Relationship between Order Management and Customer Service - Essay Example

Logistics Name Course Name and Code Instructor’s Name Date Executive summary Logistics is the function responsible for overall aspects of the movement and storage of materials on their way from suppliers through to the final consumers. Retailing in general involves selling products to the final consumer. Online retailing is a web enabled interface between the business organization and the target customers for selling products and services; this website has an online payment facility. In-store retailing is selling physical goods from a fixed location to final consumers. Order management and customer service are ensures that a business functions efficiently and consistently thus increasing the company’s profitability and competitiveness. The design of distribution centre should be in a manner that that accommodates the loads of goods and materials to be stored, associated handling equipments, the receiving and shipping operations and associated trucking, and the needs of the operating personnel. Australian physical distribution has significantly changed. For instance, customers can place direct orders that are processed within the shortest time possible and shipped to the target customer on time. Table of Contents Executive summary 2 Table of Contents 3 Introduction 4 Order Management and customer service 5 Order Management 5 Customer Service 6 Relationship between Order management and customer service 6 Elements and measures of customer service 7 Customer Relationship management (CRM) 8 Australian distribution centre design and operations 9 Physical distribution in Australia 12 Conclusion 14 Bibliography 16 Introduction Business organizations are developed by entrepreneurs and business proprietors with a single most objective of making profits. Organizations production department can successfully come up with high quality and enhanced products at right costs and marketing department can sell the product, however if logistics does not deliver it when and where promised, the customer will not be satisfied (Hill & Fredenhall, 2001). Customer service is a vital concept that is essential in linking logistics and marketing within any business rather retailing organization. Online retailing also known as e-commerce is a web enabled interface between the business organization and the target customers for selling products and services; this website has an online payment facility. Online retailing offers retailers vast channels through which they can reach customers and conduct business without the need of a storefront. On the other hand, In-store retailing refers to the sell of physical goods from a fixed location like, supermarket, hypermarket, department stores, warehouse stores, general stores, and convenience stores to final consumers . This report is inclined to discuss the differences between online retailing and in-store retailing in regard to the optimal designs of new company’s Australian logistic activities including order management and customer service; Australian distribution centre designs and operations; and physical distribution within Australia. Order Management and customer service Order Management Order management is a system that represents that principle means by which buyers/consumers and sellers/retailers communicate information regarding orders (Pang, 2008). It is eluded that effective order management is vital to operational efficiency and customer satisfaction. Logistics require up-to-date and timely information in relation to orders hence it is important for business firms to place order management in the logistics department. It is essential to note that order management executes the operating plan basing on the demand forecast. Order management is an interface between buyers and sellers and thus it consists of influencing the order and order execution. Influencing the order entails the organization’s attempts to change the manner by which its customers place orders (Pang, 2008). Order execution refers to how the organization handles the orders received from the customers. Product availability is the ultimate measure of logistics and supply chain performance. Product availability from the customer’s perspective for instance he or she can ask these three questions; did I get what I wanted, when I wanted it, and was it in the quantity, I wanted? Good order management systems help businesses optimize their profitability while enhancing rather developing good customer relationship management (Hill & Fredenhall, 2001). In essence improving customer service through good order management is vital in retaining customers. There are three cycles with regard to order management these includes order to cash cycle; this cycle represents information flow, product flow and cash flow. Consequently, the order to cash cycle is centred on the variability and or consistency of the process. The absolute or total length of order execution is very important and so is the consistency. The main driving for consistent order execution is the safety stock mainly because the absolute length of the order cycle will influence demand inventory (Simchi-Levi, et al., 2007). Order cycle; this entails all activities that are undertaken from the time when the order is received until the product is received. In addition, replenishment cycle this entails to the acquisition of additional inventory. The risks associated with stock-outs for instance when the desired quantities are not available includes the buyer waiting until the product is available, the buyer back-orders the product, the seller loses the current revenue, and consequently the seller loses a buyer and its future revenues. Customer Service This is the interface between logistics and marketing. For instance, it entails all the activities that impact information flow, product flow, and cash flow between the retailing