Archive for June, 2017

Blue Tick Shows Quality And Excellence

Qualitative Supply Chains


“Quality is never by accident; it is always the result of intelligent effort. There must be a will to produce superior things”
John Ruskin

Before we discuss the process of implementing quality, it is necessary to understand what lies for us in Future as far as Quality Management is concerned.  It would help us in fine tuning our process of implementation.

Seven key forces have been identified that are most likely to shape the foreseeable future:

  1. Quality must deliver bottom-line results;
  2. Management systems increasingly will absorb the quality function;
  3. Quality will be everyone’s job;
  4. The economic case for broader application of quality will needed to be proven;
  5. Global demand for products and services will create a global work-force environment;
  6. Declining trust and confidence in business leaders and organizations;
  7. Rising customer expectations.

These are the areas identified as things in store come our way when we progress into future as far as quality management is concerned.  Having understood the future requirements, we may have to carefully plan a process for implementing quality management.

Quality Management Principles:

International Organization for Standardization has identified eight quality management principles and they are:

  1. Principle 1 Customer focus
  2. Principle 2 Leadership
  3. Principle 3 Involvement of people
  4. Principle 4 Process approach
  5. Principle 5 System approach to management
  6. Principle 6 Continual improvement
  7. Principle 7 Factual approach to decision making
  8. Principle 8 Mutually beneficial supplier relationships

I would highly recommend that the Quality Management can be introduced using the above 8 principles.  The detailed process is discussed hereunder:

  1. Customer Focus:

 “Don’t try to tell the customer what he wants. If you want to be smart, be smart in the shower. Then get out, go to work and serve the customer!”  Gene Buckley, President, Sikorsky Aircraft

Customer is the objective and meaning of the business.  Every organization depends on their customers and therefore should understand current and future customer needs, should meet customer requirements and strive to exceed customer expectations.  Any business will be successful, if they are able to think one step ahead of their customers.  I would call it as proactive approach towards customer.  Most of the businesses fail because of the reactive approach. As the competition is introducing e-commerce offerings, the management is taking a critical look at their operations.  This should change and the change would bring the following benefits:

  • Increased Revenue and growth in market share;
  • Increased customer satisfaction which results in repeat sales;
  • Increased customer loyalty which will ensure market leader status.

This means one has to do his homework well.  Applying the principle of customer focus typically leads to:

  • Understanding of Customer’s expectations.
  • Aligning Organizational goals with customer needs.
  • Making the organization aware about the customer needs well.
  • Measuring customer satisfaction and acting on the results.
  • Systematically managing customer relationships.
  • Ensuring a balanced approach between satisfying customers and other interested parties (such as owners, employees, suppliers, financiers, local communities and society as a whole).
  1. Leadership:

 The best way to gain and hold the loyalty of your personnel is to show interest in them and care for them, by your words and actions, in everything you do.

Secrets of Effective Leadership

Ordinary people believe only in the possible. Extraordinary people visualize not what is possible or probable, but rather what is impossible. And by visualizing the impossible, they begin to see it as possible. The leaders have to be extraordinary.

Leaders establish unity of purpose and direction of the organization. They should create and maintain the internal environment in which people can become fully involved in achieving the organization’s objectives.

Key benefits:

  • Employees will understand the goal and be motivated;
  • Activities are evaluated, aligned and implemented in a unified way.
  • Miscommunication between levels of an organization will be minimized.

Applying the principle of leadership typically leads to:

  • Considering the needs of all interested parties including customers, owners, employees, suppliers, financiers, local communities and society as a whole.
  • Establishing a clear vision of the organization’s future.
  • Setting challenging goals and targets.
  • Creating and sustaining shared values, fairness and ethical role models at all levels of the organization.
  • Establishing trust and eliminating fear.
  • Providing people with the required resources, training and freedom to act with responsibility and accountability.
  • Inspiring, encouraging and recognizing people’s contributions.


  1. Involvement of People:

“Managing at any time, but more than ever today is a symbolic activity. It involves energizing people, often large numbers of people, to do new things they previously had not thought important. Building a compelling case -to really deliver a quality product, to double investment in research and development, to step out and take risks each day (e.g. make suggestions about cost-cutting when you are already afraid of losing your job) -is an emotional process at least as much as it is rational one”. – Tom Peters.

