Supply Chain Management - PDF

Supply chain management Question that you need to be able to answer: Chapter 1: 1. Clarify what a supply chain is. 2. Name the main components of supply chains. 3. Define a recommended functional model to categorize supply chain processes. 4. Determ...

Supply chain management Question that you need to be able to answer: Chapter 1: 1. Clarify what a supply chain is. 2. Name the main components of supply chains. 3. Define a recommended functional model to categorize supply chain processes. 4. Determine the players and dynamics in product supply chains. Chapter 3: 1. Explain sourcing and the purchasing steps. 2. Clarify strategic sourcing initiatives. 3. Explore key management tools in sourcing. 4. Calculate and make recommendation based on the Total Costs of Ownership. Chapter 4: 1. Explain the Make function in SCM. 2. Clarify how to set-up manufacturing. 3. Clarify the principles of planning and control (forecast driven). 4. Understand JIT and Lean and their added value (demand driven). 5. Identify the different tools to improve make performance. Chapter 5&6: 1. Explain components of deliver in the supply chain. 2. Define transport planning and operations. 3. Define warehouse planning and operations. 4. Explain the function of return. 5. Define return process. 6. Recognize industry trends. Chapter 10: 1. Explain the components of service profit model. 2. Define customers. 3. Recognize the different variabilities to improve customer service and how to manage them. 4. Identify how to manage key customers. 5. Define customer lifetime value. 6. Identify and understand how to deliver against customer needs. Chapter 1: Into supply chain management Supply chain= is the controlling of flows and forces in a supply chain. There are 4 types of flows, and which starts SC: 1. Flow of information: Information about order process, confirmation, or dispatch. 2. Flow of materials: From raw materials to make to end product. 3. Flow of reverse: receiving things back such as: - Defect items - Packaging materials - Transport. equipment - Customer feedback 4. Flow of refund: getting the money back into supply chain. There are two types of forces in SC: 1. Customer demand: Is customized on a high level of degree by customers. Special orders so it takes a long time to achieve. Examples: Birkin bag, customized tools or in a restaurant (fish example). The SC start only when you give your wishes as an order. 2. Product supply: It start before you enter a supermarket, since these items are daily commodities. So, products start making a long time before to fill it every day in the supermarket shelves. Examples: milk, bread, rice, and other daily commodities. There are 5 steps in SC and functional view: 1. Plan: Finding the balance between supply and demand. And thinking of what you can produce. 2. Source: What kind of suppliers are there that meet the expectations. 3. Make: When the first steps are completed, manufacturing the product. 4. Deliver: Sending it the final product to the customers, this includes warehousing and management. 5. Return: hat you receive back that is associated with the product. There are two types of architecture in SC and players: 1. Short: Supplier-> Company-> Customer 2. Broad: Supplier’s supplier-> Supplier-> Company-> Customer-> Customer’s Customer Upstream Downstream - These are all service providers Customers can be divided in three categories: - Distributor: buying from the manufacturer in large bulks and selling to customers. Example: Tank stations, airports. - Wholesaler: Buying from distributor or manufacturer and specializing themselves in a specific category. Example: Catering, hotels, and restaurants.  - Retailer: stocking quantities in a smaller amount, selling them to general customers. Firms that provide in SC= 1. Transportation 2. Technology 3. New design 4. Warehousing 5. Market research 6. Sustainability 7. Finance SC dynamics: SC react to external things in the environment and macroeconomics. SC needs to maintain a balance in inventory while keeping a high level of customer service. Chapter 3: Guide to source in SCM We analyze and measure our suppliers by all the experiences we had with them while doling business or word-to-mouth, Marketing strategies, online ratings, and influenced by - At B2B happens the same We can divide sourcing into two main activities: 1. Selecting the right supplier: Looking for the supplier that meets the acquirement needs. 