Logistics
In Chapters 2 through 6 , we explored how different CEO strategic mindsets contributed to the success or failure of companies competing in industries that provide products to consumers. For each of these industries, the companies we explored made decisi
- PDF / 217,418 Bytes
- 18 Pages / 439.37 x 666.142 pts Page_size
- 109 Downloads / 273 Views
7 Logistics In Chapters 2 through 6, we explored how different CEO strategic mindsets contributed to the success or failure of companies competing in industries that provide products to consumers. For each of these industries, the companies we explored made decisions about which business functions to perform themselves and which functions to outsource to partners. For example, during its early years when it sold books online, Amazon built its own website so customers could place orders online. It relied on partners, such as Ingram, a leading book wholesaler, to fulfill those orders. As the company expanded its product line and dramatically increased its order volume, those fulfillment partners could not meet Amazon’s service quality standards – particularly during peak periods of demand. Amazon responded by building its own fulfillment network – consisting of warehouses, trucks, airplanes, and the people and systems needed to operate them. Amazon’s decision to backward integrate into logistics has put pressure on its fulfillment partners and changed the structure of the logistics industry. While it began by operating with a few physical assets, the ecommerce industry’s ability to fulfill demanding service standards – for example, shipping the right products quickly without breaking them – depends on building an asset-heavy logistics network. Simply put, logistics has become an essential part of ecommerce. That fundamental shift has implications for ecommerce companies, storebased retailers, and the logistics industry. Lessons for leaders include • Set customer service quality standards: It is far more profitable to win new customers and keep them buying than to lure in customers who are disappointed with their initial encounter and decide never to buy again. A customer won't come back if their first order arrives shattered into pieces two weeks later than expected. © Peter S. Cohan 2020 P. S. Cohan, Goliath Strikes Back, https://doi.org/10.1007/978-1-4842-6519-2_7
110
Chapter 7 | Logistics On the other hand, if the order arrives intact by the expected time, the customer is likely to buy again – especially if the company already offers the best selection of products at a competitive price. To achieve the benefits of creating and keeping customers over a long period of time, the first step is to set specific, measurable standards for service quality that are higher than competitors’. • Assess whether operations can satisfy service standards: Once a company sets service standards, it must monitor whether its operations are meeting them. For example, a company could set a standard that all orders must be delivered with the products the customer requested, undamaged, within 48 hours. If the company consistently achieves a 100% score for these metrics on its orders, then its operations can satisfy the service standards. If not, the company must investigate the reasons why. • Partner or build so your operations can meet your service standards: If a company is falling short of its service standards, it must conduct a
Data Loading...
