Our RightChain™ Model begins with customer service for two reasons. First, a humble attitude of service is a basis for supply chain success. High levels of customer service are a common denominator in superior supply chain leadership. Quite simply, leaders serve. Christ Himself, the Leader of leaders, encouraged us along these lines when He told us that He had not come to be served, but to serve. Second, the constraints developed as a part of a customer service policy are the underpinnings for supply chain and inventory optimization.
It is fascinating to observe the faces and body language of managers and directors in RightChain™ kickoff meetings. The bodily and facial slumping, sets in almost immediately. Most assume the project will be all about “cutting heads” and heavy expense reductions through declining service offerings. That’s not what RightChain™ or RightStock™ are about. They and we are about determining the most profitable way and level of inventory to service customers and to take the burden of supply chain logistics off sales and marketing, so they can focus on sales and marketing. In the end, our strongest proponents are often sales and marketing teams, dealer support groups in automotive service parts, chefs in our restaurant projects, doctors in our healthcare programs, etc. The RightChain™ begins with service!
Customer service and customer service policies link supply chain logistics externally to the customer base and internally to sales and marketing. Customer service is optimized when the customer service policy (CSP) that maximizes the financial and service performance of the organization is identified, implemented, and maintained.
Optimizing customer service (RightServe™) includes customer valuation, segmentation and optimization (RightSales™); SKU valuation, segmentation, and optimization (RightSKUs™); pricing optimization (RightPrice™); customer satisfaction optimization (RightSat™); and customer service policy optimization (RightTerms™), all of which play a major role in determining inventory requirements.
An example customer service policy developed as part of a supply chain and inventory strategy project for a major semi-conductor manufacturer is presented below. The figure illustrates many of the dimensions of a customer service policy that impact inventory requirements including fill rate, response time, returns, value added services, minimum order quantities, and consolidation. Of those, fill rate and response time nearly always have the greatest impact on inventory requirements.
Example Customer Service Policy for a Semi-Conductor Company