The three tools (Human Resources, Processes and Technology) that make things happen include human beings.  A good system may bring some discipline in work place and a technology may make things easier to execute.  However, we ultimately need people to translate objectives into results. “Artificial intelligence is no match for natural stupidity.”

People at all levels are the essence of an organization and their involvement enables their abilities to be used for the organization’s benefits.  Human resources are identified as one of the Supply Chain enabler.  Any organization which fails to involve all levels of their employees may progress towards their objective due to indifferent thinking process in the organization.

Key benefits:

  • Motivated, committed and involved people within the organization.
  • Innovation and creativity in furthering the organization’s objectives.
  • People being accountable for their own performance.
  • People eager to participate in and contribute to continual improvement.

This would ultimately lead to people understanding the importance of their coordinated contributions to the organization.  People get to know their constraints in their performance and they will try to improvise their performance which leads to quality product development and delivery.  Information sharing will help the employees to extend their knowledge base and leads to innovative thinking.

  1. Process Approach:

ISO 9001:2015 definition of a process approach is working the following way:
A process is using resources to transform inputs into outputs. An organization can function more effectively if it identifies its processes and manages them accordingly.  One can achieve desired results if one manages the activities and related resources as a process.

Key benefits:

  • Lower costs and shorter cycle times through effective use of resources.
  • Improved, consistent and predictable results.
  • Focused and prioritized improvement opportunities.
  • Progress monitoring against the bench mark.

When we put processes in place we have defined the key responsibilities and key persons responsible for achieving the same.  The process will enable identification of interfaces of key activities within and between the functions of the organization.   And also will help the organization in evaluating risks, consequences and impacts of activities on customers, suppliers and other interested parties.

  1. System Approach to Management:

Identifying, understanding and managing interrelated processes as a system contributes to the organization’s effectiveness and efficiency in achieving its objectives.

Key benefits:

  • Integration and alignment of the processes that will best achieve the desired results.
  • Ability to focus effort on the key processes.
  • Providing confidence to interested parties as to the consistency, effectiveness and efficiency of the organization.
  • Structuring a system to achieve the organization’s objectives in the most effective and efficient way.
  • Understanding the interdependencies between the processes of the system.
  • Structured approaches that harmonize and integrate processes.
  • Providing a better understanding of the roles and responsibilities necessary for achieving common objectives and thereby reducing cross-functional barriers.
  • Understanding organizational capabilities and establishing resource constraints prior to action.
  • Targeting and defining how specific activities within a system should operate.
  • Continually improving the system through measurement and evaluation.

The objective of this approach is to structure the management system to achieve the corporate goals in the process defined and accepted by the management.

  1. Continual Improvement:

NASA has defined continual improvement as: Continual Improvement is a recurring activity to increase the ability to fulfil requirements or to increase the effectiveness of the management system and its processes.

One can never rest thinking that everything is in place and all is well.  One should not forget what Thomas Edison has commented about finding new things:

“There is a better way. Find it”
Thomas Edison

The re-engineering process or continual improvement methodology will enable the organization to take a re-look into their systems and processes to check whether there is any better way doing things which would lead to cost reduction, quality improvement and increase in customer satisfaction.

Key benefits:

  • Performance improvements;
  • Flexibility to react to a situation;
  • Increased customer satisfaction;
  • New opportunities.
  1. Factual approach to decision making:

Effective and efficient decisions are always made based on conclusions supported by logical data analysis and interpretations.

Key benefits:

  • Informed decisions.
  • An increased ability to demonstrate the effectiveness of past decisions through reference to factual records.
  • Increased ability to review, challenge and change opinions and decisions.
  • Making the data to those who need to take decisions;
  • Making decisions and taking actions based on factual analysis balanced with Business knowledge and experience.
  1. Mutually beneficial supplier relationships:

The author has suggested in earlier assignments that the relationship between the supplier and buyer should be as that of strategic partners and not vendor and the buyer.  An organisation and its suppliers interdependent and a mutually beneficial relationship will enhance both parties chances in improving their business opportunities and growing and healthy bottom-line.

