Customer Service

Topics: Logistics, Inventory, Customer service Pages: 5 (939 words) Published: October 6, 2012
Customer Service

“Customer service is a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer expectation." Customer Service is defined as a process of providing significant value added benefits to the supply chain in a cost-effective way.

Customer Service – Expectation (The 7 R’s)

The “seven R’s rule” offers a simple description of how integrated logistics creates customer service.

The seven R’s are :-

1. Right Quantity

2. Right Cost

3. Right Product

4. Right Customer

5. Right Time

6. Right place

7. Right Condition

Any breakdown in the seven R’s disrupts the flow of product and leads to poor customer service. Firms that routinely deliver the seven R’s add value for customer’s and create a competitive advantage for themselves.


The various elements of customer service are :-

A] Availability                        

Availability is the capacity to have inventory when it is desired by a customer. The most common practice to achieve availability is to stock inventory in anticipation of customer order. Availability is based on following three performance measures:

1. 1. Stockout Frequency: Stockout frequency is a measure of how many times demands for a product exceed its availability. The aggregation of stock outs of all products indicates how well a firm is able to provide basic service commitments. 2. 2. *Fill Rate: Fill rate measures the magnitude of stockouts over time. E.g. if a customer orders 50 units and only 47 units are available, the order fill rate is 94 % (47/50). Just because a product is out of stock does not mean that a customer requirement is going unsatisfied. Before a stockout affects service performance it is necessary to forecast customer requirements then to identify the product unavailability and to determine how many units customer wanted. Stockout frequency and fill rate are inversely related through order quantity. i.e. if a firm places larger order the stockout frequency will be less and the expected fill rate will be higher. 3. 3. Orders Shipped Complete: It is a measure of time when a firm received the entire inventory ordered by a customer. It indicates the potential times that customers will receive perfect orders. B] Operational Performance

1. Operational Speed: Performance speed is the interval between placement of order and shipment arrival. Depending upon the logistical system design, the speed can be as short as a few hours or as long as several weeks. In critical situation service can be performed in a few hours by special delivery or on overnight basis. But every customer does not need maximum speed if it results in increase in logistics cost. 2. Operational Consistency: Consistency refers to a firm’s ability to perform at the expected delivery time. When a form fails to be consistent it forces customers to carry extra safety stock to protect against possible late delivery. 3. Operational Flexibility: Flexibility refers to a firm’s ability to handle extraordinary customer service requests. The events that requires flexibility are: - Modifications in basic service arrangements

- Product modification

- Product introduction

- Product phaseout

- Product recall

- Disruption in supply

C] Reliability

Reliability refers to logistics quality i.e. ability of firm to comply with levels of planned inventory availability and operational performance. Reliability also includes firm’s capability to provide accurate customer information regarding logistical operations and order status.

D) Communications :-

The two logistics activities vital to order filling are the communication of customer order information to the order filling area and the actual process of picking out...
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