Supply Chain is really ALL about customer service.
Hi, this is Rob O’Byrne from Logistics Bureau. And if you’re wondering where I am this time, I’m actually in Cairns, Queensland, Australia.
I’ve actually been at the Next Generation Supply Chain, otherwise known as the NG Supply Chain, a great event! If you’ve never been to it, look at the link below and check it out. It’s probably one of the best Supply Chain events around.
I just ran a really interesting session this morning about Customer Service, and I thought I’d share that with you because it seems to generate a lot of interest.
Ans what I talking about was what I called the 8 Noble Truths of Customer Service.
Let me just run through those briefly and I’ll mention a couple of key points and then what I’ll do is when I get time is to add a link down below to an article about the topic with a lot more detail. But just check these out for the 8 Noble Truths, what I was telling people was that:
- Most companies don’t actually know the service needs of most of their customers but they assume they do. Does that ring true for you maybe?
- Most companies don’t segment their customer base by that need. Very often companies have historical ways of segmenting their customers either by industry or product group, but very rarely actually by the customer service need.
- Not all customers want the same service, that’s an issue I see time and time again with businesses. Either over servicing or under servicing, you really need to get inside the heads of your customers and understand what they value and very often it’s not very high service levels. Sometimes it can be a bit lower.
- Some customers are happy with what you might perceive as “poor service”, the example I used was actually Amazon. When I buy books online, I don’t actually need the books straight away. Maybe some people do, they go to a book shop but I buy books online in sort of dozens or so — 10 or 12 at a time and I don’t really mind if they take 2-3 or 4 weeks to get there. So I think it’s a good example of a consistent service or high quality service but not necessarily a long service is okay.
- Then we talked about the fact that most companies don’t have sufficient Supply Chain Cost and Performance visibility and hence, they under perform. I talked about the perfect order. How to manage your business so that you can actually measure the probability of a perfect order and I’ll put a link to that below. Because most companies actually just measure DIFOT — Deliver In Full On Time and that doesn’t really give you the full picture.
- Then we talked about the fact that not all your customers are happy. You know that old adage? If you have a really happy customer they might tell someone, if you’ve got a very unhappy customer they’ll tell EVERYONE. And where are your customers gathering to talk about your products and services? Very often now, it’s online, so you actually need to tap in and be part of that conversation and know what’s going on.
- All companies have non-profitable customers and orders. Do you know which ones they are?
- All companies have non-profitable products and services. Again, do you know which ones they are?
And this where I talked a bit about Cost to Serve. Looking at the processes and functions within your business and really trying to establish the cost of not only servicing individual customers but with different types of products.
And what you find, I found time in time again with hundreds of companies is that about 15% of their orders going out to distribution — out to your customers are probably not making any profit, so you need to understand some of the cost drivers in there, which maybe revolving around particular service issues.
Either customers have a very demanding service requirement or products actually have a very demanding handling requirement, all of which can drive additional cost in to your business.
So those were the 8 Noble Truths of Customer Service. Here are some handy links for more information:
The Perfect Order Metric
What makes a perfect order