OPERATIONS MANAGEMENT

CUSTOMER TAILORED LOGISTICS

GROUP-8
PGDM 2018-2020

SUBMITTED TO- SUMITTED BY-

MS. SHALINI KAPOOR BM-018002 AASHI GUPTA
Professor BM-018039 SAKSHI RAJPOOT
IMS Ghaziabad BM-018062 VIDUSHI GUPTA
 ACKNOWLEDGEMENT

I would like to express my thanks of gratitude to my

Operation Management teacher

“Ms Shalini Kapoor” who gave us the opportunity to do the project on

“Customer Tailored Logistics” and for her able guidance and support
in completing our Report.

Through this project we came to know about so many new things and
we are really thankful to her.

Group 8

Section A

PGDM 1ST Year

 TABLE OF CONTENTS

Title Page
no.
1. Introduction 1
2. Tailored Logistics along the relationship continuum 2-4
3. Mission and vision 5
4. Case: - The Tailored Logistics Support Program:
6-7
Balancing Requirements for Effectiveness and
Efficiency
5. CRM for logistics 8
 INTRODUCTION

In a perfect world, you would provide outstanding logistics services to every customer—
always. But, we don’t live in a perfect world, we live in a world characterized by
uncertainty and constrained resources. Customers are unpredictable and they change their
minds—and their preferences. This makes it hard to always meet their needs. Even if you
could anticipate every customer need, you probably wouldn't have enough resources to
fulfill every customer request. Your rivals don’t either. No one provides the highest levels
of customer service and order fulfilment to every customer all of the time.

Now, a little good news: You don’t have to. Every customer has unique needs and some
of your customers expect perfection in every instance. They are important enough to
demand six-sigma performance—i.e., 3.4 defects per million—everywhere, including
logistics. 1 Other customers do not need such exacting order fulfilment—nor are they
willing to pay for it. The bottom line: Not all customers are created equal. Nor is every
transaction equally important. Success depends on your ability to align service offerings
to individual customer’s real service requirements. This principle is called tailored
logistics. Figure 2.2 depicts this idea, showing the two endpoints of a logistics service
continuum.
Figure 2.2: Tailored Logistics Along the Relationship Continuum

For example, that Coca-Cola has increased its offerings in many ways during the past decade
or so: diet Coke, cherry Coke, caffeine-free Coca-Cola. What is less well-known is that the
company has also been in the process of differentiating its products along important service
dimensions during this time, based on a continual rethinking of its logistics pipelines. The
process has gone furthest in Japan. By now, consumers of The Coca-Cola Company’s products
in Japan are subtly segmented, not only according to their product choices or preferences but
also according to the logistics needs of the stores and vending machines that they find
convenient: a store’s need for timeliness, for example, or help with billing, or frequency of
delivery.

Informally, the bottlers of Coca-Cola in Japan have extended services for years. The drivers of
their delivery trucks have distinguished The Coca-Cola Company products by performing an
important merchandising function in supermarkets, setting up displays and keeping shelves
attractive. In mom-and-pop stores, drivers have often helped process billing or even helped
clean up the back room. Consumers may not have known about these services, but
they experienced them, if only in the way their favourite corner store looked, or in the fact that
it was able to stay in business at all.

But Coca-Cola bottlers in Japan are now attempting to segment customers much more precisely
along service dimensions of this kind. The point is profit. Bottlers spend $600 million annually
on logistics and have major plans for growth; we estimate that by tailoring their service delivery
channels to the needs of distinct groups of customers, bottlers can save an average of $80
million to $90 million a year for the next ten years. Nor, in this context, does “precisely” mean
that each group of customers will get a separate channel. In many cases, service characteristics
(dependability, frequency, merchandising, order processing, and so forth) intersect;
overlapping customer desires generate such a high number of permutations and combinations
that segmenting customers into cost-effective channels can be a daunting task.

The Coca-Cola bottlers’ major customers in Japan, Ito Yokado and Daiei supermarkets, 7-
Eleven convenience stores, and so on, want predictable delivery above all, which is hard to
achieve during Tokyo’s daytime traffic. At the same time, predictable delivery during the day
is less important than merchandising for mom-and-pop stores. Operators of vending machines
want support refilling their machines. They depend on communications systems that regularly
update the bottler on levels of stock so that trucks are not dispatched to replenish full machines;
they do not want to absorb the costs of trucks that also carry products and packages their
machines do not sell.

By far the biggest challenge in managing logistics strategically, then, is developing target
segments of customers that can be served profitably by distinct, rationalized pipelines—a
critical point we’ll return to later. For now, it is enough to see that in services, too, one size
doesn’t fit all. A can of Coca-Cola makes a distinct journey. A particular can of Coca-Cola
might well be called a can of Coca-Cola going to a vending machine, or a can of Coca-Cola
that comes with billing services. There is a fortune buried in this distinction. (See the chart “A
Product Is Also Its Services.”)
Company does not create value for customers and sustainable advantage for itself by offering
varieties of products but by attaching services to those products.
 Our mission and vision

Tailored Logistics has one key objective and that is to deliver measurable consistent value to
our clients through a system of optimised distribution. This means putting the client at the
centre of our business and driving strategy and operations around client requirements and
interests. One way in which Tailored accomplishes its mission statement is by working closely
with our clients capturing their unique requirements clearly and concisely to formulate and
deliver custom tailored transport solutions
CASE: The Tailored Logistics Support Program: Balancing Requirements for
Effectiveness and Efficiency