2. Contributing with that supplier over a time: it dure for a short time or long time, or even for one single time. - All of these are important for the bottom-line improvement since this is the start of an important process. All of this is also important because it brings a lot of benefits and profits for good searching such as: 1. Reducing time cycles 2. Development of product 3. Development of technology 4. Cost reduction 5. Cash Flow 6. Cost improvement 7. Product quality 8. Improved service to customers Sourcing can be divided in two categories: 1. Direct items: Products or services that are directly needed to make it product itself 2. Indirect items: Product or items that are related to run a business. There are two types of purchasing steps: - Pre-order: 1. Need: what do you want 2. Specification: What materials and accessories do you need for that. 3. Source: Buying team is looking for possible suppliers that provide the needs. 4. Tendering: Pick the few preferred suppliers and asks them to submit their offers. 5. Negation: Buying team discusses with each supplier to come to an agreement 6. Selecting: Buying team chooses the supplier that provides the best deal. 7. Contracts: Buying and legal team setting official contracts & agreement. Both parties need to sign to make the product. - - Post-order: 1. Placing & Handling orders: placing orders with a good working system since sometime orders can be too big to handle.  2. Progress & Delivery: company need to monitor, so they are going to split in two teams: - Logistics will lead the operations - Buying team will arise when there are issues. 3. Payment & Review: If everything is received, they will pay the supplier and look for if they received everything they needed. 4. Performance indicators: giving a review about the service and quality of each other. Strategic sourcing Initiatives: Tactical sourcing: Is a method of efficient sourcing to achieve the benefits and profits of good sourcing. There are 5 ways: 1. Market research: looking for what is happening in the market for a specific item. (Example was with the lood that it is not everywhere available so higher price) 2. Commodity analyses: Commodity products that a firm need, however sometimes it can be expensive so doing good research could help to save some money. 3. Forecast requirements: predicting future prices needs to get it cheaper at this time. 4. Supplier performance analysis and benchmarking: evaluating of how well a supplier is doing compared to standards. 5. Price & cost analysis: checking the cost and comparing prices to get the best item. Product companies have been moved from functional structure to a category management structure. It strives firm ton go from a short term to an integrated relationship. Category sourcing or management: in a supermarket, categories like vegetables and fruits each have a dedicated team to manage purchasing& inventory, keeping everything organized and stocked. There are 5 steps to category sourcing: 1. Profile category group: determining how many suppliers exist and their market influence, which is crucial for negotiating leverage. Suppliers with unique products hold more power than in those competitive markets.  Hereby there is a tool to segment the different category groups: - Routine items: low-cost items, and if the deliver fails to bring it there is just a little risk. Example is stationary. - Bottleneck: low spend but high risk. A bottleneck is a point in a process where progress is slowed down because the capacity is limited. - Leverage: these are items that a company buys a lot so high spend but can get also from many suppliers. So, it doesn’t matter lot if the company fails to deliver it, because of other options. - Critical: is high price but also risky. These items are the most important things to produce a product. Without these items the product cannot be made. Example: in a car no car seats or windows, the product cannot be delivered. 2. Selecting sourcing strategies: deciding on the best approach based on category importance and risk. Whether is by face-to-face meeting or calling once in a month to optimize sourcing benefits and supplier relations. 3. Generating a supplier portfolio: a list of potential suppliers who meet specific criteria like size, financial stability, ethical standards, and sustainability to ensure reliable partnerships. 4. Following the purchasing process: doing pre-order and post-order steps. 5. Negotiation: finalizing agreements with supplier, ensuring favorable terms and conditions that align with organization goals and maximizes value. Supply relationship management: the process that looks pro-actively managing the link between buyer and supplier. Some benefits of this are: - Breakdown functional barriers &mindsets - Promoting innovation and thinking to do things better - Improving sc visibility between supplier and buyer - Sharing assets across sc - Forward. Looking visibility giving more reliability to all parties There are two models of interaction between supplier and buyer: - Bowtie model: - Only one point of conatct and is easy to manage. Howere the decision making progress can dure long since two people are involved in b2b. they are depended on each other. - Diamond model: These are interdependent, and they are working closely together. They aim for shared goals& sustainability benefits. SC companies must invest in sustainability, some of the. Header sustainability are: 1. Environment: taking care to not damage the environment. 