Customer value and supply chain management

• Discussion on Dell’s direct business model

The Value Chain

Introduction

• The internal quality assurance Phase (Mfg. Focus)

• The external customer satisfaction Phase ( MM focus)

• The customer true value phase– Customer value is the way the customer

perceives the entire company’s offerings including products services and intangibles

• The role of logistics in customer value chain management

The dimensions of customer value

• Conformance to requirements (availability; stable viruses highway nation in demand )

• Product selection ( options-style, colors and designs service features etc.) Maruty example

-specialized offerings one type of porter e.g. Starbucks -Megastore; one stop shop offering e.g. Wall mart -Megastore specialized in one product –IKEA, Factory outlets- Internet based offerings

• Price and brand (Dell, every day low prices, Food bazaar's price challenge, Subhiksha BACHAT ADHIKAR slogan

• Value added services ( The ultimate differentiate and value creator)

• Relationship and experiences Need to get closer to the customer ,loyalty cards , data-based promotional offerings ,after service calls ,mobile telephone groups

Strategic Pricing

• Revenue management (example of hotel room management

• Smart pricing – Customized pricing ( example of airline tickets)

– Dynamic pricing (available capacity , demand variability ,seasonality in demand pattern,length of planning horizon)

– Internet based differentiation

Hotel Room Pricing options

• Total 400 Rooms• Demand fore casts for per night rent

– 400 rooms@ Rs.12000 (480000)– 200 rooms@ Rs.16000 (320000)– 100 rooms@ Rs 18000 (180000)– 50 rooms @ Rs. 20000 (100000)– What pricing strategy hotel should follow? What should be

their supply chain strategy to maximize their revenue

– The Hotel Managed a revenue of Rs.6,60,000 per night)

Airline pricing model

Customer value measures

• Service level

• Customer satisfaction

• Supply chain performance measures – Total supply chain costs – Cash -to- cycle time – Upside production flexibility – Delivery performance to request

SCOR Valuation Metrics (Supply Chain Operations Research Model)

Information technology and customer value

1-Customer benefits • Increased ability to connect and disconnect • Increased customer expectations

• Tailored experience

2-Business benefits

3- Business to business benefits

Summary and conclusions

• The myth of excellence (book research)• The myth is really not valid

• To succeed a company needs to dominate in one attribute and

• Differentiate itself in another and

• Be adequate in all the rest but not below that

.supply Chain strategy affects customer value

. A properly designed supply chain strategy can enhance customer value .