Key benefits:

  • Increased ability to create value for both parties;
  • Flexibility and speed of joint responses to changing market or customer needs and expectations;
  • Optimization of costs and resources;
  • Sharing information resulting in better business processes;
  • Pooling expertise and resources with partners;

Think Zero Defects

Cartoon Source: Cartoonstock.com
















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The objective of performance drivers is to create an environment within which companies can plan, communicate and measure strategies and tactics in their unique business environment.

Before we get into the discussion of performance drivers, we should be clear in thoughts whether we are looking at short-term business performance drivers or long-term strategic performance drivers.  I feel for both of them the process is the same.  We should know where we are and also know where we are heading to.  I would explain the process first before we discuss the performance drivers.


The inspiration for the above process mapping is the story from famous Alice’s Adventure in Wonderland, which goes like this:

“Would you tell me please, which way I ought to go from here?”

“That depends a good deal on where you want to get to,” said the Cat.

“I don’t much care where –” said Alice.

“Then it doesn’t matter which way you go,” said the Cat.

 In my opinion, the following Business Drivers are appropriate for any predictive supply chain operations if we follow the above-mentioned process.

Strategic Instruction:

To be the Market Leader and retain the leadership with better product offering and service support to the customer.

 From scenario to strategy

 In our earlier assignments, we have identified qualitative critical variables which are strategic in nature.  We have recommended internal analysis in the Logistics Audit assignment; we have the Market Analysis about the present status Vs. Competition position in some of the measures. We also know where we are strong and where we have to improve.

From Strategy to Action

 It is time now to set the Business performance drives or objectives or strategic guidelines or any name that me suitable for the action of guiding the company to achieve the corporate goal of maintaining the Market Leader position and continue to enjoy the customer’s support.

The best Business performance drivers in my opinion:


If anyone looks at the above-given business performance drivers will recognise that these performance drivers are aimed at reducing the lead time, reducing the cost and improving the product offerings to the customers.  As and when one achieves these objectives will become the market leader.

However, one should not forget to develop Industry foresight.  With the advanced technology and availability of the same to everyone, the network expansion and the reach has put everyone on the same platform.  In order to win the customer’s support and business, one has to integrate three basic resources (i.e. Process, People and Technology) and try to add value to the system through innovation and re-engineering.  Any company which will not have this as the primary business performance objective will fail in the long run.  Organisations who keep their eyes and ears open and keep a close watch on the customers and the competitors will be the winners.


Cartoon source: http://www.torbenrick.eu/blog/









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The Logistics Audit

Audit Puzzle Shows Auditing And Reports


The primary objective of Logistics Audit is to match the logistic requirements and customer service expectations, taking the market dynamics into consideration, and to identify  areas for improvement to achieve customer service excellence.

Key Steps in conducting Logistics Audit:

Logistics Audit

An effective logistics control system requires accurate, relevant, and timely information about activities and performance. A major source of this information is a logistics assessment, otherwise known as a logistics audit. The periodic assessment of logistics should be an integral part of the process of logistics strategy development. The logistics audit serves three main functions for any organization:

  • Identification of key data required to manage costs, service, cycle times, response and quality.
  • It allows for a better understanding of the current environment.
  • It determines how well the system is meeting current business needs in a cost-effective, flexible and responsive manner, and how it is adapting to the changing marketplace.

The logistics audit can be framed by asking below given basic questions to any organization.

  1. Are current logistics objectives consistent with current corporate, marketing and production strategies?
  2. How is the company performing with respect to customer requirements and preferences?
  3. What is the true total cost of the Logistics function? And how do those costs compare with others in the same industry or market segments?
  4. Is the company using its Logistics resources and capacity effectively?
  5. Is the company managing its material flow effectively through the supply chain?
  6. Are the information systems and technologies meeting the needs of the users, the business, and the consumers?
  7. How should the company plan proactive measures in reducing the cost by optimizing the supply chains and by reducing the inventories?
  8. How the present order cycle time is addressing the customer satisfaction as far as lead time is concerned?
  9. How to optimize the manufacturing operations?
  10. How can we switch over to pull process from the present push process?
  11. How to develop component vendors to avoid long distance buying?
  12. How to react to the competition as far as innovative distribution strategies?
  13. How can one optimize the resources and reduce the administrative costs?
  14. What are the areas one can look into outsourcing to reduce the cost and increase the efficiency levels?

