Page 67 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes 3. New-product introductions
4. Product phase out
5. Disruption in supply
6. Product recall
7. Customization of service levels for specific markets or customers

8. Product modification or customization performed while in the logistics system, such as
pricing, mixing; or packaging. In many ways the essence of logistical excellence rests in
the ability to be flexible. As a rule, a firm’s overall logistical competency depends on the
capability to “go the extra yard” when appropriate to satisfy a key customer requirement.

Malfunction/Recovery

Regardless of how fine-tuned a firm’s logistical operation is, malfunctions will occur. The
continuous performance of service requirements under all types of operational situations is a
difficult task. Sometimes, programs can be established to prevent or accommodate special
situations, thereby preventing malfunction. Such extraordinary commitments must be reserved
for justifiable situations. In terms of the basic service program, the key is to anticipate that
malfunctions or service breakdowns will occur and to have in place contingency plans to
accomplish recovery. Thus, the basic service program guarantees a high level of service with the
realization that no program is fail-safe. When service failures occur, the customer service program
should have contingency plans that identify expected recovery and measure compliance.
Logistics quality is all about reliability. A fundamental quality issue in logistics is the ability to
comply with levels of planned inventory availability and operational performance. Beyond
service standards, quality compliance involves a capability and willingness to rapidly provide
accurate customer information regarding logistical operations and order status. Research indicates
that the ability of a firm to provide accurate information is one of the most significant measures
of customer service competency. Increasingly, customers indicate that advanced information
concerning the contents and timing of an order is more critical than complete order fulfilment.
Customers detest surprises! More often than not, customers can adjust to a stockout or late
delivery situation if they receive advanced notification.
In addition to service reliance, a major part of service quality is continuous improvement.
Logistical managers, similar to other managers within the firm, are concerned with meeting
operational objectives with as few malfunctions as possible.

Notes One way to achieve these objectives is to learn from malfunctions and improve the
operating system to prevent reoccurrence.

3.2.7 Service Reliability

Service reliability involves the combined attributes of logistics and concerns a firm’s ability to
perform all order-related activities, as well as provide customers with critical information
regarding logistical operations and status. Beyond availability and operational performance,
attributes of reliability may mean that shipments arrive damage-free; invoices are correct and
error-free; shipments are made to the correct locations; and the exact amount of product ordered
is included in the shipment. While these and numerous other aspects of overall reliability are
difficult to enumerate, the point is that customers demand that a wide variety of business details
be handled routinely by suppliers. Additionally, service reliability involves a capability and a

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