Supply_Chain_3.ppt

Business Logistics and supply chain management--Suqian Zha Customer service goalsThe logistics/ supply chain products Substitutability When there is little or no difference between a firm’s product and those of competing suppliers, the products are said to be highly substitutable(food, drug) Distribution managers try to provide product availability at a level so that customers will not have to consider a subsitute product Subsititutability can be viewed in terms of lost sales to the supplier., Higher Subsititutability Greater chance for a customer to select a competing product Higher lost sale for supplier Improved transportation service Logistic cost as a percentage of sales value Transport cost Total cost Lost sales Storage costs For a given average inventory level, improved transportation can be used to reduce lost sales When product becomes more readily available to the customer, fewer product substitutions by the customer are likely to occur Do not forget trade off Average inventory level Transport cost Total cost Lost sales Storage costs Logistic cost as a percentage of sales value In either case, logisticians should control the impact of product substitutability on the firm’s profits Risk Characteristics Product risk characteristics refer to features such as perishability, flammability, value, tendency to explode, and ease of being stolen Lead to High transport and storage costs Increasing degree of risk in the product cost 0 Storage cost Total cost Transport cost Packaging selection Packaging selection Packaging material Packaging design Factors influence package . The packaging material Use new materials which are cheap ,protective and of light weight Should be environmental friendly Foam sheets Soft foam Cohesive foam Bubble bags * Customer Service Goals—The supply chain product * Elements of customer service Who are the customer? General definition: People who want and can afford to buy goods or service