Supply Chain Management:

From Vision to Implementation

Chapter 2: Customer Fulfillment
Strategies

6 Learning Objectives

 Has the information rich environment

change consumer demand?

Information-Empowered Customer
Customers are empowered with
pricing
information and availability of a
broad
range of products from which
to choose.

Information-Empowered Customer

How do Organisations can create

value?

Question

What is
quality?

Eight Dimensions of Quality

Can Cost be a
competitive
dimension?
How do we lower
cost?
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Competing on Cost

10

Can Flexibility
be a
competitive
dimension
apart from
quality and
cost?
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Ways to be flexible
Flexibility is the capability to adapt to new,
different, or changing requirements.
Flexible organizations operate with short lead
times, are responsive to special customer
requests, and can adapt rapidly to unexpected
events.

12

Competing on Delivery
Competing on delivery means consistently
delivering on-time and in the correct quantity.
Fast, reliable delivery requires the reduction of
order cycle time and the elimination of
variability.

13

Competing on Innovation
Innovation creates new markets and
changes industry standards.
Early Supplier Involvement (ESI) is a
key element of innovation strategies.

14

How successful are organisations at innovation as a

strategy of increasing value for customers?

15

Competing on Innovation
Products introduced on-time but 50% over
budget, realized only a 4% reduction in profit.

Products introduced on budget but six months

late experienced a 33% decrease in profits.
16

Customer Satisfaction
Customer satisfaction is based on whether a
good or service meets or exceeds the
customers expectations.
The key to satisfying customers is to
understand their needs so that unique products
and services can be developed.

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Importance Complete Satisfaction

Xerox found that customers who rated their
service experience as largely satisfied were six
times more likely to defect to a competitor
than those who were completely satisfied.
Loyalty is achieved when customers perceive
truly distinctive service.

18

How do we know that what we pride ourselves as

high level of customer service is of corresponding
value to customers?

19

Feedback as a way to gauge

customer level of satisfaction
Without feedback it is easy to
emphasize activities the customer
does not value.

Service Gaps
20

Customer Success Strategies

Success strategies consist of:

1. A clearly communicated goal to help customers
succeed
2. A clear understanding of downstream
requirements
3. Investment in customer-valued capabilities
4. Training provided to customers
5. Resources shared with customers

21

The End Customer

The end customer is one of the party who puts
money into the supply chain and is therefore
the focus of all activities.
Successful companies share information that
helps the chain focus on the end customer.

22

What issues do customer fulfillment strategies aim

to address?
The real needs of our immediate customers
The real needs of our customers customers
What are the real needs of our supply chain end customers
What information must be shared up and down the SC
The capabilities must be developed up and down the supply
chain to meet these customer needs?
23

Matching Strategy to Customer Needs

Three types of analysis are needed to effectively
tailor supply-chain service levels to specific
customers:
1. Customer Analysis
2. Supply Chain Analysis
3. Competency Analysis

24

Customer Analysis
Customer analysis identifies customer needs,
helping management to segment customers.
Customer segmentation the identification of
unique groups of customers who possess
similar needs allowing the development of
products and systems necessary to fulfill the
needs of different customer groups.
25

Supply Chain Analysis

Supply chain analysis identifies the end
customer needs and the capabilities that must
exist in the chain to meet those needs.

26

Competency Analysis
1. What are we known for that makes us uniquely
good?
2. What do we do better than anyone else?

*** Core competency is almost always cross

functional

27

Barriers to Customer Fulfillment

Companies may seek to improve service
levels, but direct their efforts toward the wrong
activities.
Companies may fail to deliver on their
promises to be customer-service oriented.
Access to information has lead some
companies to provide low service levels to
less valuable customers.
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Barriers to Customer Fulfillment

What are the common problems faced in relation
to customer fulfilment?

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Barriers to Customer Fulfillment

Training - employees do not know how their behavior and
performance affects customer perceptions.
Measurement - measures do not reinforce appropriate
attitudes and behavior toward customers.
Empowerment - employees do not have authority to solve
problems and respond to customer needs.
Policies - policies and procedures are inflexible and often
run counter to real service and satisfaction.
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Problem Solving Tools

Cause Effect Diagram (Fishbone Diagram)
helps to identify under cause for a nonconforming outcome.
Pareto Diagram an application of the 80/20
Rule; helps to identify the vital few from the
trivial many

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Fishbone Diagram

32

Pareto Diagram

33

Questions ?

34