Customer focus and demand

This chapter considers how to get closer to the customer to determine what they really want and how to keep customers. In particular, the concept of customer relationship management (CRM) is explained. We begin with short section on the need to estimate demand and conclude with a short introduction to techniques for forecasting. As explained in Chapter 3 without some form of forecast of demand, management will have difficulty in establishing what the capacity of the operation is and what it should be. 

Future demand can only truly be known if the customer (and we mean all of the customers) orders in advance and the orders are firm and not speculative. It is difficult to get customers to commit to forward orders beyond the short term and consequently it is highly unlikely that we can know what the demand will be in the mid- to long term and thus a forecast will be necessary if we are going to have sufficient capacity in place to meet demand when it occurs. 

It is obvious that the closer we are to the customer, the easier it will be for us to be in a position to meet their needs and to deliver on time. The effect of fluctuating demand through the supply chain, including the bullwhip phenomenon, and how to overcome and/or smooth demand fluctuations is covered in Chapter 14. 

It should also be noted that at each level of the supply chain there will be additional and different needs. Downstream from the retailer, the end user will not only expect the basics (goods meet specification, available when required), but they will also appreciate after sales service and the opportunity to return goods. At the retail level of the supply chain, retailers will expect the basics 

Determining what the customer wants means more than asking them to fill out satisfaction qnestionnaires, or taking them out for a cup of coffee. 

---

This building block of customer focus and demand including forecasting methods is covered in more detail in Chapter 4. 

Customer focus and demand Resource and capacity management Procurement and supplier focus Inventory management Operations management Distribution management Systems and procedures Sales and operations planning Performance management... 

SfrOP playbooks. Base the S OP plan on the predicted level of variability. Ninety percent of companies with strong S OP processes believe that it improves agility. Focus less on precise numbers and more on understanding how the variability of supply and demand impacts costs, customer service, quality, and inventory. 

As supply chains focus on the design of outside-in processes, and sensing demand and customer sentiment, processes will evolve to listen to the customer holistically and cross-functionally to better serve the channel. Today, this is aspirational but within two years, it will become a reality for early adopters. The fastest adoption will happen in high-tech and electronics, media and entertainment, and consumer durables. 

Management has a clear focus and goal to reduce demand variability due to end of the month loading process, price discount to high volume customers or special consumer promotions (actual performance shows less than 40% variation between high and low peak weeks during the month). 

Two of the key factors to be addressed when introducing the ISO 9000 initiative are developing a customer-focused culture and teamwork. These factors are often not given sufficient attention during the implementation of the ISO 9000 system. This can result in a static management system rather than one which is dynamic and responsive to market demands and competitive pressures. For a very extensive discussion for an effective implementation of the ISO 9000 standards, see Refs. 2 and 3 for a thorough discussion on documentation and its proper implementation, see Ref. 5. 

The modern value chain management model has remained demand chain customer focused. Slywotzky and Morrison (1997) presented the progression of the value chain model from its traditional form into amodern form. Their model is displayed in Figure 8. This model commenced with the customer, and linked the customer back to management core competencies. 

Sphere C is a customer-focused sphere. It is defined as Market l/product l/product 1 manufacturing. This choice would be appropriate if Market 1 made special demands on the company that required responses all the way back to suppliers. These demands might be in the form of new technology, responsiveness, or custom configurations. Fast responses up and down the supply chain are required in this type of environment. The company might form this sphere if they have found that their functional organization cannot respond fast enough. 

This cluster of literature explores the application of toolkits and mass customization to handle demand heterogeneity and offer individualized products to customers. It includes three studies. Franke et al. (2009) show how the ability of customers to make their preferences and need knowledge explicit impacts the perceived value of customized products. They also find product involvement of consumers to be an antecedent to customer satisfaction with customized products. This finding is shared Ity Fuller et al. (2009), who focus on how users perceive the process of co-creation. Lead usemess, creativity, and involvement are influence factors on enjoyment and customer empowerment Priigl and Schreier (2006) extend these findings by showing that lead users customized designs are also attractive to other users. 

Economic factors are basically focused. One is a return product volume. Decision makers should concern about handling uncertainty of return product volume. A product which has regularly high return product volume can be inspected and considered to be reused or remanufactured. A selected recovery option and volume can depend on market demand as well. For example, if market or customers accept and require the remanufactured product, remanufacturing will be added as a recovery option. On the other hand, a decision maker might consider... 

Our study focuses on selecting location of temporary warehouses (local distribution centers) at post-disaster for facilitating an efficient and effective response operation and determining amount of relief supplies that will be delivered through the relief network in order to minimize cost as well as maximize customer satisfaction under uncertainly environment. The proposed relief network encompasses three tiers multi-collection centers, candidates of local distribution centers (LDCs), and demand points. It should be noted that the majority of papers address to historical information to select the distribution center locations. Our model is applied for designing relief plaiming based on the future disaster predicted by scientist and agreed by disaster stockholders. 

---