2. Human rights: paying legal wages, don’t using child, or forced labor. 3. Business integrity: doing the right thing in business, being fair and honest and following the rules. Sourcing in the digital age: has benefits for buyers to let them have a background. In transparent sourcing. This helps to trace the origin of the product. It helps to the trusting the company as well. - This is traceability: ability to identify the past or current location of an item. Like barcodes or qr-codes. There are two tools that are very commonly used in sourcing: negotiation and cost management. 1. Negotiation: it happens only when there’s disagreement. In the past if negotiation wasn’t possible, they tried: several other ways like violence, by a judge, vote, flip of coin, contest. This will not help to come to an agreement: Negotiation happens between supplier and buyer. The four. Main stages of negotiation are: 1. Establish if negotiation is required: Before starting, decide if you really need to negotiate. If something has a fixed price and is low cost, you might not need to negotiate because it's already set. 2. Plan the negotiation: f negotiation is needed, plan it carefully. Make a list of what you want to achieve (your wish list) and think about where to have the negotiation. Decide who will lead the negotiation and who will help summarize and clarify things. 3. Execute the negotiation: This is when you actually have the negotiation. Stick to your plan, propose ideas based on facts, and trade things to find a solution that works for both sides.  4. Deliver an agreement: Once you reach an agreement, make sure everyone understands and agrees to it. Close the negotiation properly and don’t make last- minute changes just because you feel good about it. 2. Cost management: - Fixed: remains the same - Variable: it changes with the volume - Semi-variable: could be a salary but then adding the bonus or something else. To manage this cost strategically they use these tools: 1. Commodity purchasing: Buying large quantities of commonly used items to save money. 2. Value engineering and analysis: Working with suppliers to improve product development and design to reduce costs. 3. Non-Value Added (NVA) improvements: Eliminating waste in processes with suppliers to cut costs, like reducing inventory or order times. 4. Total Cost of Ownership (TCO): Considering all costs associated with a purchase, not just the initial price, to make cost-effective decisions over the product's lifespan. For example: you have two fridges a:120, - b:50, -. However, a is guaranteed and b not, to guarantee it you need to pay 80, - more. While they are the same, so you don’t choose the lowest price, but which provides more. 5. Price analysis: Analysing the breakdown of costs for an item, such as materials, value added by the supplier, and profit margins, to negotiate better prices without harming the supplier's sustainability.  Chapter 4: Guide to make in Supply chain management Make involves production types/layout, planning & control, manufacturing strategies. Manufacturing includes: - Man: people who are working in manufacturing - Method: business process to run manufacturing - Machine: technology employed - Materials: materials that are consumed Several advantageous of craft manufacturing are (by hand): 1. It has a high quality 2. It is totally unique However, there is a problem if it unique, because if its defect than its hard to repair it since there are not any other product’s that you can lend/use to repair it back. Because of that reason, now all parts are going to be standardized at mass manufacturing. - Other advantage is it reduces time& greater output. It reduces human error and variations. Production types: 5 types of manufacturing process (method): 1. Project: Making a special order with specific needs and an on-off manufacturing process, that after finishing it is hard to move. Example: Stadium. 2. Job shop: Also, an on-off manufacturing process, where end product meets customer unique specifications and requirements that can be delivered. Example: Yacht. 3. Batch: It is a type of flow manufacturing; similar products are on repeat basis in large volumes. It is divided into chain activities that take place after each other in various stages and being flexible. 4. Line: same sequence of operations from the begin to the end. Just that each product goes through the same process and is for large quantities and identical products. There are here two types: - U-line: 1 skilled employee finishes the tasks moving around. But the employee increases, the output will increase as well. - Rabbit chase line: someone coordinates from the centre, and if they use. Machines it can go faster because of automation.  