Reverse Logistics - Logistics Quarterly

Options for Addressing Global Logistics Service Gaps
find itself at a competitive disadvantage
in these markets, increased accessibility
Perception of Order Placement Activities Perception of Order Receipt
to employees, more frequent sales calls,
Ordering Procedures: Effective and efficient Order Condition: Packaging modifications, and higher customer service quality
web-based procurement, modified and alternative shippers, alternative
through better trained personnel may
straight re-buy alternatives, minimization of
ordering time, accurate confirmations.
Information Quality: More detailed website
information, better trained service personnel,
transportation modes.
Product Quality: Conforming substitute
items, technical standards, procurement
increase customer value. Similarly, some
global customers are more focused on
global security issues than others, this
better information of alternative products, quality.
due to geographic location and govern-
product efficacy.
mental constraints. A standardized logis-
Order Release Quantities: Enhanced safety
stock, more accurate forecasting, inventory
management initiatives.
Order Discrepancy Handling: Uniform
policy on replacements and investigations,
service personnel quality, feedback channels
tics service offering for all customers
often fails to take these discrepancies
(including web-based).
into account, meaning supplying firms
Personal Contact Quality: Increased Timeliness: Alternative transportation, can lose customers by not providing
accessibility to employees, more frequent
sales calls, higher customer service quality
(training).
alternative packaging, compliance. security initiatives to those customer segments
that need them to move products
Financial Procedures: Willingness to take
payment in multiple currencies, ability to
Order Accuracy: Effective info. exchange
between order receiving and warehousing,
quickly. U.S. firms, for example, are now
preferential to global suppliers in com-
offer flexible payment terms.
uniformity of SKU codes, standardized
procurement methods.
pliance with CT-PAT and Container
Security Initiatives, whereas this has little
Security Compliance: Pre-clearance,
certification drivers and system.
value to the average Argentine manufacturing
importer. Modifying global supply
saving activity by avoiding efforts (in additional service per- chains accordingly is critical for satisfying profitable segsonnel,
for example) which do not add value to the customer.
Next, we determine how well those customers perments
with significantly different service bundle needs.
ceive our service handles those critical elements.These two Conclusions
tasks are accomplished using traditional survey methods, Global logistics managers should understand the value of
where we can quantify the differences between what is customizing their logistics services for specific buying seg-
important to the customer and how well we provide that ments across overseas markets.Too often,customers are lost
service dimension. These differences represent our global because we seek to standardize our global supply chains in
logistics service gap. Unfortunately, we often discover our order to be operationally efficient, while failing to provide
service shortcomings to be negative, meaning we are not the distribution services necessary to add value for the cus-
meeting customer needs for specific segments, leaving tomer. Different customer segments will demand different
openings for competitors to benefit from our service fail- logistics services, and only by understanding our shortcomures.
We can also determine how well the market feels we ings in these service areas can we develop global logistics
compare to our competitors on specific dimensions, this by strategies that increase customer value, increase customer
asking customers to rate the industry at large on logistics loyalty, and subsequently increase the profitability of our
service dimensions. While not compulsory, this extra infor- relationships with our buyers. Customizing our supply
mation allows firms to benchmark against other providers. chains for specific customer groups is only possible by surveying
customers regarding what they value, and under-
Options for Addressing Global
standing how they feel our firm is performing in the service
Logistics Service Gaps
areas they rate as important. Over time, strategies based on
Once a firm’s logistics service quality gaps have been closing our service gaps lead to greater customer satisfac-
identified,there are a number of options available for develtion, retention, and subsequently higher margins for global
oping strategies that close these gaps and enhance customer
value. Several of these are offered in the accompanying
supply chain managers.
table. For example, some customer groups may place an NOTES:
emphasis on the personal contact quality they receive from Mentzer, John T., Daniel J. Flint, and G. Tomas M. Hult
suppliers: we see this often in cultures such as those in (2001), “Logistics Service Quality as aSegment Customized
Japan, southern Europe, and Latin America. Should a firm Process,” Journal of Marketing, 65 (October), 82-104.
30 LQ winter 2003/2004
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