,000 = 97.5%

Line Fill Rate: Number of order lines delivered complete / Total order lines

= 4,800/5,000 = 96%

Order Fill Rate: Total complete orders delivered / Total orders

= 910/1000 = 91%

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6

Lead Time Performance

9–7

Lead Time: time between start and end of an activity

Product design: conceptualize, design & test

Order: place and schedule for production

Procurement: source and arrive

Production: start to end of production

Delivery: warehousing & transportation to customer

LO9-2

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7

Lead Time Performance – Part II

9–8

Differing market orientations have different elements of Order-to-Delivery (OTD) lead time

Engineer to Order (ETO): design and make to customer specifications

Make to Order (MTO): make to customer demand from raw materials and components

Assemble to Order (ATO): assemble to customer demand from generic subassemblies

Make to Stock (MTS): build and stock in anticipation of customer demand

LO9-2

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8

Lead Time Performance- Part III

9–9

LO9-2

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9

Service Reliability: The Perfect Order

9–10

Service Reliability: performance of all order related activities error-free

If a firm has 97% reliability on four attributes, the probability of a perfect order is .97x.97x.97x.97 = 0.885, or 88.5%

The Perfect Order: delivered without failure in any order attribute

Complete

On time

Damage free

Documentation correct

Example 9-2

LO9-2

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10

Limitations of Customer Service

9–11

Customer service involves specifying the firm’s commitment to availability, operational performance, and reliability

Order winners, qualifiers, and losers

Meeting or beating competitor levels

Link to competitive strategy

Link performance to customer satisfaction

LO9-2

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11

Customer Satisfaction: Core Expectations

LO9-3

9–12

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12

Reliability

Security

Courtesy

Customer Satisfaction

Responsiveness

Access

Communication

Credibility

Competence

Tangibles

Knowing the customer

Customer Satisfaction – Part I

9–13

Customer Satisfaction: meeting or exceeding customer expectations, including:

Reliability: performance as promised

Responsiveness: prompt reply and resolution

Access: easy to use communication channels

Communication: proactive order notifications

Credibility: believable and honest

LO9-3

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13

Customer Satisfaction – Part II

9–14

LO9-3

Customer Satisfaction: meeting or exceeding customer expectations, including:

Security: low risk and confidential

Courtesy: polite, friendly and respectful

Competence: able to perform

Tangibles: physical appearance

Knowing the customer: responsive to unique customer needs

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14

Customer Satisfaction Model Gaps

Gaps occur at differences between:

Knowledge: understanding of customer needs

Standards: internal performance and customer expectations

Performance: standard and actual performance

Communication: actual performance and communications about performance

Perception: customer’s view of performance and actual performance

Satisfaction: customer’s perceptions and expectations of performance

9–15

LO9-3

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15

Customer Satisfaction Model Gaps

9–16

LO9-3

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16

Limitations of Customer Satisfaction

9–17

LO9-3

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17

Happy Customer

Satisfied/Loyal Customer

Activity

Think of a time you were dissatisfied with a supplier’s performance

Which of your expectations were not met?

How did you form these expectations?

Which ‘gap’ resulted in your dissatisfaction?

9–18

LO9-3

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18

Customer Success

Customer success requires a supplier to:

Have a long-term relationship focus

Gain comprehensive knowledge of customer needs

Consider the customer’s customers

Adapt manufacturing and distribution

9–19

LO9-4

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19

Customer Relationship Management

Customer Relationship Management (CRM): technology-enabled data gathering about customers to develop strategic relationships

9–20

LO9-5

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20

Customer Management and Relationship Strategy

9–21

LO9-6

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21

Customer Management Summary

9–22

Basic customer service includes availability, lead-time performance and service reliability

Order-to-Delivery lead time is important

Satisfaction is achieved by meeting or exceeding customer expectations

Customer success focuses on strategic objectives and individual customer requirements

CRM involved data gathering and responding to the needs of specific customers

Multiple types of relationships and levels of commitment

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