Irish Retail Industry

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Irish Retail Industry

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6.1The role of inventory location16




Irish Retail Industry


Shorter product life cycles, an increasingly sophisticated and demanding consumer, growing retailer concentration both nationally and internationally, among other factors, are combining to increase the competitive pressure on Irish food manufacturers. Consequently, manufacturers need to explore all possible avenues for creating sustainable competitive advantage. Customer service may provide such an avenue. Non-price competition, in the form of high quality customer service, is increasingly important as a marketing instrument used throughout the food marketing channel to generate greater customer loyalty and improve supplier-customer relationships (Lemmink et al., 1996).

This paper acknowledges the importance of logistics customer service(LCS) and seeks to assist the Irish food industry develop appropriate customer service strategies. First, it examines the importance UK grocery retailers place on individual elements of customer service. Second, it explores the customers' evaluation of manufacturers' performance on these elements. Initially, the paper addresses what is meant by customer service from a logistics perspective, reports on Irish food manufacturers' measurement of logistics customer service and then proceeds to trace out UK retailers' evolving requirements.

Elements of customer service

An identification of the elements of customer service provides a basis for measuring customer service. The degree of importance attached to any of the elements associated with customer service varies from company to company depending on customer needs. Indeed, the importance attached to various measures has changed over time. The most common elements reported in the literature are as follows: order cycle time; consistency and reliability of delivery; inventory availability; order-size constraints; ordering convenience; system picking, packing and labelling accuracy; delivery times and flexibility; ability to expedite; ability to substitute; invoicing procedures and accuracy; claims procedure; condition of goods on arrival; post-sale support for the product; product tracing; order status information (Christopher et al., 1994; Emerson and Grimm, 1996). Product availability (order completeness, order accuracy and stocking levels) is often the single most important element of the customer service mix; for most manufacturing sectors, order cycle time is second in importance (order transit times, time for assembly and shipping) (Coyle et al., 1992). This suggests that dependability is perhaps the single characteristic customers desire most in a firm's logistical capabilities.

Coyle et al. (1996) think of customer service elements for logistics as having four main dimensions: time, dependability, communications, and convenience. While such a categorisation is useful, it should be noted that there are overlaps and interrelationships between the dimensions, e.g. time and communications.

The time factor usually refers to order cycle time from the seller's perspective, while from the buyer's perspective it usually refers to lead time or replenishment time. Several components affect the time factor. These include: order processing, order preparation and order shipment. Effective management of these activities will ensure that order cycles are of reasonable length and consistent duration. Information technology, particularly EDI, can contribute significantly to improving the time dimension of customer service.

To a customer, dependability is often more important than lead time (Coyle et ...
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