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Questa è la versione tradotta in italiano con il traduttore automatico di Google.

Overview

This study was conducted in order to determine the relation of supply chain management (SCM) to the provision of efficient customer services. In this chapter, three global players operating within different industries will be described and analyzed. These companies include Ford, Dell and Wal-Mart. In particular, the SCM practices, activities or systems applied by the said companies will be discussed in the results section along with the analysis of how these particular systems result to efficient customer service delivery. Relevant secondary resources are the main instruments used for this chapter.

Results

Ford Motor is considered as the second largest manufacturing company within the automotive industry worldwide. In 2000, the financial report of the company indicated that the company was able to acquire a total of $6.7 million worth of sales. As the company operates in several parts of the world, Ford has a high-volume, high-velocity and complicated supply chain. In its North American operations for example, a total of $140 million worth of materials from 5,000 suppliers must move on a daily basis within the chain. These materials are then transported to 46 manufacturing and assembly sites. Once the products have been made, these are then delivered to about 7,000 dealers within the region (2002). As the efficacy of the company’s supply chain is the main determinant of the products it would distribute to the market, Ford Company’s supply chain serve as an essential instrument for meeting customer satisfaction.

The company highly values the products and services it gives to the customers. Ford’s advanced manufacturing and engineering vice president even stated that meeting the satisfaction of the customer is the top priority of the company. In particular, the vice president noted that a business will not progress if the expectation and demands of the customers are not met. The company follows the principle that the management of the supply chains involves multiple flows; by means of maximizing each flow, value is created. Through this company practice, companies and manufacturers in general will be able to overcome the continuously increasing business challenges (2002). For this reason and belief, Ford highly values strategies that would enhance its supply chain systems, which is geared towards the provision of efficient customer services. One of which is the Six Sigma program.

In 1999, the company introduced the Design for Six Sigma (DFSS) program to its operations. DFSS is described as an approach that aims to enhance product development through the organized and strategic anticipation of customer needs as well as the utilization of proper statistical and scientific applications that would help in meeting these identified needs (2004). In simpler terms, this quality tool was made to establish a consumer database that would help create winning products at all times.

Within this tool, Ford identified four major cornerstones that would support its aim of transformation for the 21st century. These cornerstones were mainly geared on increasing customer commitment and driving greater shareholder value. These four cornerstones include (2002):

1. The Six Sigma – a strategic approach based on data that aims to take out all defective procedures and aspects of the company.

2. e-Business – a cornerstone that involves the utilization of technology-based tools so as to enable real-time interaction and collaboration with both suppliers and customers.

3. Ford Product Development System – includes processes that serve as an outline for new product to be designed and distributed to the target markets.

4. Ford Production System – also referred to as lean manufacturing; involves procedures that are geared on the elimination of all types of waste in the production of the vehicles and their components.

With these four cornerstones of the Six Sigma effort, Ford strongly believes in the ability of this quality tool to achieve its objective of becoming a leading company in the automotive industry, particularly in terms of product design, quality and service efficiency. One of the company departments that were able to benefit from this program is the Material Planning & Logistics (MP&L) sector. This company department involves a number of sub sectors including product development, manufacturing, distribution and other activities related to supply chain. Each of these sub sectors has their own responsibilities. Nonetheless, by means of the Six Sigma tool, these different perspectives were able to coordinate with one another, resulting to quality product and service delivery (2002).

Through the Six Sigma project, Ford was also able to streamline its means of generating greater customer satisfaction. Specifically, its Material Planning & Logistics department was able to establish a customer-oriented program called DMAIC-R, a six phase procedure that aims to enhance customer satisfaction. DMAIC-R stands for define, measure, analyze, improve, control and replicate ( 2002). In the define phase, the objective is to identify and understand the issue being solved. Through this phase, the MP&L team members are able to understand customer expectations more.

The measure phase is more centered on the use of various data collection methodologies; these techniques are used in order to measure the company’s current performance and accessible project opportunities. It is the aim of this stage to monitor what improvements have been gained by the department in line with customer satisfaction (2002). As data have already been gathered through the first two phases, the analyze phase is then carried out in order assess the acquired data. This stage is done in order to refine identified issues and draw out real opportunities for the business. The fourth phase is focused on the generation of appropriate ideas and processes for improvement. Once this is done, the suggested improvement actions for customer satisfaction will then be integrated into the operations (2002).

