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Presented by: HC Lalpanmawia

The way of measure of product and service Internal quality assurance external customer

satisfaction customer value SCM is naturally an important component in

fulfilling customer needs and providing value. SCM can also impact the important customer

value of price by significantly reducing costs. Customer value drives changes and

improvements in the supply chain. Customer value is also important for

determining the type of supply chain.

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Customer value the way the customer perceives the entire company’s offerings (products, services…)

Customer perception can be broken into several dimensions: Conformance(mil) to requirements Product selection Price and brand Value-added services Relationships and experiences

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The ability to offer what the customer wants and needs is a basic requirement to which SCM contributes by creating availability and selection market mediation(buaina kara palai) function the differences between supply and demand will lead

to the costs associated with the market mediation Supply > demand inventory cost Demand > supply lost sales and possibly market share

Customer access the ability to easily find and purchase a product

In all, the company provides Products, services for customers The way for customers to know its products, services

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The contribution of product proliferation (rapid reproduction/increase in no)to customer value is difficult to analyze and understand. The proliferation of products and difficulty in predicting demand

for a specific model force retailers and distributors to hold large inventories.

Sometimes there is no need to provide too many selections for one item

Three successful business trends Specializing in offering one type of product : Starbucks, Subway Megastores that allow one-stop shopping for a large variety of

products :Wal-Mart Megastores that specialize in one product area : Home Depot,

Office Max, Sportmart Several ways to control the inventory problem of a large

variety of configuration or products Build-to-order model : Dell Larger inventories at major distribution centers: vehicles A fixed set of options that cover most customer requirements

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Price of products and the level of service are essential parts of customer value The price may not be the only factor a customer

considers, there may be a narrow price range that is acceptable for certain products.

Brand – an important factor affecting the price The internet and its impact on consumer behavior

have increased the importance of brand names, because a brand name is guarantee of quality in the buyer’s mind.

Mecedes cars, Rolex watches, Coach purses…

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Value-added offering can differentiate some companies from their competitors and provide them with more profitable pricing structures Especially technical products : after sales services

Other reasons why many companies are adding more services around their products: The commoditization of products The need to get closer to the customer The increase in information technology capabilities

Value-added services Support, maintenance Information access

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An increased connection between the firm and its customers makes it more difficult for customers to switch to another provider

The learning relationship Companies build specific user profiles and utilize

this information to enhance sales as well as retain customers

Beyond relationship, some companies are also designing, promoting, and selling unique experiences to their customers. An experience occurs when a company

intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates memorable events

Disney’s theme parks8/

Revenue management “selling the right inventory unit to the right

type of customer, at th-e right time, and for the right price”

Smart pricing Use price as a tool to influence customer

demand

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Many companies use price as a tool to influence customer demand and apply the principles of revenue management techniques to their respective industries.

Smart pricing Customized pricing

The objective is to distinguish between customers according to their price sensitivity

Dynamic pricing Dynamic pricing, or changing price over time

without necessarily distinguish between different types of customers has traditionally been used only for sales or promotions

Example : fashion clothing retailers offer discounts later in the season to reduce inventory, and this discount is the same for all customers at a given time.

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The objective in this section is to introduce various measures of customer value as well as supply chain performance measures

Service level Customer satisfaction Supply chain performance measures

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Service level is the typical measure used to quantify a company’s market conformance.

Service level is usually related to the ability to satisfy a customer’s delivery date.

There is a direct relationship between the ability to achieve a certain level of service and supply chain cost and performance.

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Customer satisfaction surveys are used to measure sales department and personnel performance as well as to provide feedback for necessary improvements in products and services.

Customer satisfaction Customer loyalty Customer defections

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Information technology has produced many valuable benefits for customers and businesses.

Customer benefits Exchange of information between customers

and business Business benefits

The use of information by companies to learn more about their customers

Business-to-business benefits Enhance business-to-business capacities

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Creating customer value is the driving force behind a company’s goals, and supply chain management is one of the means of achieving customer value.

Companies need to select their customer value goals since the supply chain, market segmentation, and skill sets required to succeed depends on this choice.

There is no real customer value without a close relationship with customers.

