Logistics and Customer Value

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Logistics and Customer Value by Mind Map: Logistics and Customer Value

1. Fixed capital efficiency

2. 1. Identify the key components of customer service as seen by customers themselves. 2. Establish the relative importance of those service components to customers. 3. Identify ‘clusters’ according to similarity of service preferences.

3. 20% of customers buying 20% of the products = 4% of all customer/product transactions

3.1. Which provides: 80% of 80% of total profit = 64%

3.1.1. Just 4 per cent of transactions (measured order line by order line) gives us 64 per cent of all our profit!

4. · Order cycle time · Stock availability · Order-size constraints · Ordering convenience · Frequency of delivery · Delivery reliability · Documentation quality · Claims procedure · Order completeness · Technical support · Order status information

5. Net operating income less Taxes less Working capital investment less Fixed capital investment = After-tax free cash flow

6. Is a true measure of what the business is worth to its shareholders

7. The bottom line determines the direction of the company and in some cases this has led to a limiting, and potentially dangerous, focus on the short term

8. Are generally supportive of the product while in use (Product warranty, parts and repair service, procedures for customer complaints and product replacement).

9. Customer Value

9.1. Perceptions of benefits –––––––––––––––––––––––– Total cost of ownership

9.2. Total cost of ownership: -Management -Operating -Inventory -Technical -Training -Etc

9.3. Quality Service Cost Time

9.3.1. Are you competitive?

10. Customer Service

10.1. Pre-transactions elements

10.1.1. Are relate to corporate policies or programmes

10.2. Transaction elements

10.2.1. Are those customer service variables directly involved in performing the physical distribution function

10.3. Post-transaction elements

11. Out-of-Stock

11.1. Having what you need every single time, so the consumer won't substitute the product

12. Customer service and customer retention

12.1. Service surround

12.2. How many of the customers that we had "x" months ago do we still have today?

12.2.1. An existing customer can provide a higher profit contribution and has the potential to grow in terms of the value and frequency of purchases than a new customer. Lifetime value If customers can be persuaded to remain loyal to a supplier, their lifetime value can be significantly increased.

12.2.2. In addition to the core product, these characteristics enter into the final value: • Quality • Product features • Technology • Durability, etc. • Delivery lead time and flexibility • Delivery reliability and consistency • Order fill • Ease of doing business • After-sales support, etc. Average transaction value × Yearly frequency of purchase × Customer ‘life expectancy

13. Market-driven supply chains

13.1. Low-cost producer

13.2. Customer-centric

13.2.1. Design the supply chain around the needs of the customer This new perspective sees the consumer at the start of the supply chain

13.3. Linking customer value to supply chain strategy

13.3.1. Identify value segments What do our customers value? Needs vs Wants

13.3.2. Define the value proposition How do we translate these requirements into an offer?

13.3.3. Identify the market winners What does it take to succeed in this market?

13.3.4. Develop the supply chain strategy How do we deliver against this proposition?

14. Customer service priorities

14.1. The ‘Pareto’ or 80/20 rule

14.1.1. The top 20% of products and customers by profitability are the ‘A’ category; the next 50% are labelled ‘B’; and the final 30% are category ‘C’.

14.2. Managing product service levels

14.2.1. Seek cost reduction

14.2.2. Provide high availability

14.2.3. Review

14.2.4. Centralised inventory

15. Service standards

16. Logistics and the bottom line

16.1. ROI = Profit ––––––––––––––––––– Capital employed

16.2. Logistics and shareholder value

16.2.1. what is the company worth to its owners?

16.2.2. Shareholder is determined by the net present value of future cash flows.

16.2.3. Economic Value Added (EVA) Is the difference between operating income after taxes less the true cost of capital employed to generate those profits

16.2.4. Market Value Added (MVA)

16.3. The drivers of shareholder value

16.3.1. Revenue growth

16.3.2. Operating cost reduction

16.3.3. Working capital efficiency

16.3.4. Tax minimisation