The control phase is carried out to make these means of service improvement as operational standards. The replicate phase, the final stage, is centered on the replication of the improvement activities done by Ford to global organizations conducting similar processes. Through this phase, Ford was able to share its achievements with the Six Sigma to other organization. Not only do these phases help in achieving faster results but it also amplifies the effect of the solution (2002).

In addition to helping develop the operations of Ford’s MP&L department, the Six Sigma project led to several other advantages and benefits to the company (2002). For instance, this enabled the company to use a data-driven statistical technique that helps in taking out defects in its manufacturing procedures. Through this effect, Ford is able to improve the quality of its products and services, which in turn contributes to increased level of customer satisfaction. The Six Sigma tool proved to be a beneficial strategy not only in identifying defective areas or processes but also in reducing wastes and addressing origins of various company bottlenecks. As the root causes of the problems are identified and addressed immediately, Ford is able to maintain its quality achievements as well as ensure service efficiency.

Reports of company on the Six Sigma project indicated that since its initial implementation, Ford has already carried out a total of 17,327 projects that were geared towards product quality enhancement and waste elimination. Furthermore, these relevant projects were able to generate around US$3.26 billion worth of savings; in 2004, the company was able to save a considerable amount of about US$919 million. With these promising outcomes, the company continues on enhancing this project by conducting more quality and waste reduction activities. In 2005, the company even planned to achieve this objective by connecting its Six Sigma efforts to Ford’s main business plan objectives ( 2006).

Dell Computer

Over years of operations, Dell Computer has actually been implementing multiple systems and programs in order to improve its supply chain management operations. As the company deals with computer parts and components, the quality of the computer units it would manufacture greatly depends on the supplies delivered by its suppliers; for this reason, Dell ensures that it is partnered with good and efficient suppliers. These include suppliers of motherboards, memory chips, microprocessors, monitors, modems, flat-panel displays, disk drives, long-batteries and other desktop components. Through its strategic supply chain operations and its partnership with the best suppliers, Dell was able to offer products that are not only of quality but highly diverse as well. This in turn provided the customer with more product choices that suit their individual needs and preferences ( 2003).

One good example of these major suppliers for Dell is IBM. In order to obtain the best component supplies for its products, the company established an alliance with IBM. In this agreement, Dell purchased a total of sixteen billion dollar worth of IBM parts and components for its PCs, servers and workstations for three years. Dell selected IBM as one of its major suppliers as it recognizes the company’s growing capabilities and expertise in producing quality components. Although IBM is in fact one of Dell’s major rivals in the industry, the company still forms alliance with the best suppliers so as to produce the best products (2003).

The company has a number of other suppliers that are also recognized for their ability to produce quality OC components. Some of these suppliers are Intel for Dell’s microprocessors; IBM, Maxtor, Seagate and Quantum for hard drives; Micron, Samsung and Toshiba for DRAM; Acer, Nokia, Phillips, Samsung and Sony for monitors; Hon Hai for the box builds and connectors; Solectron and SCI for the company’s printed circuit board assemblies; and several Taiwanese manufacturers for contract manufacturing and other components. The supplies for Dell’s microprocessors are supplied solely by Intel as the company believes this effective for simplifying product development ( 2001).

Dell’s partnership with the best suppliers for computer components actually resulted to more than just the production of quality products; the approach has in fact benefited the company in other ways. For instance, this business approach enabled it to operate with fewer than seven days of inventory. Aside from having the PCs equipped with the next-generation components, the company also obtained substantial savings from inventory costs. With fast production processes, Dell is able to release its quality products in less than a week after the components had been delivered, resulting efficient service delivery and highly-satisfied clients (2003).

In the production sector, effective logistics is employed by Dell Computer through the implementation of a system known as Metric 12. During the late 1990s, the top management team of the company realized that some changes must be done in order to meet the growing demand for its products. Dell then decided that instead of building more factories to meet the demands of the market, the company will develop an operational strategy where the process of assembling the computers will go through a smaller number of personnel. Through this, the time and cost allotted for product assembly will be limited, resulting to faster production. For this objective, the company developed the Metric 12 strategy. Basically, the strategy reorganized the factory and assigned more responsibilities to a limited number of workers (2003).

