Home > Articles > Business & Management

The Customer Service Environment for Supply Chain Management

  • Print
  • + Share This
The authors of Customer Service Supply Chain Management: Models for Achieving Customer Satisfaction, Supply Chain Performance, and Shareholder Value introduce their book, which covers the Customer Service Management Model (CSM Model), a tool developed by the authors to evaluate the interactions present in the customer service environment. The model presents four pillars and provides a quantitative approach to understand the connection between them.
This chapter is from the book

Customer Service Environment

According to the Supply Chain Knowledge Management Maturity Roadmap (SKMap)1, illustrated in Figure 1.1, tactic integration is the first movement toward a solid supply chain governance structure. Once tactic integration has matured, leaders are capable of interpreting the signals generated within the organization and promoting a solid strategic alignment of the supply chain function with corporate governance. These connections are sustained by five pillars:

  1. Customer service
  2. Project planning
  3. Human resources
  4. Sustainability
  5. Information technology
Figure 1.1

Figure 1.1 Supply Chain Knowledge Management Maturity Roadmap (SKMap)

At the tactic integration level, the organization strengthens several functional areas and creates the architecture capable of aligning supply chain building blocks with major business objectives. According to the Supply Network Alignment Reference Model (SNAR Model), illustrated in Figure 1.2, these building blocks are planning logistics and synchronous operations (Oliveira and Gimeno, 2014).

Figure 1.2

Figure 1.2 Supply Network Alignment Reference Model (SNAR Model)

Moving on to SKMap’s fourth maturity stage (supply chain governance), three major targets complement tactic integration:

  1. To establish and lead a supply chain risk management strategy
  2. To define which key knowledge areas must be acquired
  3. To synchronize supply chain strategies to corporate governance goals

Corporate governance is a complex discipline. A simple approach to understand the concept of governance lies on balancing performance, risk and cost. Usually when the organization maximizes either one of these elements, the others will not achieve minimum required standards. This balancing exercise is continuous because most businesses are constantly under pressure due to both permanent and changing factors.

Customer service plays a major role in the tactic-alignment dynamics. Most publications introduce customer service as a set of activities categorized into pre-transactional, transactional, and post-transactional. This approach induces the readers to believe there is only an operational level for customer service, when its contribution to the organization lies within the tactical and strategic levels.

Figure 1.3

Figure 1.3 Customer service levels

This book introduces the Customer Service Management Model (CSM Model), a tool developed by the authors to evaluate the interactions present in the customer service environment. The model presents four pillars and provides a quantitative approach to understand the connection between them:

  1. Customer’s service level expectation
  2. Supplier’s service level (hired performance)
  3. Customer’s service level perception
  4. Supplier’s service level (delivered performance)

The following figure indicates that it is possible to assign scores to each pillar. The methodology used to classify each pillar should be jointly agreed between supplier and customer. It shows six correlations (1, 2, 3, 4, 5, and 6), which are analyzed more fully in Chapter 2, “Customer Service Management Model.”

Figure 1.4

Figure 1.4 CSM Model, correlation grid

Figure 1.5 illustrates the output of the CSM Model. It compares:

  • If the customer hires the service level equivalent to its expectation
  • If the customer’s perception of the service level is aligned to previous expectation
  • If the supplier is delivering the service level as hired by the customer
Figure 1.5

Figure 1.5 CSM Model, analysis panel

The combination of these factors defines an aggregated risk index. The lower this percentage, the higher the risk to which the supplier is exposed. The lower part of the panel classifies the supplier’s ability to manage the customer’s expectation. Once again, the fields are illustrated as lines 4, 5, and 6 in the correlation grid (see Figure 1.4).

The performance leverage compares customer’s perception to actual process performance, and the contract leverage compares customer’s perception to the actual hired service level. Finally, process commitment compares supplier’s actual performance to the hired service level. The Customer Service Management Model is detailed in the following chapters.

These correlations interact dynamically and define the efficacy of customer service strategies. However, customer service should initially strengthen the connections with a few preferred customers and with commercial structures within its organization, known as the primary boundary.