Data is power in an organization, and a lack of relevant data is a key impediment to the achievement of an information-integrated company. Often companies collect the data but store it in a diverse range of locations from mainframe to notebook computers. Accessibility of data is essential throughout the firm in order to leverage its usefulness effectively. The first thing a logistics audit will discover is how accessible data is, for without data, the audit process will be significantly handicapped.

The process itself comprises eight major steps:

  1. Determine consistency of strategic objectives
  2. Determine customer requirements and preferences and obtain performance targets
  3. Detail current logistics operations and practices
  4. Analyze logistics data
  5. Identify programs and initiatives
  6. Prioritize projects
  7. Develop and implementation plan
  8. Implement and measure performance and improvement

Once we have identified key questions for the Logistics Audit, it is time now to establish Critical variables.  We can classify the variables into two categories and they are:

  1. Quantitative Variables
  2. Qualitative Variables 
  1. Quantitative Variables:

The objective of quantitative variables is to establish bench marks or norms to conduct the audit for the existing operations and also simulate situations to understand the capabilities to meet the future demands of the market place.  As the name suggests, these variables can be measured in terms of numbers and compared with the present or future operations to understand the progress.  Further, these quantitative variables can be classified into four broad categories and they are:

  1. Demand Throughput
  2. Service
  3. Cost
  4. Utilization.
  • Demand Throughput:

This analysis is conducted to analyze the capability of the system (i.e. Production plants and Distribution centers) keeping in view of the strategic objectives of the business.  To conduct this analysis, we need the future forecasts and data related to customer geographic locations of the future periods.

  • Service:

The primary value of logistics is to accommodate customer requirements in a cost effective manner.  Philosophically, customer service presents logistics’ role in fulfilling the marketing concept.  A Customer service program must identify and prioritize all activities required to accommodate customers’ logistical requirements as well as, or better than, competitors.  In establishing a customer service program, it is imperative to identify clear standards of performance for each of the activities and measurements relative to those standards.  In basic customer service programs, the focus is typically on the operational aspects of logistics and ensuring that the organization is capable of providing the seven rights to its customer: the right amount of the right product at the right time at the right place in the right condition at the right price with the right information.

As discussed earlier the customer satisfaction is measurable through the below given measures:

  1. Order Fill Rate;
  2. Line Item Fill Rate;
  3. Quality Fill Rate;
  4. Back orders / Stock-outs;
  5. Customer satisfaction;
  6. % of Resolution on first Customer Call;
  7. Customer returns;
  8. Order track and trace performance;
  9. Customer Disputes;
  10. Order entry accuracy;
  11. Order entry times.


  • Cost Analysis:

In order to establish or identify costs involved in servicing the customer. By Analysing the foremost challenge is to interpret and understand the variation in the margins.  The gap between the lowest and the highest cost analysis is very critical and it is necessary to understand elements of cost escalation and low cost elements.

  • Utilization Analysis:

This analysis would give us the Resources utilization indication.  However, to work out the utilization %, we need Installed capacity of the production plants, Human resources employed; Equipment employed details; Product stacking norms etc.  The basic principle to arrive the Utilization rate is:

Capacity Utilisation/Installed Capacity

  1. Qualitative Variables:

Qualitative variables are undertaken to give a shape to the strategic thinking of the organization.  These interviews basically should be done with the heads of the departments and also few strategic personnel in the department to understand the scope for improvement of productivity and reduction of costs.  The following Qualitative Variables should be subjected to the Logistics Audit.

    1. Distribution Strategy;
    2. Warehousing Strategy;
    3. Outsourcing Strategy;
    4. Vendor Development from local areas;
    5. Marketing Strategy;
    6. Production Strategy;
    7. Product mix strategy.


Cartoon Source: http://independentaudit.com

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There is a common belief that Supply Chain professionals need not have costing knowledge.  That is a misleading thought process.  Cost savings takes lion share of Supply Chain optimisation.  Ideally supply chain professionals should have intermediate knowledge of cost behaviour analysis and interpretation capabilities.