organization and its customers (Watson & Pitt, 2008). Customer service is achieved by a business organization through its philosophy, performance, and activities. Philosophy in this perspective is the organization’s overall commitment to provide customer satisfaction through superior customer service. Performance; this emphasizes customer service as the main performance measure addressing strategic, tactical, and operational aspects of order management (Pang, 2008). Activity on the other hand treats customer service as a specific task that any business organization must undertake to satisfy the customer’s order requirements. Relationship between Order management and customer service Influence the Order Customer Relationship Management Determine performance measure/levels Provide pre-transaction order management information Execute the Order Service Recovery Manage to/Measure Performance levels Order execution As a Philosophy As Performance Measures As an Activity (Pang, 2008) Elements and measures of customer service Product availability: this is the obvious and most common measure of customer service; it defines the available stock. It is measured in percent availability in base units i.e. order, product, or dollars. Order cycle time: this refers to the time taken from order placement to order receipt. Speed and consistence in execution of order is key to the overall performance of the business. Order cycle time is measured in time units and variation from standard or target order cycle (Bowersox, 2007). Distribution cycle flexibility: this the ability of the business firm to respond to special or unexpected customer needs. It includes expedite and substitute capability. The typical measurement units in this case are the response time that firm takes to respond to special requests (Bowersox, 2007). Distribution system information: this is the ability of the business organization’s information system to respond in timely and accurate manner to customers’ request for information. Speed, accuracy, and message detail of response are the typical measurement units (Rushton et al., 2006). Distribution system malfunction: this refers to the efficiency of procedures and time required to recover from distribution system malfunction like errors in billing, shipping, damage, or claims. Response and recovery time requirements are the measurement units in this case. Post-sale product support: this the firm’s efficiency in providing product supports after their delivery; this may include technical information, spare parts, or equipment modification. Response time and quality of the response are the main measurement units (Pang, 2008). Customer Relationship management (CRM) This is the process of strategically positioning customers in order to improve the organization’s profitability while at the same time enhancing its relationships with its customer base (Watson & Pitt, 2008). This concept is new particularly in the service industry, however, it has bee established that it has not been widely used in the business to business environment (Bowersox, 2007). Many marketers have found that customer actions affect the firm’s costs; these actions may be how customers order, how much customers order, what customers order, and when customers order an order. There are four basic steps through which a firm can implement CRM Segment the customer base by profitability Identify the product/service package for each customer segment Develop and execute the best processes, and Measure performance and continuously improve (Pang, 2008) As aforementioned customer, service is the main link between logistics and marketing within an organization and in this regard, it is essential that customer service to be put in the perspective such that it includes all activities that touches on the customer. The four main dimensions of customer service are time; which constitutes cycle times, safe delivery, and correct orders; Dependability; Communication; this entails pre-transaction, transaction, and post-transaction; and Convenience; the service level should and must be flexible (Rushton et al., 2006). Owing to this explanation, customer service performance measure from the buyer’s perspective comprises of orders received on time, orders received complete, orders received damage, orders filled accurately and orders billed accurately With regard to the discussion above it essential to note that In-store retailing is similar to the traditional way of retailing while online retailing is the used of enhanced technologies to sell their products across the globe (Pang, 2008). The in-store order management and customer service systems are very slow; for instance; order placement, order processing, order preparation, and order shipment take longer times. In the advent of online retailing, these processes have been shortened (Simchi-Levi, et al., 2007). The internet based CRM systems have made it possible for online retailers to manage customer orders efficiently as it is easy to capture order information for fulfilment systems for picking, packaging and shipping. Consequently, online retailing allows faster cash collection by retailers as compared to in-store retailing (Rushton et al., 2006). Online retailing also allows retailers to reach many customers across the globe thus increasing their profitability. Australian distribution centre design and operations Business firms across the world are focused on innovative logistics solutions that foster planning business strategies, accelerating order cycle times, improving customer service and tightening control of the supply chain while reducing transportation, inventory and order fulfilment costs. Through leading technologies and logistic services, business firms can manage complex global supply chain issues (Rushton et al., 2006). As identified in the above discussion, improved services, reduced costs, and enhanced performance are