5. Continuous flow: It is meant for gasses or liquid non-stop procedures. It is most of the time an expensive investment that big companies like shell and total uses. Also, other water and gas providers. - When moving form project or job shop to batch, line or continuous flow, certain things such as machines, methods, materials and man features changes. Manufacturing planning & control: When manufacturing set-up is finished, setting up methods to order plan & control from input to output. 1. Master production scheduling (MPS): How many product a factory needs to make & when. It is built up from demand forecast that is established for an end product, but it can be also from a customer order. It is the first step of implementation of the overall manufacturing programme of a factory. Here are two main objectives: 1. Short term materials planning for production 2. Long-term estimate of demand on company factory recourses like people and machines. All of this is for month& years to keep factories running smoothly. - Time fences= MPS uses this to set rules for when and how plans can be adjusted to overcome when there is a last-minute shortage of materials or too much stock on hand. Materials requirement planning: Ensuring that items are available for manufacturers when needed. MRP has two main inputs: 1. Bill of materials (BOM): Recipe of a product, what components are required.  2. Inventory file: how many components you already have on stock, and you don’t need to buy those items than. This is important because you know what you need to buy still. These products need to be delivered on time for the assembly. Now manufacturing plan can be executed. Capacity & Distribution requirements planning: 1. CRP: checking if there is enough factory space & workers to make all products. It is all about panning strategically. With a shortage space you need to open more locations, and if you have more than needed space you need to close locations. 2. DRP: Making sure delivering products on time and the best way to deliver for customers. Manufacturing strategies: These functions can be efficiently by using the Just-In-Time concept. Just-In-Time concept= only when needed not before & not after. It helps to usual methods by focusing on efficiency & reducing waste. It is short term set-up and minimalizes delays in transportation, other processes, keeping inventory small. - Because of this reason reducing inventory, firms can their businesses more smoothly and efficient. Just-In-Time concept philosophy: By reducing the stock, you see that there is a problem because it reduces the output efficiency. So, looking for that what the reason is that reduces the output you can see what is going wrong. By solving the problem, you can increase the quality and reducing delays and forecasts. Simply put, when you reduce inventory, problems in production become more noticeable because there's less margin for errors or delays. This lets you react faster, figure out the reasons, and take steps to boost efficiency in production. Now the three elements of JIT: 1. People: everyone needs to be informed at an early stage. Without the support & agreement, they cannot implement the JIT-strategy successfully. 2. Plant: only driven by customer demand& ensuring to produce only necessary stuff and focusing on worker flexibility and product specification 3. System: it refers to technology and process used to connect, plan and coordinate manufacturing activities. MRP is an example. Limitations of JIT: 1. Cultural difference: It is a Japanese system, so it can be difficult to adapt in different regions/ countries.  2. Loss of safety stock: it can be risky to get out of stock because you produce only at time. 3. Decreased individual autonomy: employees need to stick to a strict management of manufacturing to maintain the system. 4. Industry specific success: craft-oriented people have performed better than JIT programmers. Mesela klantin istegi degisebilir zaman icerersind, ooyuzden obur JITolmayan sirketler faydanabilirler, ve jitdegil cunku onlar biseye odaklanip uretiyorlar. Yani JIT sirketlerin adapte olacak zaman kadar, kayib yapabilirler. - Lean thinking & supply: is about using the right level of the 4ms. Lean means without fat, so only focusing on the necessary stuff to reduce waste. - Totally quality management: focusing on the big Q. Little q: traditional quality verzekering that used in traditional business. Big Q: The move away from the little q, and focusing on a more functional and general approach that looks at quality, products, services, processes, improvement opportunities instead of being isolated. 7 types of waste identified in manufacturing: 1. Overproduction: production more than it is demanded. 2. Waiting: waiting for the next manufacturing step 3. Defects: Spending money and effort to fixing defects. 