Running head: SCM Chapters 10 - 12
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Principles of Supply Chain Management: A Review of Chapters 10-12
Renita A. Duncan
Supply Chain Management
March 17, 2013
Mr. Bruce Stephens
Southwestern College of Professional Studies
SCM Chapters 10 - 12
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Chapter Ten: Customer Relationship Management
Customer relationship management will be instant once a company gains customers for
its products and services and want to satisfy them. We want to maintain long-lasting customer
relationships. CRM services are rapidly growing and many companies are being to hire third
party CRM services and software to predict customer buying patterns. Not always the best idea
because it affects the competitive advantage. The role of CRM in supply chain management is
not directly with the external customer, it is usually the first-tier customer we learned about in
earlier chapters of the text. We as SCM must ensure that the training and education reflects the
importance of the end-customer benefit. Segmenting customers is one of the most basic ways to
customize marketing and communications so that specific customer groups are targeted. This
can be accomplished based on region and demographic information, sales history and profits.
Within segmenting customers is permission marketing which is like relationship marketing. This
may be ineffective because customers are overwhelmed with advertisements and many other
contact tactics. The other is cross-selling, in the telemarketing world we use to call them upsales. When a customer buys one item that are introduced to several others related to it or
similar to their style which they are hoping the customer will desire. There is also a way to
calculate customer lifetime value which we learn in this chapter. It is to determine customer
profitability, we use this so as to direct our resources towards customers that actually bring profit
to our company. There is also personalizing customer communications which is to know their
preferences. Within these communications is event-based marketing which include special
availability to customers such as on-line banking and even paying your bills on-line. The key in
CRM is to develop customer contact that better serves the customer and will produce
profitability for the company.
SCM Chapters 10 - 12
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Questions for Chapter Ten
1. What products are used for documenting field activities, communicating with the home
office, and retrieving sales history and other company specific documents? Answer: B
(p.
354)
a. Sales Activity Management
b. Sales force automation (SFA)
c. Pareto analysis
d. Lead Management
e. Sales Knowledge automation
2. __________________ is another form of personalized communication that comes with the
ability to offer individual promotions tied to specific events. Answer: Event-based
marketing (p. 353)
3. Reducing _________________________ or customer churn is a necessary component of
managing long-term profitable customer relationships. (p. 351) Answer: customer
defections
4. By targeting specific customer segments, firms can save money by avoiding marketing
efforts aimed at the wrong customers. T/F? Answer: True (p. 349)
5. Customer relationship management refers to building and maintaining profitable long-term
customer relationships. T/F? (p. 346) Answer: True
SCM Chapters 10 - 12
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Chapter Eleven: Global Location Decisions
Global location decisions are very important to supply chain management. The strategy
for this gives companies like FedEx the competitive advantage in the global market. There are
sever factories listed in our text that would give a company competitive advantage overseas.
Offshore factories, source factories, sever factories, contributor factories, outpost factories and
lead factories, all of which play important roles and affect costs of doing business globally.
Regional trade agreements are important to understand for both ethical and legal reasons. There
are several factors in which to consider when selecting a potential location from the reaction of
shareholders and customers to the impact of delivery performance. It is quite easy to determine a
nations competiveness; you would look at their OECD organization of economic cooperation and
development. This would be to look at how the company can produce goods and services
needed to meet customer demand. There two sources in which to get the rankings of
competiveness; World Competitiveness yearbook and The Global Competitive Report. There
are 12 pillars of competitiveness which are listed in this chapter. Government taxes and
incentives are very important when it comes to the global market. Tariffs are very important to
know and understand as the federal government of the U.S. does impose them for American
business protection so also may some other countries. The U.S. also has other laws that affect
exporting. Labor laws in the U.S. differ from other countries. There are also quality of life
issues, access to resources and suppliers as well as right-to-work laws to consider. The
protection that the U.S. offers to employees differs greatly than from those globally, it is
important to consider the ethical responsibilities that affect all stakeholders and not just look at
company profit when it comes to global location decisions.
SCM Chapters 10 - 12
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Questions for Chapter Eleven
1. Why are global location decisions made? Answer: to optimize the performance of the supply
chain and be consistent with the firm’s competitive strategy (p.377)
2. An Outpost factory is set up in a location with an abundance of advanced suppliers,
competitors, research facilities and knowledge centers to gain access to the most current
information and materials? T/F (p.379) Answer: True
3. What factory is set up primarily to take advantage of government incentives to minimize
exchange risks, avoid tariff barriers and reduce taxes? (p. 379) Answer: B-Server Factory
a. Contributor Factory
b. Server Factory
c. Outpost Factory
d. Offshore Factory
4. T/F- There are three competing sources for national competitiveness rankings; they are the
World Competitiveness Yearbook, The Global Competitive Report and The International
Competitive Journal? (p. 382) Answer: False
5. What information needs to be available in order to use the break-even model as a useful
location analysis technique?
( p. 391) Answer: C
a. Fixed costs
b. Variable costs
c. Both fixed and variable costs
SCM Chapters 10 - 12
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Chapter 12: Service Response Logistics
In this chapter we learn more about the service industry as it pertains to SCM. “Services
are by far the largest sector of a post-industrialized nation…”(p. 404). The service industry
stems from grocery stores to private attorneys or consulting firms. There are a few differences
between goods and services and they are listed at the beginning of this chapter. We must learn to
account for services provided to ensure that we are providing the best services for the lowest
possible cost. The service industry is an excellent arena to strategically implement lean
management systems. There is a basic measurement for gaging productivity which our text also
demonstrates for us. There are global service issues to consider as well; similar to the last
chapter we reviewed labor, facilities and infrastructure support, legal and political issue,
domestic and economic climate, and identifying global customers are all focuses of the service
market that are important globally as well. Services strategy development includes cost of
leadership strategy, differentiation strategy and focus strategy; of the three cost of leadership
requires a large capital investment because of the equipment and automation requirements. The
service of delivery which AMAZON seems to have mastered is also discussed in this chapter.
There are some primary concerns of Service Response Logistics because they directly affect
customer interaction, they are; management of service capacity, waiting times, distribution
channels and service quality. Managing capacity is simply how many customers one company
can serve in a day. There is a calculation similar to the productivity calculation. We must learn
about queue times when it comes to providing service as they are very important to arrivals and
other service characteristics. Service response activities are important to quality and since
maintaining long-term customer relationships depends on quality and service we must ensure
that we can tie the customer experience into our strategic plan.
SCM Chapters 10 - 12
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Questions for Chapter Nine
1. Successfully managing services as they expand into foreign markets involves a number of
issues including what?: (p.406)
a. Labor, facilities and infrastructure support
b. Legal and political issues
c. Domestic competitors and the economic climate
d. Identifying global customers
2. What is the basic measure of productivity formula? (p.405) Answer: Productivity=Outputs
produced/Inputs used
3. Differentiation strategy is based on creating a service similar to other and does not possess
any uniqueness at all. True/False (p. 407) Answer: False
4. When things work out right, service operates at optimal capacity utilization. What is the
calculation formula for this statement? (p. 417) Answer: Capacity utilization =Actual
customers served per period/capacity
5. Which of these is not an issue to consider when managing queue time? (p. 423) Answer: E
a. How long will customers actually wait in queue before they either leave or lower their
perceptions of service quality.
b. How are customer arrival and service times distributed
c. What is the average arrive rate of the customers
d. In what order will customers be serviced
e. All of the above should be considered
SCM Chapters 10 - 12
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References
Wisner, J. D., Leong, G. K., & Tan, K. (2005). Principles of supply chain management: a
balanced approach (Third ed.). Mason, OH: South-Western.