Customer Orientation and Adaptability - Case Study Example

SOSYO IN THE UK By Location orientation and adaptability Literature review Definitions Third party logistics provider- this is a company that is usually outsourced in order for them to provide logistics services such as warehousing and transportation for companies, which serve under the supply chain management function. It is abbreviated as 3PLSP or TPLSP (De Toni 2011, p. 232). Customer orientation- this refers to a set of actions performed by a business that focus on addressing and meeting the needs of the customers as a priority to everything else, which involves the management team and the employees to work around this principle. Customer adaptability- refers to the specific adaptations for each customer by third party logistics providers so as to influence the success of the third party logistics relationships. According to Sheikh and Rana (2012, p. 546), outsourcing of third party logistics allows a company to concentrate more on the areas that cannot be outsourced and on the activities that form part of their core activities. In this research, the authors suggest that integration of 3PL helps a company to achieve customer satisfaction because these companies tend to use information technology systems that are advanced. In line with the ever changing business environment, businesses have had to had to change their structures in order for them to be able to reduce their cost of operations. In essence, the whole function of 3PL is in achieving customer satisfaction as intimated by Sheikh and Rana through the improvement of the logistic processes through outsourcing. Kannan, Haq and Kumar (2007) also seem to be in agreement with the views of Sheikh and Rana as they also discuss the importance of using outside companies to provide the logistics services to a company. In their research, they give timely delivery of goods and services by 3PL as a benefit of this function, which in turn influences customer satisfaction. Additionally, these three authors suggest that companies have adopted the 3PL as part of their business operations strategy because of the increased global competition in their specific industries making them to outsource this function in order for them to concentrate on their main competencies so as to stay ahead. Therefore, applying 3PL can help a company to achieve competitive advantage within a highly competitive market and also help in influencing savings on logistics costs according to the research by Kannan, Haq and Kumar. The advantage that 3PL has is that it helps in outsourcing business functions that were initially conducted within an organization that used to increase operation cost and delayed delivery to the customer because the company is involved in performing other tasks. Essentially, when a company concentrates on their core competencies they are able to survive the tide of strong competition because the stress of how the finished product will get to the customer in time is no longer theirs but that of the 3PL (Schniederjans M, Schniederjans A & Schniederjans D 2007, p. 30). Over the years, businesses have shifted from the profit-centered approach of business to the customer oriented approach in order to help their businesses to survive in a highly competitive global market. The customer-oriented approach is designed to have the needs of the customers to be the priority for a business, which in turn influences customer satisfaction (Hewing 2014, p. 19). Authors that seek to bring out the relationship between the reduction of logistics cost and customer satisfaction and loyalty are Liu and Fang. The two authors assert that as much as a company seeks to deliver their products at the lowest possible cost through 3PL service providers, it is also important for them not to disregard the aspect of quality. The implication of this is that they should not spare any cost whatsoever when manufacturing the products so that they meet the quality standards, which is a sure way of achieving customer satisfaction and also loyalty. However, Liu and Fang (2009, p. 24) also intimate that the 3PL service providers should also uphold safety standards when transporting the goods to the customer because if any harm comes to them then the customers are highly likely not to be satisfied by the product. This can be a loss that the manufacturer did not anticipate for making the 3PL and the producer to have responsibility when it comes to product quality that has an influence on achieving customer satisfaction. Tian, Ellinger and Chen (2010) seem to be in argument with this fact as they suggest that 3PL service providers together with manufacturers should be able to give customers value for what they are willing to spend, which can influence customer satisfaction. Therefore, they should also be on a constant path of upgrading and expansion on the services that they offer in order for them to be able to meet the needs of their customers effectively making it to be a customer centered approach. On the other hand, Langley (2005) discusses on the need for 3PL service providers to be flexible in the way they deliver services to the customers that can help in the adaptation of the customers with ease in order to make their needs a priority. This means that a 3PL service provider should be in a position to change some of the ways that it conducts its operations or delivery schedules if the customers find them not to be favorable. At the end of the day, the customer needs should be the major priority for the 3PL meaning that everything should revolve around what they find to be comfortable with them because if they lose them to their competitors that offer favorable conditions then it would be a great loss the company’s supply chain. Therefore, flexibility and adaptability go hand in hand meaning that 3PL service providers should be flexible enough to accommodate the changes that might be required to be made so a to facilitate smooth adaptation by the customers (Rezapour, Farahani & Kardar 2011, p. 76). Flexibility can also stretch to include making changes to the technology tools that they use and introduce ones that are able to meet the needs of the customers as required and also help in improving efficiency. A research Large, Kramer & Hartman (2011) also addresses the issue of customer adaptability in terms of 3PL service providers adapting to the changes and demands of their customers so as to improve on their 3PL relations for the good of the supply chain management of the company that has outsourced these services. Customers have different and unique needs meaning that it would be improper for the 3PL service provider to provide general solutions that will not be able to address these effectively and as desired. As per this research, a 3PL provider can be bale to improve their relationship with their customers if they address the specific needs as per the an individual customer the adapt to these needs in the same manner in order for them to influence loyalty. Case study DHL Supply Chain & Global Forwarding has been providing the fashion industry with logistics services to ensure that their high fashion clothes arrive on time for catwalks all around the world. This is justified case study because the fashion industry is one of the most lucrative businesses in the world today and the need for on time delivery is pertinent. DHL ensures that the fashion clothes arrive in time for them to be worn on the runway no matter the part of the world they have been shipped from because those that these events targets should not be disappointed. DHL has been able to tailor logistics solutions that are in line with the needs of the fashion industry to which they have a Fashion Project Manager at their DHL office in Milan whose main responsibility is to address the needs of the fashion designers who are their clients (DHL 2013). This serves as an excellent case study that can help in understanding how important the relationship between a client company and third party logistics services provider is important when seeking to achieve customer satisfaction. In essence, DHL understands how important it is for fashion experts to have their collections showcased on the runway on time as they have a global express network that serves this function. DHL also has over 250 planes that are on standby and where the journey does not need to be by plane then vehicles are always ready to deliver when required. Other services that DHL uses so as to satisfy the needs of their customers include special courier services that require the delivery of the catwalk clothes with urgency that this logistics service provider works as per the time that their clients choose. When these clients are assured that DHL will deliver their fashion products in good time then they are able to concentrate on other elements that go towards making a show a success that can in turn help them make the desired profits. Additionally, DHL has been able to influence customer loyalty and satisfaction through this service because they always deliver as per the customer’ time and have created a tailor made solution that only targets the fashion experts such as those located in Milan. One of the loyal clients that DHL has is Mauro Zardi, a fashion expert situated in Milan (Mital 2008, p. 84). Examples of customer orientation and adaptability by the TPLSP that focus on meeting the client company’s strategic business needs Before an 3PLSP embarks on the process of meeting the needs of the its customers of its client company, it is important for them to determine the needs that should be met in the first place so as to address them effectively. Therefore, a 3PLSP should conduct extensive research on what these clients need in order for them to develop offerings that are comprehensive (Coyle, Novack, Gibson & Bardi 2011, p. 399). Based on this, TPLSP have the challenge of ensuring that they apply the differentiation strategy in order for them to satisfy the customers belonging to their client companies. Customer satisfaction and adaptability by TPLSP can be achieved through the provision of high quality services or value added services without necessarily making immense investments to make their product offering to be unique on behalf of their client company (Mohanty 2008, p. 276). Therefore, it is advisable for these logistics service providers to partner with experts to ensure that their systems involved in product delivery are up to date so as to suit customer needs (Luo 2013, p. 142). For instance, a company involved in freight or transportation services might have to partner with a firm that provides car tracking services so as to assure them of the safety of their products while on transit. When a TPLSP makes use of such a technology tool, they are likely to influence customer satisfaction because they will be assured that they are goods are on the right track and would be delivered within the scheduled time. The implication of this is that when a logistics provider makes use of up to date technology tools then they are bale to achieve competitive advantage because the customers will be more loyal because of the services they receive. On the contrary, companies tend to outsource logistics services mainly due to limitations associated with resources, problem solving, expertise, cost, risk mitigation and innovation hence requiring that 3PLSP meet them fully when chosen to offer logistics services. Moreover, it is important for 3PLSP to have an idea of what their client companies engage in as part of their business operations in order for them to plan on how best to serve them. In this case, the logistics service provider might have to make changes to their technologies in order to meet the specific need that each client company will have that will make them satisfied with the services they offer. Supply chain visibility through technology can be able to help improve the relationship between TPLSP because it can assist the service