essential increasing the profitability of any business organization. Consequently, good warehousing and distribution operations of any firm are tasked with augmenting customer services, reducing costs while integrating performance. Competitive advantage of a company demands for real focus on planning and consistent improvement in warehousing and distribution operations (Pang, 2008). Distribution centre or a warehouse is a facility that provides an environment suitable for storing goods and materials that require protection (Taniguchi et al., 2003). A distribution centre must be designed in a manner that accommodates the loads of goods and materials to be stored, associated handling equipments, the receiving and shipping operations and associated trucking, and the needs of the operating personnel (Pang, 2008). In essence, a warehouse should be designed to best accommodate the business services together with the products to be stored/handled. The current economics of commercial warehousing demand that goods are processed in minimal turnaround time (Rushton et al., 2006). Traditionally, the distribution centre designers geared there designs towards making the latter’s space more functional, and efficiency as well as providing a safe and comfortable environment for the staff to increase their productivity and control, minimize operational costs, and improving customers services. Further, the building image and aesthetics, landscaping, together with worker safety and comfort are some of the most significant issues (Pang, 2008). In Australia, distribution centres are designed to provide the following types of spaces; storage space, office space, loading docks for shipping and receiving, and computer centres. Consequently, these warehouses’ space configuration is such that is based on the current and future needs, for instance it can facilitate changes in business growth. Additionally, the warehouse should be durable and functional; in this case, they are designed to accommodate loads of stored materials as well as associated handling equipment. The distribution centres are designed to be energy efficient (Pang, 2008). The security and safety of the personnel and materials are also fostered in the designs. The warehouses are also designed to uphold health and comfort of the personnel thus factors like proper ventilation, lighting, and health work practices are taken into consideration. Growth across the globe has impacted the business sector as a whole, in distribution centres and operations for instance automated storage and retrieval systems (AS/RS) are continuously shaping the manner in which products are manufactured, stored, and distributed. The AS/RS are now the means of controlling and instant reporting of the movement of goods, providing a critical link in the chain supply of information systems that monitor work-in-process, manufacturing schedules, and distribution. In regard to this, AS/RS distribution centres are now being designed for maximum storage and minimum personnel on site (NRTC, 2001). Online retailing is currently forcing distributors to come up with new means of moving larger quantities of their products faster and more efficiently to customers in order to keep up with the ever increasing competition on the marketplace. In this regard, many online retailers have clustered there distribution centres. Consequently, labour availability and technology have forced firms to consolidate their distribution systems into fewer but larger regional facilities. However, some observations have identified that not all firms consolidate their distribution centres; the consolidation trend has culminated into a new generation of smaller, local distribution centres. Further, it has been established that there new logistic handling and outsourcing; for instance there is increased use of third-part logistics providers (NRTC, 2001). Physical distribution in Australia Physical distribution is a set of activities concerned with the physical flows of materials, components and finished products from the producer to channel intermediaries and consumers (Sahay & Mohan, 2003). It is basically a general term used to deliver finished goods to customers. In most cases, it is aligned with marketing hence forms a vital link with the downstream activities. Physical distribution system comprises of consumer service, order processing, inventory control, warehousing, transportation, and material handling. Customer service as mentioned earlier is the interface between logistics and marketing. For instance, it entails all the activities that impact information flow, product flow, and cash flow between the retailing organization and its customers. Customer service is achieved by a business organization through its philosophy, performance, and activities (Sahay & Mohan, 2003). Order processing this entails the order entry for instance how customer’s order is entered into the firm’s information system; order handling which involves locating assembling, and moving products into distribution, and the final order delivery to the customer. Warehousing, this is how company’s finished products are stored until they are sold. Distribution centres in this regard are designed to ensure efficiency reception of goods from suppliers and then fill orders for individual stores or customers (Sahay & Mohan, 2003). Additionally, warehousing ensures that stored products are stored under right conditions, treatment and packaging in order to maintain them in good condition. Inventory management; this is the process of ensuring that the firm neither runs out of manufacturing components or finished goods nor incurs the expense and risk of carrying excessive stocks of these items (Sahay & Mohan, 2003). Consequently, it considers the products to be stored, overall investment, customer service, stock levels, order sizes, order timing. Transportation; refers to the method or modes that a