The Metric 12 strategy is developed by the company in order to improve the products and services given to government and corporate customers. As the company is also using the product customization strategy, operating with Metric 12 allows the company to give the best to the consumer at the fastest delivery time. With this operational process, Dell is able to cut the assembly, testing and customization time for desktop systems by half. This is advantageous for the company as it does not only get a higher level of customer satisfaction, but the fast production of the products also lead to higher sales (1997).

While Compaq Computer, Hewlett-Packard, Toshiba, Sony and other PC manufacturers are producing their products in volumes and selling them through retailers, Dell opted to use a more direct value chain model where products are directly marketed to the consumers by the company. The direct value chain model is especially useful for the company since this allows it to fulfill its objective of serving the specific needs of the consumers within the shortest possible time (2003). This is yet another aspect of the company’s supply chain operation which is more related to product distribution.

In the company’s website (2006), the different aspects of the direct model had been discussed; these include most efficient path to the customer, single point of accountability, build-to-order, low-cost leader and standards-based technology. These five parts of the model allowed the company to employ a unique buying and selling technology. The model basically promotes the belief that the most efficient method to reach out to the consumers is through direct relations. Through this business model, customers are able to access the right resources for their needs.

The customers are not the only ones benefiting from Dell’s direct business model. Aside from removing retailer mark ups from the business flow, the direct access of the company to its customers also helps in strengthening company-consumer relations. For example, if the products of Dell will be distributed through multiple channel partners, the company will not be able to identify who their specific end users are; in most instances, retailers do not reveal the end users of the products they are selling.

However, with the direct business model, the company is able to identify their end users, the type of equipment they had bought from the company, the shipping location as well as the amount spent for Dell products. These data are then used by the company to offer other related products or services; these additional information is then helpful in coordinating the company’s other feature with that of the consumers’ purchases. In other words, the direct business model is beneficial for Dell as it become involved right from the purchase of the PC up to their installation and maintenance.

Aside from implementing SCM systems that improve the materials, production and distribution of Dell’s products, the company also ensures that the needs of the customers are met by means of providing convenience during the ordering, delivery, setting up and maintenance processes of purchased goods. One process employed by the company for this purpose is through its company website, which is basically patterned after the one-stop-shopping system. Through online access, buyers can visit the site and browse over the company’s products for keyboard, mouse, operating system, memory, chassis, software and processor easily (2002).

With the online company store, buyers do not have to personally visit the site to choose over multiple products; the site also helps them in comparing prices and determining the product stocks. In this way, they will be prepared as to how much the total purchase costs. Once the consumer had already designed the hardware system, the buyer can easily move on to other IT categories. To help out the consumers, the company offers various services such as consulting services, web design and hosting services and system support. Specific subcategories are available for each service so as to meet the specific needs of the buyers. Through this SCM tool, service efficiency for the customers is observed.

Wal-Mart

Wal-Mart Stores, Inc. was first established and founded by Sam Walton at Rogers, Arkansas in 1962. The business growth of the retail store was momentous that within a span of seventeen years in operation, Wal-Mart had already topped annual sales at one billion US dollars. By the end of January in 2002, Wal-Mart has been recognized as the largest retailer in the world a sales record of 218 billion US dollars. With this huge and continuous development, it is no wonder the retail store was able to operate at the global level (2001).

Along with its global success, the company naturally needed to expand its supply chain and employ effective systems that would allow it to serve multiple markets from different locations. Compared to the global companies described in this chapter, the giant retailer allotted considerable investments on various technologies that would support its large and dynamic supply chain. Ever since the company started, Wal-Mart has always viewed technology as an essential business competitive advantage; thus, in its important business activities such as the management of the supply chains, technology has always been involved. Over the years, the company had employed a number of different technology-based tools to enhance its SCM systems. Though technology has long been applied in the company’s operations, it was not until the mid 1980s when this was applied in its supply chain systems (2002).

One of its earliest technological SCM systems was the installation of the electronic data interchange (EDI) tool, which was around in 1985. EDI is one of the products of information and communication technology that helped enhanced SCM processes. Private wide-area networks or value-added networks (VAN) were conventionally used to implement EDI. This however made EDI too costly for small and medium sized companies. With the introduction of the internet-based EDI, these enterprises are now able to acquire the benefits of EDI application (2000).