Figure 1.6

Figure 1.6 Customer service primary boundary2

Despite the basic need of the primary connections, customer service only delivers long-term strategic benefits to the organization as it creates communications channels within various areas of the business.

Figure 1.7

Figure 1.7 Customer service maturity3

The ultimate goal of any organization is to deliver value to shareholders. A general model introduces three basic mechanisms that enable the creation of shareholder value: increase sales volume, increase sales revenue, reduce costs. The logical structure is quite simple:

  • [1] Volume sold (quantity of products or service)
  • [2] Amount paid per unit (product or service)
  • [3] Revenue = [1] × [2]
  • [4] Cost to serve
  • [5] Profitability = [3] – [4]
    Figure 1.8

    Figure 1.8 Profitability, basic mechanisms

Note that this basic algorithm has a few simplifications. For example, the cost-to-serve line aggregates all costs and expenses without segmentation. This includes imposts and taxes. We could use more sophisticated models; however, this format is well adapted to the objectives of this book.

The Supply Network Business Value Model (SNValue Model) suggests three building blocks to create shareholder value (Oliveira and Gimeno, 2014):

  1. Enabling sales volume growth.

    The main purpose of this mechanism is to increase the volume sold by the company. The volume increase generates increased revenues but the impact on profitability can vary greatly. If the strategy to increase volume defines equally increased costs, then operations profitability may reduce. However, so far when “enabling sales volume growth” is cited, the reader will only consider the number of units traded despite eventual cost consequences. The main policies of this strategy are as follows:

    • Enabling market-share growth
    • Reducing revenue cycle
    • Reducing lost sales
    • Supporting marketing and sales initiatives
    • Enabling customer experience
  2. Enabling customer experience.

    The aggregate set of policies on “enabling customer experience” seeks to change customer perception positively. Customers who see greater value in the product or service offered to them are more likely to spend more, thus increasing revenue and profitability. The main policies of this strategy are as follows:

    • Adding value to the customer
    • Enhancing cost to serve
    • Adjusting the right service at the right cost
  3. Enabling margin growth.

    The difference of this mechanism in relation to the two previous ones is in the focus given to cost reduction and elimination of general expenses. The main policies of this strategy are as follows:

    • Reducing cost of sales
    • Balancing asset management
    • Balancing service level and cost structure

The complete SNValue Model integrates all three mechanisms into a coordinated effort to maximize gains to the organizations. The simultaneous application of various policies has a diffuse effect on the final result. Therefore, companies often do not capture the exact correlation between the implementation of a specific action and its outcome. The quantification of the cause-effect relationship is very limited in most cases.

However, the organization may identify how each process will contribute in order to add value. A simple tool to support this exercise is the Business Value Impact Chart (BV Chart). The structure of the BVChart has four key elements; the first is the process identification according to the SNAR Model coding system (see Figure 1.9).

Figure 1.9

Figure 1.9 SNAR Model coding system

The second element consists of understanding how the selected process (for example, customer service, SNAR 01.03.01) influences each business value dimension. Although this analysis is business specific, there is some adherence within several different industry sectors.

Figure 1.10

Figure 1.10 BVChart for SNAR 01.03.01

The BVChart for customer service obviously has a tremendous potential impact on enabling customer experience despite the fact that this influence is mostly associated with the definition of strategies and policies. The customer service role is also to steer customer culture within the organization and facilitating or incentivizing other areas to perform accordingly.

The third element is the internal evaluation (diagnosis) of the processes. To capture the real contribution requires maturity and represents the most difficult step within the methodology.

Figure 1.11

Figure 1.11 BVChart, reality check

Each dimension of the SNValue Model has to be audited and evaluated against set expectations. The example illustrated in Figure 1.12 indicates that this company is fully delivering the potential benefits of the margin growth pillar while the benefits from both the sales growth and customer experience pillars are only partially delivered.

Figure 1.12

Figure 1.12 BVChart graph

The last element in the BVChart is the graphical representation of the SNValue dimension. It compares the expectations to a real situation.

  • + Share This
  • 🔖 Save To Your Account

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020