Supply Chain Management ESCM 2724 Unit 2

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Questions and Answers

What does the ABC analysis categorize in relation to profit?

Customers and products based on their profit contribution (correct)

Service priorities and logistic costs

Marketing strategies and delivery methods

Geographic locations and warehouse types

According to the Pareto principle, what percentage of effects typically come from a small number of causes?

90%

50%

70%

80% (correct)

What priority level receives the highest service priority in the customer-product prioritization matrix?

Priority level 4

Priority level 8

Priority level 1 (correct)

Priority level 16

For logistics, what is the distribution strategy for items with priorities 5 to 8?

Intermediate distribution stocked at a few regional warehouses Signup and view all the answers

Which category refers to the most profitable products in the ABC analysis?

Category I Signup and view all the answers

What prioritization level indicates the least profitable customer-product combination?

Level 16 Signup and view all the answers

What is a key role of logistics in relation to marketing’s objectives?

To determine the cost of execution and guide trade-offs Signup and view all the answers

What does the seven Rs rule encompass in supply chain management?

Providing the right product to the right customer at the right cost Signup and view all the answers

What is the distribution method for priorities 1 to 4 in the customer-product prioritization matrix?

Wide geographic distribution through many warehouses Signup and view all the answers

What is included in the 'Place' element of the marketing mix?

The geographical location for product availability Signup and view all the answers

How can incremental increases in customer service impact costs and revenues?

They can potentially enhance perceived value and justify higher prices Signup and view all the answers

In customer management, what does the 'people' aspect primarily refer to?

The employees and processes involved in delivery Signup and view all the answers

Which of the following is NOT a component of customer service in the context of the marketing mix?

Employee salary incentives Signup and view all the answers

What aspect does logistics play in the customer service element of the marketing mix?

It provides timely product availability and enhances communication Signup and view all the answers

What is a key benefit of applying the seven Rs in supply chain management?

It maximizes customer value while reducing total costs Signup and view all the answers

What does customer prioritization through an ABC analysis involve?

Classifying customers based on their revenue impact Signup and view all the answers

What does the process dimension of customer service encompass?

The buying experience and complaint resolution Signup and view all the answers

Which of the following is NOT a pre-transaction element of customer service?

Quality assurance Signup and view all the answers

Which aspect of customer service is primarily under the control of logistics?

Physical environment of facilities Signup and view all the answers

What creates a positive perception with customers in relation to the physical environment?

Ergonomically designed and well-maintained spaces Signup and view all the answers

What is a critical component of developing a customer service strategy?

Balancing the trade-off between customer service, cost, and quality Signup and view all the answers

What enables an organization to gain a competitive advantage in customer service?

Optimizing logistics performance capabilities Signup and view all the answers

Which of the following is considered a post-transaction element?

Complaint resolution strategies Signup and view all the answers

What type of capability can enhance customer success and lead to competitive advantage?

Bulk-handling capability in logistics Signup and view all the answers

Study Notes

Customer Management Overview

Seven Rs Rule: Integrated focus to create customer value involves having the right product, in the right quantity, condition, place, time, and for the right customer, at the right cost.
Customer Value Equation: Relationship between perceived benefits and total costs incurred (including purchase price and life-cycle costs).

Customer Service in Marketing Mix

Elements of Marketing Mix:
- Product: Tangible or intangible offerings that meet customer needs.
- Price: The amount customers pay.
- Promotion: Two-way communication between buyer and seller, with logistics playing a key role.
- Place: Ensuring product availability at the right geographical location and time.
People Aspect: Involves employees (head-office, back-office, logistics) and the delivery process.
Process: Customer buying experience, including documentation and complaint resolution, spanning pre- and post-transaction phases.
Physical Environment: Customer interaction with physical aspects like warehouses and delivery vehicles; clean, efficient spaces enhance customer perception.

Dimensions and Elements of Customer Service

Pre-Transaction Elements: Strategy and policy that guide customer engagement before purchasing.
Transaction Elements:
- Product availability and order convenience.
- Order cycle and quality assurance.
- Appropriate transport and expedited shipments.
- Product-substitution policy.

Market Strategy

Customer Attraction: Growth hinges on attracting and retaining the most profitable customers.
Logistics Performance: Enhances customer success and establishes competitive advantage, e.g., efficient export logistics for mines.

Customer Services and Costs

Triangular Trade-off: Balancing customer service, cost, and quality is essential for effective strategy development.
Logistics Role: Logistics helps by determining execution costs and guiding trade-offs aligned with marketing objectives.

Customer/Product Prioritisation Matrix

ABC Analysis: Categorizes customers and products based on profit contribution, reflecting the Pareto Principle (80/20 rule).
Category Insights:
- Category A: Most profitable customers/products.
- Category I: Least profitable customers/products.
Prioritisation Levels:
- Priorities 1-4 receive extensive distribution and stock.
- Priorities 5-8 utilize an intermediate distribution strategy.
- Priorities 9-16 distributed from a central warehouse.

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Description

This quiz focuses on Customer Management from Chapter 7 of the Supply Chain Management course ESCM 2724. You will explore the relationship between logistics customer service and the marketing mix, understand the various dimensions of customer service, and evaluate the financial impacts of enhancing service levels. Additionally, the quiz will cover methods for prioritizing customer needs.