Logistics and customer value

The objective should be to establish a chain of customers that links people at all levels in the organisation directly or indirectly to the marketplace. Xerox is a company that has worked hard to implement the idea of the internal customer. They have even extended the idea to the point of linking bonuses to an index of customer satisfaction. In organisations like Xerox, managing the customer service chain through the business and onwards is the central concern of logistics management. 

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The four elements of logistics-derived customer value highlighted later in this chapter are Better, Faster, Cheaper, Closer and the criterion for a good logistics vision statement is that it should provide the roadmap for how these four goals are to be achieved. 

The outsourcing of C and D customers, for example, allows producers to save sales, logistics, and administration costs. Furthermore, a focus on their core customers allows them to reduce their cost of complexity significantly and at the same time enhance the profitability of their overall customer portfolio. Further important added value arises from the distributor s in-depth knowledge of regional markets and ability to design tailor-made packages. As a result of their broader market access, distributors are often able to increase the sales of dedicated product lines outsourced by suppliers. New customers may be attracted and switch to products... 

If the distributor does not play an important role in terms of value-added and customer access, a direct disintermediation approach may be advisable. Such a strategy is unlikely to lead to complete elimination of the distributor, since chemical producers will not want to build capabilities speciBcaUy for the complex supply chain management of small customers. However, the distributor s role will change more to that of a logistics service provider. The approach of some of the consortia remains to be seen here. 

The third phase of the procedure model regards the derivation and definition of concrete ICT-based measures to implement the logistic levers and support potentials identified before. For the development of the to-be concept for the tailored improvement of the supply and production network, the procedure model provides a comprehensive and well-tested guideline to define shape, functions and services of the electronic process support according to the demands emanating from the process environment (see Hausen, 2005). As a consequence, tailored and customized improvement in line with demands emanating from the value network, product and processes characteristics through functionalities of electronic support and automation such as transaction facilities can be realized. 

Demand and supply planning capabilities enable companies to balance inbound and outbound logistics and thus to maximize return on assets, and to ensure a profitable match of supply and demand. Inbound and outbound logistics are also described, as upstream and downstream processes. For example, Christopher (1992) defines supply chain management as the management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole. 

Logistics management Is almost unique In Its ability to Impact both the numerator and the denominator of the customer value ratio. This point becomes clearer If we expand the ratio as follows ... 

Customer value is the customer-perceived benefit gained from a product/service compared with the cost of purchase. In order to measure customer value, we need to understand what aspects of a product or service it is that a customer values Qohnson and Scholes, 2002). Here, we are primarily interested in aspects of customer value which impact on logistics strategy. Two aspects in particular relate to buying behaviours ... 

Ellram Liu (2002), Hofinann Locker (2009) and Pohlen Coleman (2005) discuss this link in the context of supply chain performance management on a conc tual basis. They distinguish between direct and indirect value drivers, where their central value driver for revenues is logistics customer service. This is additionally confirmed by enqpirical quantitative studies, for instance, those of Ozmcnt Chard (1986), Tracey (1998) and Yeung (2008). 

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