The most often reported reason for Business Failures amongst small to medium sized companies is a lack of financial management. Budgets, Financial Planning and proper FINANCIAL CONTROL MECHANISMS are often seen as an unnecessary non revenue earning administrative burden. As long as times are good, businesses tend to survive quite easily. But when business conditions change, a lack of financial planning and control makes it difficult to assess the potential damage or exposure the business is subject to.

Thus, BUDGETS, FINANCIAL PLANNING AND CONTROL are issues which have to be solved when Business is good, in order to survive the lean times.  Having created the budgets for the Warehouse operations and with an assumption that the Volume budget will be same as last year’s actual, we get on with the job of creating Financial Control Mechanisms.

Comparing actual performance with budget is the traditional device used by senior management to measure managerial and business performance.  A good business management system asks questions such as, “Do I have the correct plans in place?” and “How is each part of the business contributing?”  A budget management properly and taken seriously becomes a more forward-looking document that can assist senior management to identify trends, predict year-end results, and avoid any unpleasant financial surprises.

To operate effectively management must keep a balance between two extremes; too much control and not enough control.  Too much control will affect the co-operative spirit and the efficiency of the individual involved and not enough control will prevent management from detecting the need for action before a chaotic situation has been created.  Effective control should be based on adequate frequency and acceptance of variance.

One hundred percent accuracy in budgeting should not be expected.  Otherwise the people involved will provide for a cushion in preparing their budget and spend more money than needed at the end of the period in order to conceal the fact that they provided for the cushion.  The best approach is to indicate which variance is considered as acceptable.

In order to properly monitor the budget, one has to work through the four actions of this feedback loop.  This will ensure you have reliable control activity built into your budgeting process.

Cost Control Process:

Const Control

As suggested above the best method to understand the progress is by comparing the actual performance with that of budgeted performance.  It is also suggested that the Budget may be prepared on monthly basis to generate this variance analysis periodically. The financial accounting will provide the actual amount spent on each head of account and through the Variance analysis, one has to work on the number and understand the reason for any variance.  Mostly, the variance will occur due to three reasons and they are:

  1.  Volume,
  2. Norm,
  3. Mix.

Volume Variance:

 The variance is due to Volume change is always well defended.  If the demand volume and resources are properly matched at the time of budget preparation, a change of volume will result in two ways:

  1.  Increased costs due to increased volume,
  2. Increased unit input cost due to decreased volume.

Norm Variance:

While creating the budget, we created norm for every variable activity.  This would be the bench mark to monitor the actual performance of the Variable cost.   Any variance in the norms will once again be highlighted in either the actual cost incurred or the level of the unit cost.

Mix Variance:

Changes in the product/customer mix will also have an impact on the cost.  For instance, in case of MR Ltd. if the New Castle customer buying power goes up to 40% and Cardiff customer reduces his purchases to 60%, this would result in reduced transportation costs.

Inputs for Variance Analysis:

  1.  Revenue Budget,
  2. Volume Budget,
  3. Actual expenses,
  4. Norms Budget.

Format of Variance Analysis:


Unexpected Variance:

One of the main problems with variance analysis is that often a scapegoat is sought when results fall short of plans.  A meaningful way of looking at unexpected variances is by considering the variance as planning variance or as an operational one.  A typical budget contains information that was thought to be correct at the time of preparation.  Any changes in the marketplace can result in variance.  Hence, there is a necessity to review the budget at least once in 6 months and come out with the revised budget.  Let us assume that at the end of 6 month period we have noticed that there were changes in prices/volumes/mix, and then it is advisable to change the budget and start comparing actual with the revised budget.

One has to very clearly understand that Variance analysis is a management tool to find out the reason for bad or good performance.  It is not a blame game tool.  Hence, while providing the information or data for analysis, at most care has to be taken to feed the accurate information and data to work out meaningful information for the management.