provider to anticipate challenges before they occur. It also helps in understanding the client needs and requirements that can facilitate the finding of solutions in good time. Customer orientation can also be achieved through the inclusion of a transport management system that is efficient meaning that the TPLSP chosen should be able to deliver within the required time and attract as minimal delays as possible (Dimitris 2012, p. 172). A client company may also have warehousing needs hence requiring them to outsource the warehouse management function to which a customer will have to supply information on the inventory (Kirk 2010, p. 775). This means that the 3PLSP should be aware of the much that their client has to store in order for them to make sure that they never lack storage as the products wait delivery to their prospective clients. Other clients might also outsource storage for their raw materials as they await processing meaning that it is up to the 3PLSP to ascertain why their client needs warehousing management service (Sehgal 2009, p. 138). In order for the client company to reap as much benefit as possible from the TPLSP, it is important for the service provider to integrate their information technologies with the business processes and the information systems of their clients so as to achieve maximum efficiency. The implication of this is that customer satisfaction can be achieved if the IT infrastructure is functional and complements the efforts of put in by the TPLSP in improving efficiency for their clients. The scope of improvement for the TPLSP in relation to customer orientation and adaptability Based on Phillip Kotler’s view on marketing that include the fact that business entities should strive more to meet the needs of their target market as a core practice if they are to achieve customer loyalty. In this case, a 3PLSP might have to adapt to the needs of the markets they serve so that they are able to address each unique need of individual customers making this to be a customer oriented approach (Barker and Angelopulo 2005, p. 147). According to Kotler, the accruing of profits should not precede customer satisfaction at any time because when a service provider focuses on the satisfying the needs of their clients then gaining profits is guaranteed (Rust & Huang 2014, p. 18). Therefore, when a service provider takes the customer centered approach then this serves as an effective marketing strategy because the consumer needs are elevated making them to be more satisfied by the services they receive. Additionally, the outsourcing of the supply chain management function helps in creating a high performing supply chain for a company because value will be created. One of the key functions that 3PLSP focuses on is on the interrelationship cost. In essence for a business, when the service levels are high then costs are likely to increase which cannot be applicable to the logistics service providers. Therefore, it is important for these service providers to devise annual plans that can be able to forecast costs and also help in the process of continuous improvements for the client company. The core mission for TPLSP is that of performing the logistic functions for their client company in the best way they know how while their clients focus on more on their specific competencies (Kotzab et al 2005, p. 205). Additionally, it is also the work of logistic service providers to identify ways in which they can apply so as to help in cost saving for their clients rather than having to wait for their clients to identify what should be done so that they are able to achieve cost efficiency. TPLSP also have a role to play in terms of them also being strategic partners to their clients especially for those that understand the business cycles of their clients because they are able to provide solutions that can help their customers to minimize operational costs (Luo 2010, p. 364). In essence, the key competence of these service providers tends to be on developing processes and technologies that are likely to improve on service delivery to their customers to which they can also suggest to their clients to adopt the same. From this, their main aim should be to look out for the interests of their client companies and also research on ways that can help them achieve competitive advantage over rival companies operating in the same industry. On the contrary, TPLSP could be offering logistics services to a number of clients in which they can use the various experiences with working with them as learning opportunities that they can borrow and apply to some of their clients. The unique needs that these clients tend to have influence the service providers to devise solutions that are line with them, which in turn makes every to be satisfied within their own right. From this, TPLSP should be able to research more for the good of the clients they serve as learning tends to mostly influence growth of both parties involved in third party logistics service provider relationship. TPLSP should be customer centered and able to develop tailor made solutions for the supply chains of the companies that out source them so that they are able to deliver on the functions that are delegated to them. Bibliography Barker, R & Angelopulo, G 2006, Integrated organisational communication, Cape Town, Juta Academic. Coyle, JJ, Novack, R, Gibson, B & Bardi, E 2011, Transportation: a supply chain perspective, Australia, South-Western Cengage Learning. De Toni, AF 2011, International operations management: lessons in global business, Farnham, Gower. Deutsche Post DHL 2013, Pinnacle of fashion logistics: DHL official logistics partner for fashion weeks. Annual report. 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Ellinger, Haozhe Chen, (2010) "Third‐party logistics provider customer orientation and customer firm logistics improvement in China", International Journal of Physical Distribution & Logistics Management, Vol. 40 Iss: 5, pp.356 - 376 Read More