4. Inventory: work-in-progress, or finishing goods not being used. 5. Motion: unnecessary movement of people or equipment 6. Transport: moving products more than necessary 7. over processing: using more recourses than needed due to inefficient tools or designs. Loss tree= a process helps to identify priorities. - This allows user to focus on specific areas rather than making a list of problems. If you don’t measure it, you cannot improve it. - - The root cause of a problem is called a phenomenon in 5-why analysis. Everywhere there will be asked why until the problem is solved. - Fishbone diagram: the 4m’s until why the product is damaged. Chapter 5: Guide to deliver in Supply Chain Management: Delivering glues important parts of supply chain together. It helps to connect them with each other. There are here three main points: 1. Suppliers->factories 2. Factories->warehouse 3. Warehouse->Customer Companies try to reduce distribution network, for example warehouses which causes for problems. Some problems are it increases the distance between the suppliers and customer and decreases the amount of responsiveness. There are four factors that influences the distribution centre: 1. Global economy: every time you think of expanding to another county or something else, you need to do sourcing strategies and it causes a lot more transport costs. 2. Political factors: Politicly decides of the infrastructure etc. and transport needs to be easily accessible like airports, seaports, new roads etc. If there isn’t a good accessible place, then it will be hard to have a distribution channel over there. 3. Technology digital: satellites, mobile telecommunication etc. must be accessible for communication and others. In the future this will be more important. 4. Environmental decisions: people need to reduce co2, so transport and others must be hybrid using solar panels and etc. everything that helps to reduce bad things for the climate. If the number of warehouses increases, then the prices of three components will also change: - Facility cost: gas, electricity, services etc. - Inventory cost: the more product you have, the amount of price will rise. - Main transport costs: the more warehouses you have, the price will decrease because of the distances. Until the amount of goods decreases per warehouse. This curve is shown like a hockey stick. Here everything increases, except the primary transport cost. That will decrease because of the short distances, until the good to the warehouses decreases. That’s the point where the primary transport cost increases. To make sure to optimize the warehouses, there is a specific programme used named centre of gravity. This programme helps to optimize warehouses and other facilities. But first before you can use these programmes there are 7 factors which you need to look at: 1. Is it a good willing location?  2. Is it quick to builds? 3. Are there skilled employees 4. Can you receive subside from the government? 5. Is it easily accessible? 6. Customer services need to be there 7. You need to think of the environment Sometimes you can’t follow all these criteria, for example: it is in the city with skilled employees but expensive, or outside the city with not much skilled employees but not so expensive. You need to consider these things and eliminate some points. After all this you can use the centre of Gravity. There are 3 types of transport: 1. Transport: transporting by different methods like plane, ships or etc. 2. Warehouse: inside the warehousy controlling goods and replacing on stock 3. Customer: from the beginning order process till the end until its delivered following. So first of all, at transport management, you need to deliver good on time with the exact amount of quality etc. but there are 6 steps that is needed for this(they can also add value to sc): 1. Speed 2. Quality 3. Reliability 4. Security 5. Omgeving 6. Kosten Er zijn 5 methodes om producten te vervoeren: 1. Zee: er zjn 3 soorten ervan weer. - Tanker: for liquids and gasses - Container: normal products as we know - Inlands: going by rivers and canals 2. Lucht: there are also three options: - cargo: small packages in containers(cN BE REFRIGATOR) - courier: boxing packages - niche: big and heavy machines like tanks etc. 3. Road: here are two options: -primary transport: transporting from airport or sea to factory -secondary transport: transporting from warehouse to customer 4. Spoor: here are also three options: but the most common is rrt ➔ That’s most of the time transporting cars inside tunnels etc. 5. Pipelines: it is just under ground and is one of the most important ones what we most of the time forget. It transports water, gasses, and other powders. Intermodal operations: when 2 or more different types of transport are used. Here are 6 factors important: 1. Scm knowledge: expertise in supply chain management is crucial for optimizing costs and service.  2. Physical assets: Ownership or access to the necessary transport vehicles and infrastructure. 