Through EDI, computer systems are linked across organizational boundaries, which facilitate electronic data exchange that does not necessitate human intervention. The EDI is then beneficial as it increases the response rate of the company as well as its accuracy. Expenses incurred in transactions are also considerably reduced. In addition to these advantages, business strategies such as vendor managed inventory as well as just-in-time delivery were made possible through the EDI.

In the case of Wal-Mart, this technology was first employed for Procter & Gamble. Through this, P&G was able to acquire point-of-sale scan data that the company required for product replenishment. The used of EDI considerably simplified of what was used to be a manually operated and paper-based activity. With this revolutionary SCM tool, both P&G and Wal-Mart was able to work together to keep track of items that need replenishment. Not only did this system resulted to more efficient services delivered to P&G and other companies connected to Wal-Mart, but the EDI and the continuous product replenishment led to significant shipping cost savings for the product manufacturer and the retailer ( 2002).

The traditional practice of Wal-Mart to share its sales data with its manufacturers and suppliers in real time is also supported through this technology. Furthermore, the business success achieved by Wal-Mart is said to be attributable to its EDI system that is applied to its group of suppliers. The success of the worldwide retain company is also explained by its online trading system. With this ICT system, companies like Wal-Mart can acquire greater profit even without the allocation of large investments ( 2004). The system then supports the store’s direct selling efforts.

The collaborative forecasting and replenishment (CFAR) of Wal-Mart was another strategy of the company geared towards the enhancement of its supply chain operations, particularly on its collaboration work. This strategy was first tried out in 1995 with Warner-Lambert for Listerine. The success of the test then led to development of the final program in 1996 called VICS CPFR (collaborative planning, forecasting and replenishment) (2002). Some strategies of the retailer have some similarities to other global companies such as DELL Computer. In particular, the company also improved its product distribution and delivery to its consumers by means of developing an official company website.

At first, the use of online retailing had not generated much favorable outcomes for the company. Being successful in offline retail, it has been expected that the same success will be achieved by the company online. However, analysts have noted that the company’s online sales were way behinds its contenders. The company however, was not discouraged. Instead, Wal-Mart searched for ways on how to maximize its online services. The company then had successfully integrated its online and offline operations leading to a revenue generation of about $218 billion in 2002 (2002). Through this tool, the company was able to integrate the concept of convenient shopping to consumers who do not have sufficient time to shop.

In addition to technology, Wal-Mart also has efficient distribution systems that support the efficacy of its supply chain operations. The distribution operations of the company are highly automated. Typically, its discount stores carries more than 70, 000 standard items in stock. Its Supercenters on the other hand, carry more than 20,000 additional grocery items that are mostly perishable, hence, must be ordered frequently. In order to establish coordination, associates make use of hand-held computers that are linked by radio-frequency network to area stores. When placing orders, every store wires merchandise requests to warehouses that can either be shipped immediately or reordered. More than 200 vendors are connected to the company’s computers, making deliveries efficient and fast (2002).

Numerous tractor trailers are also owned by Wal-Mart, which enables the company to deliver product items within 38 to 48 hours from the time the product order is placed. After delivering the products, trucks would pick up items from manufacturers on the way to the distribution center. Over 60 percent is the average of this back-haul rate. This means that delivery trucks are 60 percent full on return trips to the distribution center, resulting to cost reduction (2002).

Analysis

From the given descriptions of the SCM systems applied by the three selected multinational companies, distinct features can be drawn. For instance, all three companies employ different systems or tools to ensure effective SCM. Ford for example, decided to integrate both management and technological approaches to develop its Six Sigma project. Dell also applied internet technology on its supply chain system but is more centered on enhancing its SCM through efficient organizational management models. On the contrary, Wal-Mart is more into technology and innovation when its come to SCM.

Another important point indicated by the cited company cases is that the three companies apply SCM-enhancing tools and systems for varied purposes. In Ford Motor for example, the Six Sigma project was implemented in order to improve the quality of its production. Dell’s SCM strategies on the other hand are focused on making its production and distribution fast and convenient for both staff and customers. The SCM strategies of Wal-Mart are geared more on ensuring high product availability and building effective relations with the manufacturers. The differences in the main objectives of the companies are probably attributed to the fact that each is operating in a different industry.

