Demand Management & Customer Service
Hany Sewilam Abdel Hamid | 2017
Inbound vs. Outbound Logistics Systems
• Inbound Logistics (_____________________)
– The set of processes that precede and ________ value-
adding activities such as manufacturing, assembly, and
• Outbound Logistics (_____________________)
– Early attention was given after WWII.
– The emphasis is on the logistics process toward
__________ to increase levels of _________________.
– It is very similar to inbound logistics,
– It is different from IL because it is often ____ complex
than IL and, thus, requires greater managerial attention.
The Marketing Concept
• The goal of businesses is to _____________ to
• A part of the marketing concept, which is an umbrella
Customer Service Defined
“Customer service is a process for providing significant
value-added benefits to the supply chain in a cost-
effective way.” (Council of Logistics Management
• A firm’s capability to be ________ and ________ in
________ changing __________________________
_____________ (Christopher 1994)
• A firm’s ability to provide core services and
___________________ that promote, differentiate,
and facilitate the basic “core” product/service
offering of the firm (La Londe and Zinszer 1976; La
Londe, Cooper, and Noordewier 1988)
Customer Service in Marketing
The Importance of Customer Service in
• An example – eBay shoppers
Trends and Observations
• Expectations and Perceptions of Customer Service
May Differ Between Suppliers and Customers
• Q: Customer Service More Critical When:
– A market is ____________ a. competitive, b. monopoly
– Products are ______ substitutable a. highly b. not
– Timeliness is strategically _______ a. significant, b. not
Logistics Customer Service
– in-stock rate and percent orders, units, and lines filled out
– consistent delivery, lead time, average delivery time, order
cycle time reliability, and minimum order cycle time, etc.
– minimum damage in transit and order-filling accuracy, etc.
– inventory availability information, advance information on
cancellations/delays, projected delivery date, etc.
• Low cost distribution
– cross-functional cost-tradeoffs are explicitly considered
Customer Service Performance
Target delivery dates
Written statements of policy
Determining the Optimum Customer
Customer Service Level
Inventory vs. Customer Service
Level of Customer Service
Issues in Customer Service
– Consult with customers on policies and
• Measure, monitor, and control customer
• All customer accounts are not the same.
• __________ and added value can “lock up”
• Defined as “focused efforts to __________________
_________________, with the intention of using this
information to shape operating decisions.”(Blackwell
and Blackwell 1999)
• Recent _____________________ makes difficult for
manufacturer to determine what, where, when, and
how many of the sale will happen.
• Complicated ____________ between manufacturing
and consumption requires demand management.
• Demand management will likely result in benefits
flowing through the supply chain.
Demand Management Objectives
– e.g., customer requirements and solutions, market trends,
– Channel functions/responsibilities are divided based upon
– Maximize effectiveness and efficiency.
• Sharing with other supply chain members market
Demand Management Objectives
• Collaboration – plan/implement/control
– Developing and executing the best logistics and
distribution methods to deliver products and services
• Bottom line:
– Better match of demand to product availability.
– ___________________________ is the key
Demand Management Objectives
• Developing and executing the best logistics and
distribution methods to deliver products and
services to consumers in the desired format.
• Primary emphasis should be on using demand
information to create likely scenarios of the future
as they relate to product supply alternatives.
• Resulting business successes will be a outcome of
the better match of demand to product availability.
How Demand Management Supports
Issues in Demand Management
• Departmental/organizational silo that results in
little or no coordinated efforts.
• Too much emphasis on demand forecasts with
little attention to collaborative efforts to derive
strategic and operational plans from the forecasts.
Forecasting: A Starting Point of Demand
• A major component of demand management is
forecasting the amount of product that will be
purchased by consumers or end users.
• In the integrated supply chain all other demand
will be derived from the _______________.
• A key objective is to ______________________
_______________ as it occurs in the marketplace.
Collaborative Planning, Forecasting, and
• CPFR is recognized as a breakthrough business model for
planning, forecasting, and replenishment.
• Developed by Wal-Mart and Warner-Lambert in 1995.
• The plan and the forecast are entered by suppliers and buyers
into an _______________________ system.
• Creates a direct link between _________________________
• Emphasizes _______________________ among and between
supply chain partners.
• Within established parameters, any of the participating
partners is empowered to change the forecast.
Electronic Data Interchange (EDI)
• EDI is “the _________________________,
__________________ exchange of business
data in a __________, _________________
format. The purpose of EDI is to
_______________ and to improve the ____
and ____ of the information flow by linking
computer applications between companies.”
Source: Emmelhainz, “EDI in Logistics,” Ch. 33 in The Logistics Handbook,
1994, pp. 84.
EDI vs. Traditional Methods
Why Use EDI?
– 70% of one computer’s input is another computer’s output
– 25% of a transaction’s cost is data entry and re-entry
– Greater accuracy and consistency
– Improved effectiveness of inventory management
– Decrease in total logistics costs
• Competitive Necessity
• Requested by Partners
Effects of EDI on Supply Chain
Supplier Mfg D/C Retail
Five Alternative Fulfillment
Strategies for E-Commerce
1. Distributed delivery centers
2. Partner fulfillment operations
3. Dedicated Fulfillment centers
4. Third-party fulfillment centers
5. Build to order
Chapter Summary & Review Questions
• Inbound logistics vs. Outbound logistics – how is the focus
of each process different?
• So, what is a business philosophy?
• What is the marketing concept?
• So, what is the ultimate goal of your business?
• What is integrated logistics concept?
• Logistics customer service is …
• Demand management is …
• How CPFR is different from traditional forecasting?
• Why do you care about order fulfillment and management?
• EDI is …