Historically the focus of the defense acquisition and sustainment system has swung pendulum-
like between two policy objectives. At one end of the arc, the goal is effectiveness: insuring
that the military gets the best equipment and support available as rapidly as possible even if
this means choosing a more costly alternative. Effectiveness is the priority when U.S. forces
are engaged in combat as they have been for the past decade. At the other end of the arc the
goal is efficiency: providing solutions based on best value or even lowest cost. In order to
achieve efficient outcomes, the acquisition system tends to increase oversight and slow down
the process of buying goods and delivering services. A focus on efficiency is common in
peacetime, particularly when defense budgets are declining.

We are living in a period in world history that can be characterized as “neither war nor peace.”
Although the U.S. military is out of Iraq it is still operating in Afghanistan, conducting counter
terrorism activities in dozens of places and contemplating (perhaps planning for) the possibility
of having to intervene in such countries as Syria, Libya and Iran. The adversaries’ tactics,
techniques and procedures are continuously evolving, requiring that U.S. forces respond with
new means and methods.

At the same time, defense budgets have begun to decline and pressure is increasing to reduce
acquisition costs. As one DOD acquisition official described the change, the environment is
changing from “how quick can I get it done” to “do I know how every penny is being spent.”
The Department of Defense has instituted a series of reforms under the banner of Better Buying
Power intended to improve the efficiency of the acquisition system and, in particular, reduce
the cost of defense goods and services. The drive for efficiency often results in greater
oversight, a more protracted contracting process and an increase in the time it takes to deliver
goods and services. Further complicating the acquisition system’s efforts to become more
efficient is the growing demand by the military for commercially produced goods and services.
The challenge for the acquisition system in an era of neither war nor peace is how to balance
the need for effectiveness in the provision of support to the war fighter with the demand for
greater efficiency.

The Defense Logistics Agency (DLA) has instituted a new approach to supporting the war
fighter, one that is both effective and efficient. DLA’s Tailored Logistics Support Program
(TLSP) enables customers from any of the services to acquire rapidly and at an affordable price
specific categories of goods that are almost entirely commercial in character. TLSP ensures
that DLA customers are able to get the products that they want when and where they need them
while providing for continuing competition among providers that serves to reduce costs. How
is this balancing act achieved? TLSP is based on multiple long-term indefinite
duration/indefinite quantity contracts awarded to highly qualified and experienced prime
vendors or integrating contractors who, in turn, have access to a wide array of commercial and
specialty vendors. The winning contractors then compete for every task order to provide a
specific type and quantity of good or service with the winner determined primarily on price
and speed of delivery.

TLSP offers significant advantages over the traditional defense procurement process that are
particularly significant when the products and services to be acquired are commercial in nature.
A single contract with all the prime vendors and a transparent task order process governs all
transactions. The prime vendors interact directly with specific product providers to ensure both
quality of items procured and timeliness of delivery. This substantially reduces paperwork,
manpower requirements, inventories and infrastructure. Under TLSP, new or improved
products can be procured without having to execute a contract modification. The prime vendor
provides customers with required cost, pricing and compliance information in the proper
formats, freeing the commercial vendors, many of whom are unable or unwilling to create the
necessary accounting and reporting systems, from this burden.

Currently, DLA employs TLSP in selected procurement areas such as special operations
equipment and fire fighting and emergency rescue. The TLSP format is particularly relevant in
these areas because most of the vendor base is commercial in character, a wide range of
products and services are involved and the rates of technological change are high. Other
procurement categories where the TLSP model would seem to be relevant include:
communications systems and IT equipment and services, medical supplies and equipment and
soldier clothing and individual equipment.
 CRM for Logistics

Why CRM software is a necessity for your logistics business

Customer satisfaction and loyalty drive growth and sustained profitability. However, if your
clients aren’t happy, sales will drop and in the end you may lose your business. This is
especially true for the highly competitive transportation industry, where customers are often
very selective about Logistics Service Providers (LSPs). They look not just at affordable prices
and on-time delivery, but at the overall quality of interactions. Therefore, to keep your
customers contented and deliver them exceptional experience, you need to empower your
business with a robust CRM (Customer Relationship Management) solution.

Capture more value from relations with your customers

The use of CRM software is a best practice approach for a wide range of businesses, including
logistics, transportation, shipping and freight forwarding. It helps optimize customer service,
manage the sales pipeline, drive successful marketing campaigns, identify and retain valuable
customers, encourage unstable ones to spend more, etc.

Your 5 key benefits

At Elinext Group, we fully understand the value that advanced IT technologies can contribute
to a business as a whole, and to its constituent elements. Thanks to custom CRM software from
Elinext Group, you can attain greater success. Consider the following 5 benefits for your
logistics and transportation business:

 Maximized quality of customer service

 Strengthened marketing and sales
 Improved image of your business
 Greater customer loyalty
 Increased profit.
 References

https://hbr.org/1993/05/tailored-logistics-the-next-advantage

https://hbr.org/1993/05/tailored-logistics-the-next-advantage

http://www.tailoredlogistics.com.au/index.html