Supply Chain Management

Chapter 12 : Customer Service in a Supply Chain

Elements of Customer Service

Pre-Transaction Elements Transaction Elements
Post-transaction Elements

Approaches to Develop Customer Service Strategy

Understanding Customer Reactions to Product or Service Failures Analyzing Cost-revenue trade-off
Activity Based Costing, Product-Customer Matrix
Internal and External Customer Service Audits
Competitive Position Matrix

Customer Service as a Performance Outcome to Create a Differential Advantage

Product Availability
Operational Performance Reliability
Market Access
Market Creation

Impediments to Implementing an Effective Customer Service Strategy

Metrics Not Well Defined Conflicting Metrics
Not Understanding the Trade-off Issues
Failure to Watch Industry Shifts and Changes in the Competitive Environment

Use of Technology in Customer Service.

Chapter Summary

The ultimate aim of supply chain management is to satisfy the needs of the end-consumers. Companies are now realizing that they can distinguish themselves from their competitors on the basis of responsiveness, accuracy, ease of interaction and similar attributes -- collectively referred to as customer service.

In this chapter we touched upon various aspects of customer service from the perspective of supply chain management. First we understood the definition of customer service. Customer service can be defined as activities aimed at enhancing the product offer or facilitating the exchange process between a company and the customer.

Later we examined the three elements of customer service: pre-transaction elements, transaction elements and post-transaction elements. Then we discussed the different approaches for designing the customer service strategies. These are: understanding customer reactions to product or service failures (customer’s response to stock outs), analyzing cost-revenue trade-off, activity based costing (ABC analysis), internal and external customer service audits and competitive position matrix.

The chapter then focused on the factors that influence the efficiency and effectiveness in a supply chain. They are product availability, operational performance, and reliability. Effectiveness depends on services provided by the seller that aim at market access, market extension and market creation. Impediments to implementing effective customer service strategy always exist.

Firms should strive to overcome these impediments as they decrease the effectiveness and efficiency of the supply chain. These impediments occur if the metrics are not well defined, if the metrics are conflicting, not understanding the trade-off issues and failure of the firms to recognize industry shifts and changes in competitive environment. One way to improve customer service is through the use of technology. Technology facilitates easy dissemination of information about the customers within the firm and among the members of the supply chain.

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