Page 77 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes In many ways a customer success program requires a comprehensive supply chain perspective
on the part of logistics executives. The typical focus in basic service and satisfaction programs is
that the firm attempts to meet standards and expectations of next-destination customers, whether
they are consumers, industrial end users, or intermediate or even internal customers. How
those customers deal with their customer is typically not considered to be a problem. A supply
chain perspective and a customer success program explicitly recognize that logistics executives
must alter this focus. They must understand the entire supply chain, the different levels of
customer within that supply chain, and develop programs to ensure that next-destination
customers are successful in meeting the requirements of customers down the supply chain. If all
supply chain members adopt this perspective, then all members share in the success.

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Caution To ensure that a customer is successful may require a firm to reinvent the way a
product is produced, market distributed, or offered for sale.
In fact, collaboration between suppliers and customers to find potential avenues for success may
result in the greatest breakthroughs in terms of redefining supply chain processes. It is enough
to say here that such arrangements are not possible without significant amounts of information
exchange between the involved businesses to facilitate an in-depth understanding of
requirements and capabilities. However, one important way that many firms have responded
to the challenges of customer success is through the development of value-added services.

3.4.2 Value-Added Services

The notion of value-added service is a significant development in the evolution to customer
success. By definition, value-added services refer to unique or specific activities that firms can
jointly develop to enhance their efficiency and/or effectiveness. Value-added services help
foster customer success. Because they tend to be customer specific, it is difficult to generalize all
possible value-added services. When a firm becomes committed to value-added solutions for
major customers, it rapidly becomes involved in customized or tailored logistics. It is doing
unique things to enable specific customers to achieve their objectives.
IBM’s ability to produce and deliver customized personal computers and networks to individual
customers is one example of adding value to a rather standard product. In a logistical context,
firms can provide unique product packages, create customized unit loads, place prices on products,
offer unique information services provide vendor-managed inventory service, make special
shipping arrangements, and so forth, to enhance customer success. In reality, some of the value-
added services that buyers and sellers agree to involve integrated service providers who are
positioned to provide such services. Transportation carriers, warehouse firms, and other
specialists may become intimately involved in the supply chain to make such value-adding
activities a reality. At this point, a few specific examples of how they may work within a specific
supply chain to provide value-added services are sufficient.
Warehouses, whether private or third-party, can be utilized to perform a number of customization
activities.

Example: A retail customer may desire a unique palletization alternative to support its
cross-dock activities and meet the unique product requirements of its individual store units.
Each store requires different quantities of specific product to maintain in-stock performance
with minimum inventory commitment. In another situation, first-aid kits consisting of many
different items are actually assembled in the warehouse as orders are received to meet the
unique configuration of kit desired by specific customers. It is also common for warehouses to

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