3. Liability: Clarifies who is responsible for the goods at each stage. 4. Operations management: Ensures smooth daily operations and continuous product flow. 5. Information: Track-and-trace systems help monitor the location and status of goods. 6. Commercial contract: Aligns transport rates and payment terms. Actually, the track trace is the most important one. Cost involved: - 90% operations - 10% equipment There are 4 formats of warehouse management: - Contract= managed by 3d parthy - Refrigataror: koelkast bascally - Bonded= door government onderhoud geen taxes - Cross-docking= bulkstock for short time Warehouse planning: you want to minimizehandling operations and maximizing storage space in cubic terms. Warehouse planning has 7 steps: Warehouse layout: - Receipt - Storage - Picking - Dispatch 2 main flow system in warehouses: Chapter 6: Guide to return in SCM: Return can be found at each interface between scm partners, all the way from suppliers & customers. Je kan het dus bij elke stap van het scor model zien. Reverse logistics: used for return management. Other definition is that processes&activities to avoid returns like, reducing materials, so that it will be re-used. So reverse logistics: commercially oriented Green logistics: environmental considerations. Okay so why product will be returned, 6 reasons: 1. Customer not satisfied.: can return the product in 30 days 2. Installation or usage problem:(Product is defect aangekomen) 3. There is a warranty: (stuk na het gebruiken dusk an het gerepareerd worden) 4. Faulty order processing:(problem tijdens het bestllen kan zorgen voor het niet optijd komen of compleet)| 5. Retail overstock: if they have a lot of it than needed, sending it back tot he retailer. 6. Manufacturer recall program: for safety reasons, so it isn’t safe for the people. Like pharmaceutical products, toys, automative industry. Drivers There are three main activities that made reeverse elogistics so important: - Legislation/wetgeving: Bijv de eu zorgt ervoor maakt wetten dat bedrijven hun producten na een bepaalde tijd weer moeten aanemen om waste te verminderen. Dus je denkt aan de enviroment. Sommige bderijven konden zich niet helemaal eraan houden, dus hebben ze de green supply chain management bedacht: 1. Enviromental 2. Pollution prevention(vervuiling tegengaan) 3. Life cycle assesment 4. Design for enviroment. - Economics: Two economic benefits here: 1. Direct gains: recovery of materials often cheaper than buying new ones 2. Indirect gains: creating customer loyalaty/ relationship, because they take the not wanted products from the customers, and for that they give them discount and etc. like what apple is doing. - Corporate citizenship: Here they respect the society. They have a corporate and social responsibility. The example of nike, that they are re-using shoes and make it sustainable, but also promoting their physical activities to the younger ones. Key players: Forward supply chain companys, 3rd party logistics and governmental institutions are looking forward for showing interests in the management of reverse logistics. Forward supply chain companies (e.g., tech and consumer manufacturers) use RL to comply with laws, gain economic benefits, and enhance corporate responsibility. Specialized reverse chain players and 3PL companies (e.g., recyclers, waste dealers) focus on collecting and processing waste, seeking market opportunities. Governmental institutions (e.g., EU, national governments) create laws and directives to reduce waste and promote sustainability. Few things that you can do for the product recovery: 1. Resale: doorverkopen op tweede markt 2. Repair: repareren naar een goede staat 3. Reuse: using some part to let it work 4. Remanufacturing: replacing the old components with the new ones. 5. Recycle: making it usefull materials 6. Scrap: pas aaan het einde als er echt geen andere mogelijkheid meer is om het te heergerbuiken, dan pas weggooien. Five stages of product return process: 1. Receive: products are received at a central location. Here the customer receives a message of returning acknowglement 2. Sort&stage: it needs to be sorted in the right place. 3. Process: items have been correctly sorted and have a vendor number. Here at this stage customer receives his money back with the approapriate information. 4. Analyse: here skilled employees need to look of what could happen to the product. It could be some product recovery steps as above mentioned of the 6. 5. Support: returning it to the right manufacturer or something else according to the chosen step above. It helps for more efficient and timely each stages in product return performed. There are three main ways to run reverse logistics supply chain: 1. Closed loop: process of used materials or products are returned and proceesed by the same manufacturer and so is that responsible for the whole time. They take the full responsibility of the 5 returning logistic process. 