Importance of Customer Service in the Supply Chain

Customer service is essential in supply chain management.

Supply chains consist of a company, its suppliers, its distributors and its customers. Customer service entails delivering products to customers to their complete satisfaction and delight. Satisfied customers are the desired result of any supply chain management strategy.

Referrals and Testimonials

A satisfied customer can be an ambassador for the company. Word-of-mouth advertising from a customer through referrals and testimonials will ensure that other people know about the customer's good experience with the company.

Returning Customers

The Small Business organization states that every year, businesses lose between 10 and 50 percent of their customers. According to Ohio State University, it costs five times more to find a new customer than to keep an existing one. Satisfied customers will not move to a different supplier, but will establish a relationship with the current suppliers and continue to do business with them.

Customer Lifetime Value

The lifetime value of a customer is the sum of all the transactions over time that occur. This is a much higher dollar amount than a single purchase. Good customer service will entice the customer to return repeatedly.

Customers' Customers

Excellent customer service should extend to customers' customers. Making it easy for the customer to deliver products to their customers will ensure that they return to do further business.

References

• "The Evolution of Supply-Chain-Management Models and Practice at Hewlett-Packard in Interfaces 25"; Hau L. Lee and Corey Billington; September-October 1995
• iSmall-Business.net: Customer Service Factors
• Reference for Business: Supply CXhain Management
• Ohio State University Fact Sheet: Keeping Customers Satisfied