In the automotive industry for example, the products produced by Ford are used for traveling; thus, to ensure good and safe traveling, the quality of the vehicles produced by the company is of utmost importance. Dell Computer operates in a highly competitive industry; moreover, the company deals with technologies and gadgets that rapidly changes over time. With this business and product nature, Dell does need to integrate speed and convenience in its supply chain operations. Wal-Mart on the other hand is practically the retail store where most people shop; thus, the efficient replenishment of goods is a must. In the same way, the success of Wal-Mart is greatly dependent on its relations with the manufacturers who provide the goods for the retailer’s consumers. From these, it becomes clear that employing SCM strategies is significantly dependent on the needs of the company as well as industry where it belongs.

The effects of the strategies and systems of the 3 companies indicated how SCM can lead to efficient delivery of customer service. Ford’s quality production for instance, led to increased customer satisfaction and loyalty, which has been made evident by its large yearly sales. Customers of Dell Computer are also satisfied with the company’s fast services and convenient ordering system. The installation and troubleshooting services of the company that is integrated in its supply chain also adds value, resulting to satisfactory customer service. With the effective relations Wal-Mart establishes with the other supply chain members, products are always made available, making customers happy and satisfied. All in all, SCM enables increased quality production and distribution, fast and convenient services as well as better business relations, leading to efficient customer service delivery. The three selected multinational companies in this study utilized apply SCM through different tools and for different objectives. Despite these differences, the resulting effect of these SCM efforts remains the same for the delivery of customer services.

Chapter V: Summary, Conclusion and Recommendations

Summary

This study was conducted for the purpose of identifying the relation between supply chain management and delivery of efficient customer services. This research particularly aims to identify the specific aspects of SCM that results to improved and effective customer services. In order to achieve these objectives, three multinational companies operating in different industries had been considered. These companies included Ford Motor, Dell Computer and Wal-Mart. Literatures describing the SCM systems of the selected companies as well as the effects of these efforts, particularly to customer service delivery were used in the process.

The results showed that Ford Motor applies an SCM project called Six Sigma, which aims to ensure quality in the vehicles and other products manufactured by the company. This SCM effort was applied to the company’s material planning and logistics sector, resulting to increased customer satisfaction, greater sales as well as cost reduction. Dell Computer employs multiple activities and programs to manage its supply chains. Specifically, the company implements a strategy known as Metric 12 in order to limit production to a smaller number of personnel, resulting to faster production.

The company also applies the direct value chain model to allow consumers to buy their computer need directly to the company as well as the establishment of partnerships with prominent and good suppliers to ensure quality production. In order to promote convenience in shopping for different computer components and tools, Dell also allows customers to shop and order online, increasing customer satisfaction. Wal-Mart on the other hand is more focused on building effective and harmonious relations with the manufacturers the retailer is affiliated to through technology-based SCM systems. By means of effective communication and collaboration, Wal-Mart’s SCM operations results to constant product replenishment and high product availability, leading to efficient customer services.

Conclusion

Based from the literatures gathered for the three selected global companies operating in different industries, several important conclusions can be drawn:

1. Supply chain management (SCM) has distinct aspects that enable the delivery of efficient customer services. As exemplified by the three selected companies, SCM is applied for the purpose of improving the quality of products manufactured by the company, increase the speed and convenience of the company operations as well as build effective business relations with the other members of the supply chain. Through SCM, these essential company objectives are achieved, which in turn help in ensuring the efficiency of the services delivered to the customers.

2. The application of SCM in the company does not only lead to efficient customer service delivery. Through quality production, fast services and effective business relations directly benefits the customers of the analyzed companies, the companies themselves benefit from supply chain management systems. In particular, the quality enhancement of the companies’ production and distribution through SCM results to greater customer satisfaction, which in turn leads to higher sales and customer loyalty. The continuous production of quality and timely goods to the customers also helps in building good company images, which is particularly important today considering the level of business competition. Aside from these, planning for efficient management of supply chains can also lead to considerable reductions in company expenses as well as inventories. Building effective relations with other supply chain members is also advantageous for the company as it will result to smoother business operation and faster progress.

