Quality of customer service in supply chain system: a diagnostic study

  1. K. Sinha and A. Subash Babu

International Journal of Quality & Reliability Management

1998, Vol. 15, No. 8/9, P. 844-859

 

1)      Introduction

  1. a) Supply Chain Management and Quality Customer Service
  2. i) Supply chains can improve customer service quality
  3. ii) Action centers at each level help to improve quality

iii)     Quality should not necessarily be measured by volume of customers, but rather by the customer’s level of satisfaction

  1. b) New Performance Metric: Depot Service Index (DSI)
  2. i) Create a meaningful assessment of how the customer is served
  3. ii) How the system’s performance can be measured

2)      Data collection and preliminary analysis

  1. a) Existing Measurements
  2. i) Two types:

(1)   Fraction of overall demand satisfied during the month

(2)   Overall system inventory

  1. ii) Problems:

(1)   Forced management to look inward rather than outward at customer satisfaction

(2)   Focused only on monthly performance

(3)   Paid too much attention to larger requirements of larger depots

  1. b) Introduction of new metric: Depot Service Index (DSI)
  2. i) In addition to existing measures (complementary)
  3. ii) Benefits

(1)   More concern for customers

(2)   Small depots are effectively reflected and measured

(3)   Captures the success rate of product-depot combinations that were fully satisfied

iii)     Calculation

(1)   Orders classified as HITS and MISSES

(2)   DSI = Number of HITs / Total number of orders

3)      Statistical Analysis

  1. a) Three time-related factors
  2. i) Time gap between forecast period and demand period (Significant)
  3. ii) Seasonal demand fluctuations

iii)     Disruptions in network

  1. b) Six Depot-specific factors
  2. i) Distance between depot and plants (Significant)
  3. ii) Length of transit time (Significant)

iii)     Variability in transit time

  1. iv) Number of consignments (Significant)
  2. v) Quantum of sales (Significant)
  3. vi) Requirements of “entry permit” for dispatches

4)      Impact of Policies on Customer Service

  1. a) Strategic Decisions
  2. i) Restructuring decisions: opening, closing or shifting of depots
  3. ii) Management should try to bring down transit time from plants to depots to increase DSI

iii)     Merging of two smaller plants to increase sales will increase DSI

  1. b) Operational Decisions
  2. i) Management should try to bring down transit time from plants to depots to increase DSI
  3. ii) Merging of two smaller plants to increase sales will increase DSI
  4. c) Tactical Decisions
  5. i) Management should try to bring down transit time from plants to depots to increase DSI
  6. ii) Merging of two smaller plants to increase sales will increase DSI
  7. d) Overall
  8. i) All three cases show the importance of increasing sales per depot and reducing transit time.

5)      Possible Improvements

  1. a) Contract only one transporter on each route in order to forge more effective/efficient relationships
  2. b) Create a hub and spoke system to service depots more effectively
  3. c) Depots to estimate demand on a rolling basis rather than once a month to improve time lag