Supply Chain costs

Cartoon Source: http://www.scdigest.com





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Supply Chain in today’s competitive world has become profitability growth engine.  When I was crossing a border one of the immigration agent asked me what is “Logistician”.  I have mentioned my profession as “Logistician”.  If a common man fails to understand what is logistics, it is hard to understand supply chain.  Even today, people ask me what do you do?  When I answer them that I am a supply chain professional, they ask me what is supply chain?  I am writing this article who are new to supply chain world and would like to understand in simple terms. Any Supply Chain will have the below mentioned process in the three steps (i.e., Source; Make and Deliver) involved in achieving the objective of “Ore to Store”.

Graphic 1.png

Planning Process:

The primary objective of this process is to work on demand planning and material scheduling in the Supply Chain.  As we are aware that there are 14 Suppliers supporting the 2 manufacturing bases for this organization.  The distribution network is supported through 3 distribution centres catering to the needs of 30 customer (distributor) locations.  To add further complexity to the whole process, the distributor places the order on a daily basis.  To manage this kind of a Supply Chain, you need a very tight planning.  The planning becomes all the more important when the components/raw material suppliers are very few.  The planning process is done on a weekly basis.

The below given graphic would explain the planning process involved supply chain operations.  It starts from Macro Level Company’s Supply Chain Planning and gets down to activity wise planning.  The objective of the whole planning is the same i.e. to deliver the product to the ultimate user without any hick-ups in the whole process.  Only right planning can achieve this objective.

Graphic 2

Execution Process:

The next three activities i.e. Source; Order Fulfilment and Delivery can be grouped into one broad process called Execution.  The activities involved in sourcing, Order Fulfilment and delivering the product is nothing but executing the Plan. Hence, let us combine all these activities and call it as Execution process.  All the activities involved in this process are explained in the graphic given below.

graphic 3

Evaluation Process:

Unless and until, we evaluate all activities periodically against the bench mark or budgets or service standards, we will not be in a position to understand where the organization is heading.  Evaluation process plays a vital role to maintain checks and balances to manage supply chain governance effectively.  I have explained in the graphic the ideal and measurable activities.

Graphic 4

Successful supply chain management requires implementing cross-functional processes within the company and integrating them with key stakeholders of the supply chain. The objective of lean and agile supply chain is to avoid wastage. Valuable resources are wasted when supply chains are not integrated, appropriately streamlined, and managed. The supply chain evaluation process plays a key role in avoiding waste and enhancing productivity. The value of having standard business processes in place is that managers from different organizations in the supply chain can use a common language and can link-up their firms’ processes with other members of the supply chain and collaborate, as appropriate.

supply chain joke

Cartoon Source: Supply Chain Digest










































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Graphic Source: http://68.media.tumblr.com

Traditionally, the decoupling point methodology has been associated with the material flow pipeline.  However, to maximize improvement in supply chain dynamics, information flow is equally important.  Many of the problems that may pop-up are the result of the distortion of marketplace sales information as it is transferred upstream through the supply chain.  However, we confine our analysis to material-flow pipeline only.

Before we get down to analyze the decoupling point, let us define it and understand the same in simple words.  The decoupling point is a standard term given to the position in the material pipeline where the product flow changes from “Push” to “Pull”. It should therefore also correspond to the Demand Penetration Point.  Having understood in common man’s language what is decoupling point, let us also understand in formal words.

“The point in the product axis to which the customer’s order penetrates.  It is where order driven and the forecast driven activities meet.  As a rule, the Decoupling point coincides with an important stock point – in control terms a main stock point – from which the customer has to be supplied.”

 The material decoupling point thereby acts as a buffer between upstream and downstream players in the supply chain.  This enables upstream players to be protected from fluctuating consumer buying behavior therefore establishing smoother upstream dynamics while downstream consumer demand is still met via a product pull from the buffer stock.


The above graphic summarizes the two sides of the material flow situation.  The above diagram will also give the explanation to the above mentioned definition.  The strategic position of the material decoupling point depends very much on the product type, consumer demands and supply chain approach adopted.  We have two solutions on hand to minimize the inventory holding.  One is to BTO (Build to Order) and the trade off are, high cost of quick production cycle, delivery lead time, and the quality of the product.  Where as the advantages are, Inventory carrying is eliminated thus resulting in cost savings, aggressive pricing is possible and it is possible to react quickly to market dynamics.  This is a very flexible situation.  The second option is Postponement. The governing principle one should not forget is that the decoupling point should be moved as close as possible to the consumer.  This approach also enables full capitalization of the benefits of divorcing the customer variability from the demands placed on the majority of players in the supply chain.