2. Open-loop: there could be a 3rd party logistic, because they are specialized in a category that can help the company.  3. Independent operators: these operators are mostly traditional waste and junk dealers. They completely function outside the forward of supply chain. Product Recovery Issues The product recovery industry faces several challenges: 1. Unorganized Sector: Unlike traditional manufacturing, this sector is less organized with few formal contracts due to its immature state and high volatility. 2. Lack of Information and Skills: Obtaining design details and evaluating products is time-consuming and costly, often not justified by the low value of returned products. Local skilled workers are necessary to avoid high shipping costs. 3. Supply-Driven Nature: Unlike demand-driven manufacturing, product recovery relies on unpredictable returns from consumers, making it hard to control the process. 4. Manual Processes: Most operations are manual, making them slow, costly, and prone to errors. Automation is difficult due to a lack of flexible tools. 5. Low Margins: The industry operates on thin margins, further reduced by the rapid value loss of time-sensitive items like clothing and electronics. Return different in each process:  1. Automotive: This sector has advanced recycling processes because of the high value of materials like steel and aluminum. In Europe, producers are responsible for vehicle disposal, leading to efficient disassembly practices. 2. Electronics: The WEEE legislation drives recycling, but it's challenging to make a profit due to high labor costs and lack of automation. Few products are designed for easy disassembly. 3. Appliances: Items like refrigerators and washing machines have long lifespans, making returns unpredictable. The recycling process is similar to vehicles due to the metal and motor recovery, and the industry can learn from automotive recycling practices. 3 activities to increase business return efficiency: 1. Design for Disassembly: Previously focused on efficient assembly, manufacturers now prioritize designs that allow products to be easily taken apart. This facilitates reuse, recycling, or scrapping. 2. Recycling Initiatives: Environmental laws drive industries to recycle more materials. Scrap dealers already recover up to 95% of major metals from cars and sell them in secondary markets. Recycling of materials like water bottles and tetra packs into new products like pens and bags is also growing. 3. Modular Design and Product Longevity: To extend product lifecycles, modular designs and manufacturing techniques are becoming popular. This allows outdated components to be easily upgraded. For example, the iPhone enables technology upgrades through software rather than hardware replacement. Here are the golden rules for improved returns management, simplified: 1. Treat Returns as Perishables: Timely handling of returns is crucial as delays reduce the remaining value of products like printers. 2. Leverage Value Chain Partnerships: Partnering with specialized logistics providers (3PL) can enhance efficiency in tasks such as credit issuance and product disposal. 3. Utilize Returns for Customer Feedback: A well-managed reverse supply chain allows manufacturers to gather valuable customer feedback, which can be used to adjust product offerings and improve design and distribution. The RL process starts when an end consumer or retailer injects a product into the reverse supply chain, where the timing, quality and quantity of these product returns is very difficult to forecast. Chapter 10: Guide to customer service in SCM Customer service: providing and being able of constantly meeting the needs and expectations of customers. In business there are two typesof customers: internal and external. - External customers: clients that are buying products of the company or that are outside of the company - Internal customer: are colleagues and employees inside the company. It is important to treat them well because it can influence the output effort. It can also effect the external customers. That why company’s treat them like external customers. or example, the Ritz-Carlton hotel chain says, "We are ladies and gentlemen serving ladies and gentlemen," meaning they use the same high standards with each other as they do with their hotel guests. In business, there are various types of customers involved in getting a product, like a chocolate snack, from suppliers to consumers. 1. Suppliers: They provide the raw materials and ingredients needed for making the chocolate snack. 2. Retail Depot: This is where the products are first received from suppliers. The staff here handle the goods carefully to avoid damage. 3. Retail Back of Store: These personnel manage thousands of products, including the chocolate snack, ensuring they are easy to find and handle. 