3. Companies analyzed for this study employ different approaches in order to apply effective SCM. Ford combined both managerial and innovative approaches in order to create its Six Sigma system; Dell used more management changes and approaches so as to implement its SCM efforts; Wal-Mart on the other hand, preferred to invest on costly information technologies to ensure supply chain collaboration among its many suppliers. However, while they may use different SCM systems, the selected companies were able to achieve their primary objectives as well as improve the products and services that they deliver.

4. The selected companies develop different goals for SCM application, mainly because of the demands of their respective industrial environment. Although SCM systems are applied by most businesses worldwide, distinct differences in implementing such strategy can be identified, particularly in terms of purpose. Ford for example, applies SCM to improve the quality of its products, which is very important in the automotive industry. Speed and convenience are also considered important aspects in the computer and electronics industry where Dell operates. The same also goes for Wal-Mart whose success is greatly dependent on the availability of merchandise as well as the relations it has with the suppliers. This then suggest that the application of SCM is as case-to-case basis and that businesses in general should be aware of the factors affecting their environment to ensure successful SCM application.

Recommendations

Based on the findings gathered in the research, the following recommendations are made:

1. In making SCM-related decisions or plans, companies should not only be limited on the application of the latest technologies or systems. Rather, they should consider the resources available and accessible to them. This recommendation is geared towards the effective implementation of SCM. In making SCM plans, it is essential that the requirements for efficient implementation are taken into account. All possible options, including how these SCM systems would evolve in the future should be considered as well. Before spending on the latest SCM technology available, the company should also consider how this system would likely change after a few years as well as the cost to update it. If the company does not have enough resources to support these system developments, then other alternative should be considered. In this way, companies will not be stuck in old and less effective SCM systems when the time comes. This would enable companies applying SCM to ensure that all essentials have been accounted for and that decision are based on what resources they have.

2. The implementation of SCM, like any other business strategies, naturally leads to some difficulties and problems; companies applying it should then design a performance assessment program to monitor the outcomes of their selected SCM systems. Immediate response to problem areas identified through regular monitoring can help smaller companies to overcome business issues such as intense competition or decreasing market share. The ability of the companies to overcome business challenges is not only reliant on technology and innovation but also on the speed of their reaction to problematic issues.

3. In implementing business strategies, be its SCM-related or not, standardization is not the key to efficacy. Each business is operating in an environment that is different from others. This means, businesses are subjected to unique internal and external factors, which should be considered in SCM implementation. Hence, rather than follow the implementation practices of major and successful corporations, it is more practical and effective to take the individualized or customized approach in implementing SCM strategies or projects. In this way, greater control can be obtained and expected good business outcomes are likely to be achieved.

4. Other customer-related strategies can be applied by companies in order to provide efficient customer services. Supply chain management is not the only strategy or technique that businesses can apply in order to deliver efficient services to the customers and meet their satisfaction. The application of e-CRM for example is one way of achieving this company objective. Other common strategies include total quality management, market segmentation and value analysis. Below are brief descriptions of the recommended customer-oriented strategies:

e-CRM

Electronic customer relationship management (e-CRM) is a business strategy that utilizes online technologies in order to involve customers in stronger and more mutual interactive relationships with the companies. In turn, this helps businesses to sell their products or services more effectively. The e-CRM strategy actually works in coordination with various channels. In order for this tactic to operate, a common brand image must be relayed and maintained through the multi-channel marketing model of the company ( 2004). Similar to CRM, e-CRM is applied by businesses in order to enhance customer retention as well as loyalty by means of satisfying their needs (2002). Companies share a common belief that by building effective relations with the clients, their needs, standards and preferences will be more pronounced; as a result, products or services of the company will be supported by more interested and satisfied customers.

Like SCM, companies apply e-CRM in order to achieve several benefits, particularly in terms of the customer aspect. The implementation of e-CRM has been recognized for instance, as a cost-efficient business strategy. Specifically, this technique has the ability to reduce costs while generating valuable competitive advantages. (1996) stated that e-CRM is helpful in lowering the churn or turnover rate in the company’s customer base through satisfaction. By managing customers more effectively, lower service costs, higher buyer retention and lower customer replacement expenditures can be achieved.