The difficulties of matching supply and demand due to the inherent dynamics within a supply chain structure are a long standing and widespread problem.  Market sales information notoriously suffers from delay and distortion as it moves upstream through the supply chain.  This result in production profiles at the factory, which bear little resemblance to the end consumer’s buying behavior.  In spite of so many innovations and re-engineering the supply chain, the fact is that today’s supply chains are still suffering the often-painful and some time fatal effects of upstream orders magnification.  To overcome this impact, the concepts of VMI, BTO, Postponement, Cross Docking etc. are being used in the modern Supply Chain.  These concepts are mostly successful in the IT and Electronics Industry.  Automotive industry is inching towards VMI in order to eliminate the Inventory.  Unless a serious attempt is made to take the decoupling point closer to the consumer, we may not be in a position to achieve the objection of lean supply chain.

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Graphic Source: ngdata.com

In today’s seemingly chaotic retail environment, much is being said and written about the importance of good customer service. And there are many suggestions on how to do it.

The Retail Owners Institute asks the question, “Good customer service? Of course. But, for which customer?” 

Consider, for example, how different lifestages can create much different expectations for “good service”.

  • A retired senior citizen might prefer stores with known brands, that offer ample free parking, can be shopped during the weekdays, have friendly, patient staff, and are willing to deal with returns readily and graciously.
  • Those folks who are working and/or have children at home need stores that have extended hours (late evening, early morning, etc), ready access to the items they most need (enough of that milk-and-eggs-in-the-back-of-the-store concept), hassle-free process to pay, sales staff that have answers when asked but otherwise don’t bother them. Wifi access is crucial as well (yes, they will comparison shop…)
  • Younger shoppers – high school and college age – may shop in groups, and expect stores to offer a social experience. They prefer that the sales staff be people who look and act like them. They fully expect to easily use their smart phones.

Now, are these overly-broad generalizations? Of course. But you get the idea. What constitutes “good customer service” is decidedly different for each group. Moreover, think about male shoppers: what do they value the most?

How can one flavor of “good customer service” satisfy all of these customer types? The point is, it can’t!

What’s a savvy retailer to do? It starts by understanding just who your “best customer” is – that is, your Most Profitable Customer. You may find some surprises as you dig into this a bit.

  • For instance, it could be that those senior citizens who come into your stores frequently are also buying from you on many of those visits. Perhaps not big ticket items, but enough smaller (maybe high margin?) items that add up to a meaningful contribution over time.
  • Or, you might find that the working moms with their heavy duty strollers don’t come in very frequently, but when they do, they make it count!

So, study their habits. And follow the money! And use that understanding of your “Most PROFITABLE Customer” to help prioritize your “good customer service” standards.

Source: Co-founder of ROI News.

How great leaders address the issue:

1. Steve Jobs, the late CEO of Apple

Years ago, Aaron Booker writes, he bought a 15-inch MacBook Pro and a 22-inch monitor, and was surprised to realize he wasn’t eligible for a discount on AppleCare that would have applied if he’d bought another, similarly priced computer. So Booker wrote “a very brief email” directly to Steve Jobs (then: sjobs@apple.com) and got a three-word response from the legendary CEO: “We’ll fix this.”

“The next day I got a call from one of Steve’s assistants,” Booker writes. “Problem solved.”

2. Brian Moynihan, CEO of Bank of America

Christian Brown says his credit score dropped 100 points after he forgot to pay his BofA credit card bill two months in a row. (Longer explanation here.) He found the address for CEO Brian Moynihan and wrote a plaintive email.

Two days later, he writes, an assistant to the CEO called; three days after that, his credit score was restored.

3. Akio Toyoda, CEO of Toyota

The warranty on Webin Manzana’s 2008 Toyota Camry had long since lapsed, but he noticed the dashboard had begun melting under the hot Philippine sun, so he faxed a letter directly to the CEO of Toyota, Akio Toyoda.

“The next day,” he writes, “I received a call from Toyota Motors Philippines, and had my Camry picked up, [and] replaced the dashboard.”

