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12Jun

Unit Fill Rate (UFR)

The unit fill rate (UFR) for an item is the portion of the total number of units...

27Jun

Warehouse Occupancy Percentage

Optimal storage utilization helps enforce healthy inventory management. In our early work with Honda their...

02Jun

Efficient Procurement Inventory

Efficient procurement inventory (EPI) is often required to realize steep discounts when a special opportunity...

26Jun

Inventory Activity Profiling & Data Mining

Suppose you were sick and went to the doctor for a diagnosis and prescription.  When...

27Jun

Inventory Performance Measures

Inventory performance measures include financial, productivity , quality, and response time indicators for evaluating the efficiency and...

Customer Definition

Customer Definition

Before developing the customer response master plan, each organization must make a clear distinction between the customers and consumers of its products and services.  The consumer is the last party in the logistics chain. The consumer is the party who uses the product for the purpose it was ultimately designed for.  Thecustomer is the party who buys product from us.

The customer may or may not be the last party in the logistics chain. Depending on where you are in the supply chain, you may have no idea who is consuming your product, but you should always have a good relationship with the customer of the product.

If the product is food, consumers eat it; if the product is a beverage, consumers drink it.  If the product is a television, consumers watch it.  If we make TVs, if we are Phillips Corporation, and our customer is Best Buy, Best Buy doesn’t consume the TV, they’re just the customer.  They sell it to one of us who consumes the television.  For a manufacturer, the customer could be another manufacturer, it could be someone who assembles product, it could be a wholesaler, a distributor, a retailer, or a mail order company, or the customer could even be the end consumer.  Dell computer for example ships product directly from Austin, TX, to the end consumer.

If I’m a wholesaler or a distributor my customer could be a manufacturer, someone who assembles something, another wholesaler or distributor, a mail order company, or a retailer.  In the United States, a typical supply chain is manufacturer, wholesaler, retailer.  In other countries, there are multiple levels of wholesaling.  In Japan it’s very common for a wholesaler to be a customer of another wholesaler.  The excess handlings and markups due to extra layers of wholesaling in some Japanese supply chains have led the Japanese government to offer financial incentives to wholesalers who are reinventing themselves to become third party logistics providers.

For a retailer or mail order company, the customer is almost always an end consumer.  It could be another business, but typically it’s an end consumer.

 

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