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1) Answer the questions.

1. What is essential for meeting a firm’s profit objectives?

2. How can you define the term customer service? Is there only one definition?

3. What is a fulfillment process?

4. Mention customer service elements.

5. Which of the customer service elements are the most important?

2) Match words to their definitions.

1. customer service

a) those that build a climate for good delivery service

2. fulfillment process

b) product, price, place, promotion

3. pretransaction elements

c) elements including customer service after the sale of a product

4. after-sale maintenance

d) outcome of all logistics activities or supply chain processes

5. accurate documentation

e) directly resulting in the delivery of a product

6. transaction elements

f) a process of filling a customer’s order

7. four Ps

g) a full set of papers in order

Part 2. Order Cycle Time.

The primary elements of customer service that the logistician can control are captured within the concept of order (or service) cycle time. Order cycle time can be defined as the elapsed time between when a customer order, purchase order, or service request is placed and when the product or service is received by the customer.

The order cycle contains all the time-related events that make up the total time required for a customer to receive an order. Note that individual order cycle time elements are order transmittal time, order processing time, order assembly time, stock availability, production time, and delivery time. These elements are directly or indirectly controlled through choice and design of order transmittal meth­ods, inventory-stocking policies, order processing procedures, transport modes, and scheduling methods.

The order transmittal time may be composed of several time elements, depend­ing on the method used for communicating orders. A salesperson-electronic com­munication system would have an order transmittal time composed of the length of time the salesperson and the sales office retain the order before transmitting it, and the length of time the order is in the transmission channel. A customer-prepared order plus electronic transmission would have a total transmittal time essentially of a telephone call, facsimile, electronic data interchange, or Web site use. At times, it may be important to factor into order cycle time the customer's time for filling out an order or the time between salespersons' visits.

Another major component of order cycle time is the time for order processing and assembly. Order processing involves such activities as preparing shipping docu­ments, updating inventory records, coordinating credit clearance, checking the order for errors, communicating with customers and interested parties within the company on the status of orders, and disseminating order information to sales, production, and accounting. Order assembly includes the time required to make the shipment ready for delivery after the order has been received and the order information has been made available to the warehouse or shipping department. It involves picking the order from stock, moving the order to the outbound point in the warehouse, any nec­essary packaging or light manufacturing, and consolidation with other orders moving in the same direction. If no inventories are available, then processing may include manufacturing.

To a degree, order processing and assembly take place concurrently, so the total time expended for both activities is not the sum of the times required by each. Rather, both activities overlap, with order processing taking place slightly ahead of order assembly, due to error checking and initial handling of the paperwork. Shipping doc­ument preparation and inventory updating can be carried out while assembly oper­ations occur.

Stock availability has a dramatic effect on total order cycle time because it often forces product and information flows to move out of the established channel. When stock is not available in warehouse inventories, a second, or backup, distribution channel may be used. For example, a back order for the out-of-stock item would be transmitted to the plant to be filled from plant stocks. If there is no plant stock available, a production order is prepared and stock is produced. Delivery is then made directly from the plant to the customer. Other possible backup systems are transshipping back-ordered goods from a secondary warehouse or simply holding back orders at the primary stocking point.

The final primary element in the order cycle over which the logistician has direct control is the delivery time—the time required to move the order from the stocking point to the customer location. It may also include the time for loading at the origin point and unloading at the destination point.

Exercises.