4. Mark Fields, CEO of Ford

Nahush Kulkarni said he bought a “lemon” from Ford: a brand-new 2015 Mustang convertible, on which the brakes failed during his very first day. He returned the car to the dealership, and after a month–and lots of replacement parts–he refused to take the car back (even repaired). He emailed Ford’s CEO and president, Mark Fields.

“Soon enough, I got a call from his office,” Kulkarni writes. “The dealership took the car back and I placed an order for a new one.”

5. Jan Koum, CEO of WhatsApp

Nina Michanie wrote one of the funnier direct-to-the-CEO complaints–a heartfelt email asking WhatsApp CEO Jan Koum why the company didn’t have a sheep emoji on its app.

Koum wrote back directly telling her he’d been “shocked to learn we don’t have a sheep” (but also correcting her and showing that the app did in fact have one).

6. Tim Cook, CEO of Apple

Mike Gnitecki, of East Texas Medical Center, told me about what happened when his dad bought a defective Apple laptop computer. After his father couldn’t get a good resolution from customer service, Gnitecki said he decided to email Tim Cook directly at 5:35 p.m.

By 10:56 a.m. the next day, “a very helpful woman from Tim Cook’s office” had called, and his dad got a new computer.

7. CEO of Target (we think)

Or maybe it was Circuit City, Gil Silberman writes–he can’t remember for sure because this was a few years ago. However, someone stole an old checkbook of his on an account that had been closed long before, and used it to make a purchase. This led to the check bouncing, and the retailer reported Silberman (who wasn’t involved, naturally) to collection agencies.

“So I tracked down all of the board members and sent them a certified letter at home,” he writes. “It worked. No more debt collectors.”

8. Michael Dell, CEO and founder of Dell

College student Tami Tritz bought a Dell computer online–but it never arrived, he says. He tried working with Dell’s customer service agents, but ran into issues over and over. Bottom line, he had shelled out money, and had no computer.

“We sent off a relatively curt but not unpleasant email to Michael Dell that evening,” Tritz writes. “Received an immediate response from the executive team, an expedited refund, and $156 to spend on Dell Official Site for our troubles…. I wonder how they settled on giving me $156.”

9. CEO of Travelers

While auditing her monthly expenses, Maureen Almaleki says she realized she’d been paying too much for her homeowners’ insurance for a dozen years, as Travelers was basing her payments on insuring a much larger house. The insurer’s customer service agents dropped her monthly payment–but said they weren’t able to offer any kind of retroactive refund.

“That’s when I did the research, found out who the CEO was, and sent a certified letter,” she told me. “After some conversations at the CEO level, the company agreed to send me $1,600, and I let it go. Granted, had I not gone to the CEO, I would have never received any money!”

(Note: We’re not sure exactly when this happened, so for now at least we can’t say who the CEO was at the time.)

10. Mickey Drexler, CEO of J. Crew

After he got a J. Crew coupon in the mail, Mike Beaulieu went to shop at the retailer, only to find that their employees wouldn’t accept it, and even suggested he’d created a forgery.

Beaulieu went home, looked up the email of the company’s CEO, Mickey Drexler, and fired off an email. He says he got the following response from Drexler within 15 minutes:

Terrible on our part! No excuses. My apologies! We will be in touch.



11. John Thompson, CEO of Symantec

This one might be my favorite, just for its immediacy. A decade ago, Ophir Ben-Yitschak wrote on Quora, he spent an hour on hold waiting for support from customer service at Symantec.

“I decided just for the sake of ‘here goes nothing’ to look up the CEO and his email address, which–amazingly–I found rather easily on Google,” Ben-Yitschak wrote. “I sent John Thompson a one- sentence email, saying I am a customer on hold for a long time and asking for his help.”

Within minutes after he sent the email, Ben-Yitschak seemed to jump to the front of the line. A “customer support manager called me and helped fix the issue.”

Have you tried emailing the CEO of a major company to prompt the equivalent of a Jeff Bezos question-mark email? Let us know how it worked in the comments.

Source: Bill Murphy Jr. Executive editor of operations, Some Spider, and founder

 Cartoon Source: https://c1.staticflickr.com

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