That part of the supply chain process that plans, implements, and controls the efficient, effective flow

and storage of goods, services and related information from the point of order to the point of consumption in order to meet customers requirements

Ensuring the availability of the

Right product Right quantity Right condition Right Place Right time Right customer Right cost

Emphasis on Quality and meeting customer requirements Change influence of large buyers such as Wal-Mart Increasing sophistication of all buyer types industrial and consumer

Logistics impacts and has relationship with economy Cost of business logistics increasing Transportation covers largest percentage of logistics costs (rising due to inventory management practices)

Logistics adds value to a product Place utility - moving goods to points where demand exists Time utility - moving goods to points at a specific time Allows for economic development and specialization Affects land values due to increased accessibility

Interfaces with production in determining the length of the production run Interfaces with marketing in selling the product

price - size, quantity product - dimensions, packaging promotion - inventory, channels customer service

Relationship with all areas of a company

Transportation - physical movement or flow of goods Storage - inventory management and warehousing Packaging - affected by product and transportation Materials handling - movement in, from, and within a warehouse

Order fulfillment - completing customer orders, affects lead time Forecasting - predicting inventory necessary to fulfill customer demand Production planning - product necessary to cover market Purchasing - procurement of supplies, affects transportation

An activity or function to be managed such as order processing or handling customer complaints Actual performance within a certain period Part of an overall corporate philosophy

Customer service is Having the right product, at the right time, in the right quantity, without damage or loss, to the right customer. It is defined as The measure of how well the logistics system is performing in providing time and place utility for a product or service. It has a significant impact on creating demand and retaining customer loyalty It refers to the chain of sales-satisfying activities

1.
2. 3.

Pre transaction elements Transaction elements and Post- transaction elements

i. ii. iii. iv. v.

Pre transaction elements Written policy statement Customer receives policy statement Organizational structure System flexibility Technical and management services Transaction elements Stock out level Order information Elements of order cycle Expediting shipments Transshipment System accuracy Order conveniences Product substitution

Customer service

i. ii. iii. iv. v. vi. vii. viii.

Post transaction elements i. Installation, warranty alterations, repairs and service parts ii. Product packaging iii. Product tracking iv. Customer claims, complaints, returns v. Temporary replacement of products

I.
II.

Effects of customer service on sales Effects of customer service on customer loyalty

5
4 3 2
Threshold Diminishing returns Decline

sales

1 0 Range of transition Range of transition

Logistic customer service

Differentiation Competitive advantage Focus

Type of customersbehavior

Brand loyal Repeat purchase

Life time value = (Average transaction value) * (Yearly frequency of purchase) * (Customer life expectancy)

1.
2. 3.

Identifying customers service needs Defining customer service objectives Designing the logistics systems

a)
b) c)

Availability Operational performance and Service reliability


I.

II.

Value added services Customer satisfaction and success Customer expectations Customer success Time based logistics

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Reliability Responsiveness Access Communication Credibility Security Courtesy Competency Tangibles Knowing the customer

1.
2.

Anticipatory business model Responsive business model

Forecast

Buy components and materials Manufacture

Warehouse

Sell Deliver to customer

Sell Buy components and materials Manufacture

Deliver