(2006) also noted that the relation between the customers and company is enhanced through e-CRM as customer feedback can easily be achieved through this strategy. Various tactics such as customer surveys, meetings with sales people, online purchases, user groups and customer service inquiries can be used in e-CRM and serve as touch points for feedback generation. Acquiring and responding to these feedbacks on the other hand, enabled the company to take a more proactive approach in servicing its customers. This feature then helps in improving the relations of the company with its customers.

Total Quality Management (TQM)

Total quality management (TQM) has long been applied by companies and industries worldwide. The strategy, which is primarily customer-driven, is focused on quality through the emphasis of commitment and involvement of each employee within a working organization so as to produce products and services of quality. Several contributory factors have brought about the introduction and implementation of total quality management among industries. At present, customers are more diverse in terms of their needs. Clientele demands have been increasingly sophisticated as well as complicated. Moreover, local and global competitions have significantly increased implying that quality-driven organizations were the only ones to survive. Thus, so as to make in the business world, companies are encouraged to integrate quality towards the satisfaction of the needs, aspirations and expectations of the customers.

TQM results to a number of corporate changes, which in turn affects the customers. These changes are brought about by better human resources, additional facilities and systems as well as cultural changes. As the companies improve the quality of their services, their images to the customers are enhanced considerably. In addition, the changes help the organizations attend to the different demands and needs of their clients, thereby resulting to customer delight (1995). The external customers are not the only ones who benefit from the application of TQM in the company.

Market Segmentation

According to (1991), market segmentation pertains to marketing efforts provided to a group of potential buyers based on various characteristics. These characteristics may include demographic, geographic, lifestyle and behavioral data. Hence, market segments are typically based on age, income, occupation, gender and behavioral aspects. Market segmentation evaluates the size of the potential market and divides them into more manageable segments for the purpose of service efficiency. Furthermore, market segmentation is a part of strategic management where market is divided so as to ensure the efficacy of certain marketing programs or efforts (1994). This element involves the classification of various buyers or consumer groups based on their behavior and characteristics. The information provided by market segmentation will then be used by the company and its marketing managers in defining its overall potential market.

Similar to the effect of other customer-oriented strategies discussed, the use of market segmentation in the business allows the company to become more responsive to their customers. In turn, customers gain the benefit of obtaining products based on their demands. In addition, market segmentation gives the customers more access to products and services at are useful and appealing to their specific tastes. For instance, if most of the buyers belonging to a specific market segment belong to the average class, companies will be able to come up with products that are more affordable to the consumers. Likewise, if the company targets the elite group, products that meet the standards of this buyer type will be met. This customer-oriented strategy also allows the consumers to optimize the worth of their money. In general, market segmentation is also beneficial to the customers as it ensures that all services and production are directed to what the customers need.

Value Analysis (VA)

Value analysis (VA) is another important and common customer-oriented strategy that is applied by businesses today. Also known as value engineering (VE), this business technique was developed by Lawrence Miles of General Electric during the Second World War. During the war, businesses would have to optimize their resources due to scarcity problems. Because of this problem, Miles developed a team-oriented strategy that enables the determination of the project objective, analysis of functions and examination of each project procedure. This strategy in turn allows the company to increase its efficiency, complete tasks on time as well as reduce costs (1999).

The development of the employees through the application of the VA strategy helps in motivating the employees to perform their best. The effect of this motivation leads to better provision of services. If employees are able to gain something out of the company’s strategy, employees are naturally more satisfied with their jobs and are more willing to handle their responsibilities. In turn, customers are provided with products or services that are of quality. With the amount of planning and analysis involved in VA strategy, product and service errors are significantly reduced. As cost of production and delivery are reduced in the companies’ operations, the business can afford to market the products at a more affordable price. This is beneficial especially to customers who are constrained by tight budgets.

These recommended strategies are indeed different from the concept of SCM. However, this particular recommendation stresses the fact that the delivery of efficient services to customers can actually be done in multiple ways. Companies in different industries are then capable of applying customer service strategies based on their specific needs or situation and available resources. The possibility of combining different strategies that would lead to customer service efficiency is also emphasized in this recommendation, encouraging companies to be creative and resourceful in applying strategies geared in meeting customer needs and achieving satisfaction.
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Stefania - Staff di QualitiAmo

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