SCM Lecture 9

8/15/2019 SCM Lecture 9

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16 – 1Copyright © 2016 Pearson Education, Inc.Copyright © 2016 Pearson Education, Inc.

PowerPoint presentationto accompany Chopra and Meindl Supply Chain Management,6e

PowerPoint presentationto accompany Chopra and Meindl Supply Chain Management,6e

9 Customer Value


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he !imensions o" Customer Value

• Con"ormance to re#uirements.• Product selection.

•Price and $rand.

• Value%added ser&ices.• 'elationships and e(periences.


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Price and *rand

• Price cannot $e a di+erential in manyindustries – Companies lie !ell and -al%art use cost

reduction strategies to impro&e pro/t

• *rand names $ecome a guarantee "or#uality – Premium $rands can as "or premium prices

– upply chain has to $e more responsi&e• ay increase costs hich may $e o+set $y higherprices

• Pricing in ser&ices more dicult – 3pportunities "or companies that can o+er ne

ser&ices


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he 'ole o" Pricing and 'e&enueanagement in the upply Chain

• Revenue management is the use o" pricingto increase the pro/t generated "rom alimited supply o" supply chain assets

• upply assets e(ist in to "orms – capacityand in&entory• 'e&enue management may also $e

de/ned as the use o" di+erential pricing

$ased on customer segment, time o" use,and product or capacity a&aila$ility toincrease supply chain pro/ts


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he 'ole o" Pricing and 'e&enueanagement in the upply Chain

• 'e&enue management has a signi/cantimpact on supply chain pro/ta$ility henone or more o" the "olloing "our

conditions e(ist1. he &alue o" the product &aries in di+erent

maret segments

2. he product is highly perisha$le or product

astage occurs). !emand has seasonal and other peas

5. he product is sold $oth in $ul and on thespot maret


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Pricing and 'e&enueanagement "or ultiple

Customer egments• !i+erential pricing increases total pro/ts"or a /rm

• o "undamental issues must $e handledin practice – 7o can the /rm di+erentiate $eteen the to

segments and structure its pricing to mae onesegment pay more than the other8

– 7o can the /rm control demand such that theloer%paying segment does not utili9e theentire a&aila$ility o" the asset8


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;llocating Capacity to a egment


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Pricing and 'e&enue anagement"or Perisha$le ;ssets

• ;ny asset that loses &alue o&er timeis perisha$le

• o $asic approaches1. Vary price dynamically o&er time toma(imi9e e(pected re&enue, dynamic

pricing

2. 3&er$oo sales o" the asset to account"or cancellations


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Pricing and 'e&enue anagement"or easonal !emand

• easonal peas o" demand common inmany supply chains

• 3+%pea discounting can shi"t demand "rompea to non%pea periods

• Charge higher price during pea periodsand a loer price during o+%pea periods

• Increases pro/ts "or the oner o" assets,decreases the price paid $y a "raction o"customers, and $rings in ne customersduring the o+%pea discount period


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Pricing and 'e&enueanagement "or *ul and pot

Contracts• Pro$lems constructing a port"olio o" long%term $ul contracts and short%term spotmaret contracts

• !ecide hat "raction o" the asset to sell in$ul and hat "raction o" the asset to sa&e"or the spot maret

• he amount reser&ed "or the spot maretshould $e such that the e(pected marginalre&enue "rom the spot maret e#uals thecurrent re&enue "rom a $ul sale



C Per"ormance easures

• C per"ormance a+ects the a$ility topro&ide customer &alue

• 4eed to de&elop independent criteriato measure supply chainper"ormance.

• Presence o" many partners in the

processBre#uirement o" a commonlanguage.


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C3' odel• upply Chain 3perations 'e"erence%odel C3'D

– Process reference model – ;naly9es the current state o" a companys

processes and its goals, – @uanti/es operational per"ormance – Compares it to $enchmar data.

• !e&eloped a set o" metrics "or supply chainper"ormance

• em$ers are in the process o" "orming industrygroups to collect $est%practice in"ormation


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C3' Fe&el 1 etrics

Perspectives Metrics Measure

Supply chain reliability On-time deliveryOrder fulfillment lead timeFill ratePerfect order fulfillment

PercentageDaysPercentagePercentage

Flexibility and responsiveness Supply chain response timeUpside production flexibility

DaysDays

xpenses Supply chain management cost!arranty cost as percentage of revenue"alue added per employee

PercentagePercentageDollars

#ssets$utili%ation &otal inventory days of supply'ash-to-cash cycle time(et asset turns

DaysDays&urns


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I and Customer Value

• any &alua$le $ene/ts "or customersand $usinesses.

• hree aspectsG – e(change o" in"ormation $eteen

customers and $usinesses

– use o" in"ormation $y companies tolearn more a$out their customers sothat they can $etter tailor their ser&ices

– enhanced $usiness%to%$usinesscapa$ilities.


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Customer *ene/ts

• 3pening o" corporate, go&ernment, andeducational data$ases to the customer.

• ;&aila$ility o" uni"orm data access tools o" theInternet.

• Inno&ations ha&e had the e+ect o" increasingcustomer &alue hile reducing costs "or thesupplier o" the in"ormation. – ;utomated teller machines ;sD

– Voice mail

– Internet

• 3pening o" the in"ormation $oundaries $eteencustomer and company – Part o" the ne customer &alue e#uation

– In"ormation is part o" the product.


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E+ects o" the Internet

• Increased importance o" intangi$les – Importance o" $rand names and other

intangi$les• er&ice capa$ilities or community e(perience in

purchasing decisions.• Increased a$ility to connect and

disconnect

• Increased customer e(pectations – Hreater a$ility to compare and the ease o"per"orming &arious transactions

• ailored e(perience – ;$ility to pro&ide each customer an indi&idual

e(perience is an important part o" the Internet.

Documents

SCM Lecture 9