4. Shelf Replenishment Team: They stock the shelves with products like the chocolate snack, preferring items that are easy to open and stack. 5. Shoppers: These are the people who visit the store, recognize the product, and decide whether to buy it. 6. Retail Checkout: They scan the product correctly before it reaches the end consumer.  7. Retail Consumers: Finally, these are the individuals who buy and eat the chocolate snack. To improve customer service: 1. Arrival Variability: This happens when all customer orders arrive at a warehouse on a Friday afternoon, creating a rush of work over the weekend. To manage this, warehouses might offer incentives for customers to spread out their orders during the week, reducing costs and improving efficiency. 2. Request Variability: This occurs when customers ask for special services or faster delivery times. Meeting these requests often requires adjustments in systems, resources, and training to ensure efficient fulfillment while meeting customer needs. 3. Capability Variability: Customers vary in their skill levels with tasks like demand forecasting. Suppliers may offer training and support tailored to each customer's capabilities to improve planning accuracy and efficiency. 4. Effort Variability: Different customers may invest varying levels of effort into tasks like packaging or preparing products for retail. Suppliers manage this by setting clear expectations and potentially offering support to ensure consistent quality and cost- effectiveness. Each type of variability requires strategies that balance customer satisfaction with operational efficiency, aiming to provide a positive experience while managing costs effectively. Managing key cuatomers: Putting our energy into managing key customers and gaining loyalty is therefore critical for business success. o summarise, not all customers are equal. To give the same supply chain service to all customers means that our key customers would be under-served and our non-key customers, who give lower value, would be over-served. It is therefore important to understand the true lifetime value of a customer. 10.2.1 Customer Lifetime Value: A food retailer spending €10,000 weekly with a supplier could be worth over €10 million in a 20-year relationship. This highlights the importance of fostering long-term customer relationships, known as customer lifetime value. Loyal customer behaviors significantly impact a company's financial success, with customer satisfaction being a primary driver (Reichheld, 2003). Retaining customers is often more cost-effective than acquiring new ones, as established customers tend to increase their spending and are willing to pay premium prices over time. 10.2.2 Customer Service Ambassadors: To cultivate relationships with key customers, companies need employees who act as ambassadors both internally and externally, promoting a service-centric culture. Organizing employees into customer service teams fosters shared goals, enhances job satisfaction, and improves communication among departments. Skills like emotional intelligence, especially in listening and understanding customer needs, are crucial. The Ritz-Carlton Hotel exemplifies this with a culture of personalized service and empowerment among employees, who are given budgets to delight customers in unique ways. 10.3 Delivering Against Customer Needs: Managing and meeting customer expectations is essential for enhancing satisfaction and loyalty. It involves delivering on core promises, setting clear standards through Service Level Agreements (SLAs), and measuring performance with Key Performance Indicators (KPIs) like On Time In Full (OTIF). Exceeding customer expectations drives satisfaction and loyalty, crucial in B2B relationships where customer perceptions shape future buying decisions. Effective service recovery is also critical, as it turns complaints into opportunities for improvement and customer loyalty. In summary, effective customer service strategies ensure that companies not only meet but exceed customer expectations, driving business performance and fostering long-term succes Delivery On Time (OT) Delivery In Full (IF) Delivery OT is calculated by agreeing a time (for example between 09:00 and 10:00) that the customer would like the delivery. During a month, if 100 deliveries are made and 5 of these deliveries miss this agreed time, then this would be calculated as 95/100 or 95% delivery OT. Delivery IF measures the ability of a supplier to satisfy customer order quantity. During the same month, if 1000 units are ordered and the supplier only delivers 900, then this would be calculated as 90% delivery IF. The OT and IF measures are often combined within the supply chain, to make On Time In Full (OTIF). The combined measure in the above example would be 0.95 0.90 1⁄4 0.855 or 85.5% OTIF. Waardoor wordt dedeliver function beiunvloedt global economy [politicak etc