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SUPPLY CHAIN MANAGEMENTSCM

Flow of products and services from: Raw materials manufacturers Intermediate products manufacturers End product manufacturers Wholesalers and distributors and Retailers

• Connected by transportation and storage activities

• Integrated through information, planning, and integration activities

• Cost and service levels

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SupplierManagement

Schedule /Resources Conversion

Stock Deployment Delivery

CustomerManagement

Leads to Business Process Integration

Material Flow

Information FlowMaterial Flow

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Suppliers Manufacturers Warehouses &Distribution Centers

Customers

Material Costs

TransportationCosts

TransportationCosts Transportation

CostsInventory CostsManufacturing Costs

Plan Make Deliver BuySource

A set of approaches used to efficiently integrate Suppliers Manufacturers Warehouses Distribution centers

So that the product is produced and distributed In the right quantities To the right locations And at the right time

System-wide costs are minimized and Service level requirements are satisfied

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Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system wide costs while satisfying service level requirements.

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Supply Chain Goals

Efficient supply chain management must result in tangible business improvements. It is characterized by a sharp focus on Revenue growth Better asset utilization Cost reduction.

Uncertainty is inherent to every supply chain Travel times Breakdowns of machines and vehicles Weather, natural catastrophe, war Local politics, labor conditions, border issues

The complexity of the problem to globally optimize a supply chain is significant

Minimize internal costs Minimize uncertainty Deal with remaining uncertainty

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Dealing with uncertain environments – matching supply and demand

Shorter product life cycles of high-technology products Less opportunity to accumulate historical data on customer

demand Wide choice of competing products makes it difficult to predict

demand The growth of technologies such as the Internet enable

greater collaboration between supply chain trading partners

If you don’t do it, your competitor will Major buyers such as Wal-Mart demand a level of “supply

chain maturity” of its suppliers Availability of SCM technologies on the market

Firms have access to multiple products (e.g., SAP, Baan, Oracle) with which to integrate internal processes

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Forecasts are never right Very unlikely that actual demand will exactly equal forecast demand

The longer the forecast horizon, the worse the forecast A forecast for a year from now will never be as accurate as a

forecast for 3 months from now

Aggregate forecasts are more accurate A demand forecast for all CV therapeutics will be more accurate than

a forecast for a specific CV-related product

Nevertheless, forecasts (or plans, if you prefer) are important management tools when some methods are applied to reduce uncertainty

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ISSUE CONSIDERATIONS

Network Planning • Warehouse locations and capacities• Plant locations and production levels• Transportation flows between facilities to minimize cost and time

Inventory Control • How should inventory be managed?• Why does inventory fluctuate and what strategies minimize this?

Supply Contracts • Impact of volume discount and revenue sharing• Pricing strategies to reduce order-shipment variability

Distribution Strategies • Selection of distribution strategies (e.g., direct ship vs. cross-docking)• How many cross-dock points are needed?• Cost/Benefits of different strategies

Integration and Strategic Partnering

• How can integration with partners be achieved?• What level of integration is best?• What information and processes can be shared?• What partnerships should be implemented and in which situations?

Outsourcing & Procurement Strategies

• What are our core supply chain capabilities and which are not?• Does our product design mandate different outsourcing approaches?• Risk management

Product Design • How are inventory holding and transportation costs affected by product design?• How does product design enable mass customization?Source: Simchi-Levi

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STRATEGY WHEN TO CHOOSE

BENEFITS

Make to Stock standardized products, relatively predictable demand

Low manufacturing costs; meet customer demands quickly

Make to Order customized products, many variations

Customization; reduced inventory; improved service levels

Configure to Order many variations on finished product; infrequent demand

Low inventory levels; wide range of product offerings; simplified planning

Engineer to Order complex products, unique customer specifications

Enables response to specific customer requirements

Source: Simchi-Levi

View the supply chain as a strategic asset and a differentiator

Wal-Mart’s partnership with Proctor & Gamble to automatically replenish inventory

Dell’s innovative direct-to-consumer sales and build-to-order manufacturing

Create unique supply chain configurations that align with your company’s strategic objectives

Operations strategy Outsourcing strategy Channel strategy Customer service strategy Asset network

Reduce uncertainty Forecasting Collaboration Integration

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Supply chain configuration components