Customer service attributes (Distribution aspects)

The most important and critical aspect of customer service in supply chain management is physical distribution of the product, that is, making the right product available at the right place and the right time, followed by the motivation of service success facilitators such as channel members to complete the physical distribution. This is a vital point for supply chain management.

For FMCG or mass-consumed products wherein product distribution is dependent on the length and breadth of the channel needs the logistics programs customized to the requirements of the channel partners. For these programs to be successful, the channel members like supply chain personnel need to be serviced and motivated by the manufacturers. The services extended to this trading community require different attributes in supply chain management from those for satisfying the end customers.

Read also: Physical distribution system

Order processing time

Order process time is the most important measure of customer service in physical distribution. It is the time between the placement of an order by the buyer and the supply of the material by the seller against and order. This involves the supply of all the material against the order placed within the agreed time frame, without any error either in documentation or physical supply. This customer service attributes helps in building a long term buyer-seller relationship.

The order processing time consists of the time required for registration of the order in the supplier’s system after through technical and commercial scrutiny, material allocation and pickup from the work in progress inventory, warehouse or distribution centers; packing of material; documentation; and dispatch of material. The time consumed in each of these activities will depend on how well coordinated the various departments are and the speed of the information flow across the logistics supply chain.

Read also: Global Distribution

Delivery consistency

This refers to the consistency in maintaining the same delivery period for delivering the material to the buyer over a period of time. For example, if the supplier dispatches the material per the agree delivery time for 97 orders against 100 repeat orders received during the year t may be said that the supplier’s delivery consistency is 97 percent, and per the present industry norms it is an excellent delivery performance.

Delivery consistency speaks of the degree of coordination in the various logistics arms of the seller’s firm and the efficiency and effectiveness of the logistical supply chain.The delivery consistency of suppliers has a direct effect on the inventory level at the buyer’s end. Inconsistency in deliveries may force the buyer to carry an excess inventory of raw materials and components as a precautionary measure and thereby block more funds. Subsequently, the buyer may look for an efficient source of supply to get rid of the inventory problem.

The delivery consistency of suppliers has a direct effect on the inventory level at the buyer’s end. Inconsistency in deliveries may force the buyer to carry an excess inventory of raw materials and components as a precautionary measure and thereby block more funds. Subsequently, the buyer may look for an efficient source of supply to get rid of the inventory problem.

Read also: Distribution Channel

Delivery frequency

The frequency of delivery is the key element in customer service. The customer does not want to carry an excess inventory but wants his operations to run without interruptions. As a result, the customer prefers frequent deliveries in small lots. This may increase transportation cost, but it reduces the inventory related cost drastically with the net result being a reduction in the overall supply chain cost.

Another case is of the firm that may not have all the ordered items available in its stocks. In such a situation the supplier, with the consent of buyer, may supply the critical items first, followed by a consignment of the remaining items after they are made and are available for dispatch. The additional transportation cost may be borne by the supplier to compensate for the buyer’s inconvenience. The practice of frequent deliveries in small lots is quite common in retail chains.

Another case is of the firm that may not have all the ordered items available in its stocks. In such a situation the supplier, with the consent of buyer, may supply the critical items first, followed by a consignment of the remaining items after they are made and are available for dispatch. The additional transportation cost may be borne by the supplier to compensate for the buyer’s inconvenience. The practice of frequent deliveries in small lots is quite common in retail chains.

Read also: Basic cost elements in Transportation

Stock availability

Stock availability is an important measure of customer service. With excess stocks, the supplier may extend an excellent service to the customer, but inventory related cost reduces the profit margin of business operations. Hence the firm needs to strike a balance between the inventory level and the desired customer service level through integrated logistics operations.

The reduction in stock holdings may be exercised through centralized inventory control from a single mother warehouse by reducing field distribution warehouses at multiple locations. Centralization may help reduce administrative cost, operating cost and manpower cost whole simultaneously reducing inventory carrying costs at various locations. Although transportation cost may go up, the net saving would be more than  such an increase in costs.

Read also: Concept of Logistics