company uses when moving products through domestic and international channels; these modes commonly used include, rail, truck, air, and water transport. Further, company transport manager must find the best transport operator, design routes, make sure that all safety and legal issues are adhered to, ensure on time deliveries, while keeping costs as low as possible. E-retailing or e-commerce in regarded as the future trend of business style as it brings various benefits to the company and customers at large. For instance, it expands the market from the regional to global, Increases Company’s efficiency and competitiveness through the use of electronic techniques. The latter also might reduce the number of warehouses and stock costs, which are key in lowering prices. E-commerce also impacts directly on transport due to increased trips. E-commerce or online retailing ensures direct delivery. In Australia Supply Chain, management is receiving vast attention from both practitioners and businessmen. The ever increasing customer sophistication and technological demands has exacerbated the significance of Supply Chain Management (Dapiran, 2005). The heightened intensity of retail competition in the country has ultimately changed the way companies distribute their products to customers. Retailing companies are persistently striving to become more competitive in a very dynamic and challenging business environment. Currently, the main emphasis in the entire supply chain is information management; managing information flow is as vital as managing the flow of products. In Australia, it is no longer sufficient to just deliver tangible products, in essence customers demand for cost effective delivery of the products to, when, where, how and in the quantities desired. In e-commerce, customer expectations in regard to quick and timely delivery have significantly increased (Dapiran, 2005). These customer sophistications have completely complicated the entire supply chain management. The role of the internet in the supply chain is a major driver of change in retailing industry in Australia and the world at large. Due to the discovery of benefits of the internet particularly in the supply chain, the Australian physical distribution has significantly changed. For instance, customers can place direct orders that are processed within the shortest time possible and shipped to the target customer on time. This has helped many Australian retailing firms to increase their productivity while reducing operational costs (Dapiran, 2005). Consequently, there is cycle time improvement rather faster supply chain, inventory management also has been hugely improved. Customer service quality, improved purchasing and procurement, improved supplier relations, improved transport and delivery, increased customer satisfaction, reduced errors, increased competitiveness, and improved information management is as a result of employing online retailing (Dapiran, 2005). Conclusion Logistics is the function responsible for overall aspects of the movement and storage of materials on their way from suppliers through to the final consumers. On the other hand, supply chain consists a series of activities that material move through on their way from the initial suppliers to final customers. Online retailing and in-store retailing are business activities that embrace both supply chain management and logistics. Organizations production department can successfully come up with high quality and enhanced products at right costs and marketing department can sell the product, however if logistics does not deliver it when and where promised, the customer will not be satisfied. Order management is a system that represents that principle means by which buyers/consumers and sellers/retailers communicate information regarding orders. Order management executes the operating plan basing on the demand forecast it is basically an interface between buyers and sellers and thus it consists of influencing the order and order execution. Customer service is the interface between logistics and marketing. For instance, it entails all the activities that impact information flow, product flow, and cash flow between the retailing organization and its customers. Distribution centres are designed in a manner that that accommodates the loads of goods and materials to be stored, associated handling equipments, the receiving and shipping operations and associated trucking, and the needs of the operating personnel. In essence, a warehouse should be designed to best accommodate the business services together with the products to be stored/handled. Technological growth across the globe has impacted the business sector as a whole, in distribution centres and operations for instance automated storage and retrieval systems (AS/RS) are continuously shaping the manner in which products are manufactured, stored, and distributed. Physical distribution is a set of activities concerned with the physical flows of materials, components and finished products from the producer to channel intermediaries and consumers. It is a general term used to deliver finished goods to customers. Bibliography Bowersox D.J., Closs D.J. and Cooper M.B. 2007. Supply chain logistics management, 2nd Ed. New York, NY. : McGraw-Hill. Dapiran P. 2005. International Journal of Physical Distribution & Logistics Management. New York: MCB UP Ltd Drucker, P.F. 2001. Management Challenges for the 21st Century. New York: Harper Business. Hill J.E. and Fredenhall L.D. 2001. Basics of supply chain management. Philadelphia, PA: St Lucie Press. NRTC. 2001. Chain of Responsibility. Information Bulletin. Melbourne. Pang S. 2008. Successful Service Design for Telecommunications: A Comprehensive Guide to design and implementation. London: John Wiley and Sons Proceedings 3rd International Conference on City Logistics. 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