Customer service measurement system in supply chain management and Dell’s BTO model
Each type of market presents unique opportunities for the supply chain. To grow steadily, companies need to seize the various available opportunities in the market. In recent years, Vietnam is considered as a growing market. This growth market will require a high level of customer service especially demonstrated through on-time fulfillment and delivery rates…
A supply chain exists to satisfy the market it serves. To determine supply chain outcomes, companies need to evaluate the markets the chain serves based on market classifications, identifying the requirements and opportunities that each type of market brings to the supply chain. Through the two basic factors are supply and demand, four basic types of markets can be identified:
- Developing market: The supply and demand for the product are both low and unpredictable. It is an opportunity to combine companies participating in the supply chain to collect information on: market demand, products manufactured, distributed…
- Bull Market: Supply is low and demand is high (demand exceeds supply). It is an opportunity to develop market-share and combine partners in the supply chain to provide a high level of customer service such as order completion rate, on-time delivery…
- Stable market: Both supply and demand are high (supply and demand are in balance), in which case it can be predicted. It is an opportunity for each company to implement and adjust internal operations to achieve the best efficiency, the highest profit for the entire supply chain.
- Mature market: Supply is higher than demand (supply exceeds demand). An opportunity to bring together companies in a supply chain that supply a wide range of products to the market, considering large fluctuations in product demand while maintaining a high level of customer service.
Each of these types of markets presents unique opportunities for the supply chain. To grow steadily, companies need to seize the various available opportunities in the market. Companies are most profitable when they successfully capture market opportunities by measuring market efficiency.
In fact, in recent years, Vietnam is considered as a growing market. This type of market will require a high level of customer service particularly demonstrated through on-time fulfillment and delivery rates.
Customer service levels measure the ability of companies’ supply chains to meet the expectations of their customers. Customer service involves the ability to participate in forecasting, capturing and meeting individual product needs and on-time deliveries. Any company that wants to survive must serve its customers best. Any supply chain that wants to survive must serve the markets it is in. This measurement shows how well the company knows its customer service and supply chain response to the market. There are two sets of customer service measurement systems for a company or supply chain: Build to Stock (BST) and Build to Order (BTO).
|Common unit of measurement in BTS||Common unit of measurement in BTO|
Build to Stock – BTS
BTS is a place where popular products are provided to customers or large markets. These products such as stationery, cleaning tools, construction materials… Customers expect to receive products whenever they need them. The supply chain for this product line responds to demand by keeping goods in stock so they are always available for sale.
In the BTS environment, the customer wants the order to be fulfilled immediately. If the order has a large quantity and variety, the supply cost is very expensive. If a company has stock of all of those items, it is capital intensive, so they have a contingency plan to ship out products that are not in stock or replace them with a high quality item that is unavailable. Fulfillment rate shows the percentage of total orders that are fulfilled immediately at the warehouse.
Build to order – BTO
BTO is where products are supplied according to customer requirements. This is the case when a product is created based on a specific order in order to meet the unique requirements of the customer.
In a BTO environment, it is important to track customer response times and on-time completion rates. If the company announces a longer response time to customer requirements, the on-time completion rate is easier to achieve. The issue here is whether the customer accepts a shorter or a longer response time. The response time set needs to align with the company’s competitive strategy and mission-critical mission.
Putting it into practice: Analyzing Dell’s BTO model – What makes Dell the king of online computer retail
Start with a direct marketing model for personal computers, then start an online business. Next, Dell applied the Build-to-Order (BTO) model on a large scale, allowing customers to choose according to their needs.
Dell builds to order manufacturing
Dell has engineered its computers, workstations, and servers to fit orders with no inventory, so Dell can push new models into the marketplace right away. Customers who buy products from Dell are very pleased with a computer made to order, to their liking and within their budget.
In 1997, Dell transformed the assembly line from the traditional one, with each worker performing a single operation, to “cell manufacturing,” whereby a group of employees would operate at a single location. polar area, will install the computer according to the customer’s specifications. The result of the conversion now reduces Dell’s assembly times by 75% and doubles productivity. The assembled computer will be thoroughly checked, then loaded with the desired software, and then shipped to the place of order within 5-6 days.
Dell builds a quality control program for assembly plants, controlling the quality of components and spare parts. Dell’s quality control program includes inspection of finished units after assembly, ongoing production reliability checks, failure monitoring to identify problems associated with subsequent models. Newly shipped to customers and information obtained from customers through service and technical support programs. All of the company’s factories have been certified to ISO 9002 quality standards.
Dell Customer Service and Technical Support
Service became a feature of Dell’s strategy in 1986 when the company began offering the service free of charge on its website. Dell has contracted with local service providers to handle customer requests for on-site repairs or services. Dell also offers its customers technical support through a toll-free phone, fax, or e-mail number.
Direct selling helps Dell understand each customer’s needs and how personal computers work. As a result, Dell advises customers to plan their computing needs and configure their personal computer networks.
Password-protected Premier websites for 40,000 corporate, government, and institutional customers worldwide allow customers online access to information on all products, online ordering as well as seek Dell support.
At the company’s website, www.dell.com, potential buyers can review Dell’s entire product line in terms of details, configuration, and pricing for custom computers, orders, and tracking. These orders from production through shipping. The company has added Web-based customer service and support tools to make a customer’s online experience comfortable and satisfying.
It can be said that, thanks to the successful application of the BTO model in the customer service measurement system by assembling personal computers in accordance with individual orders and customer technical requirements, it can be said that the product has been eliminated. inventory, reduce logistics costs, and bring specialization to each product. Since then, Dell has become the king of online computer retail.