Global Logistic Management Lecture 11: Measuring and Selling the Value of Logistics... Components of Customer ValueProduct attributes Service attributes Transaction cost Expected custo
Trang 1Global Logistic Management
Lecture 11: Measuring and Selling the Value of Logistics
Trang 2Competitive Suppliers
Trang 3Options for Measuring Value
considerations)
Trang 4Components of Customer Value
Product
attributes
Service
attributes
Transaction
cost
Expected customer value
Perceived benefit Perceived sacrifice
Risk
Life cycle
cost
Source: Earl Naumann, Creating Customer Value: The Path to Sustainable Competitive Advantage (Cincinnati, OH: Thomson Executive Press, 1995), p 103
Trang 5How Customers Select Among Competitive Suppliers
• Customer buys on value
• Value equals quality relative to price
• Quality includes all non-price attributes
• Quality, price, and value are relative
Price
Customer service
Product
Source:Bradley T Gale, Managing Customer Value (New York: The Free Press, 1994), p 29
Trang 6Creating Value That Customers Can See
Understanding
customer needs in a
well-defined market Superior quality in areas that matter to
customers
Market-perceived quality
Exceptional customer value
Business results Profitability, growth, and shareholder value
Advertising and
other marketing
communications
Low “cost of quality” and overall cost leadership
Effective design and quality control
Source:Bradley T Gale, Managing Customer Value (New York: The Free Press, 1994), p 19
Trang 7Customer Value Added
Provide products and services to customers that are a better value than those they could purchase from competitive companies in
similar markets
Trang 8THE VALUE QUESTION
– Considering the products and
services that you purchased How
would you rate them as being worth what you paid for them?
Calculating CVA
CVA = Perceived Value of Company’s Offer
Perceived Value of Competitive Offers
Trang 9Order Fulfillment Customer
Satisfaction Survey Results Delivering Material
Performance (1 poor…5 excellent) Ratio
Best Other Vendor
Company/best Other Vendor
Delivering Material When You Wanted It 3.35 3.32 1.01
Having the Necessary Info on All Shipping
Having the Correct Materials Delivered Relative
to What You Ordered 4.00 3.76 1.05
Overall Quality of Delivery of Materials 3.89 3.74 1.04
Trang 10Total Cost Analysis
Purchase Price
plus
Transportation costs
Inventory turns
Terms of sale
Ordering costs
Receiving costs
_
_
_
Copyright © 2001 by The McGraw-Hill Companies, Inc All rights reserved
Trang 11Segment Profitability Analysis :
A CONTRIBUTION APPROACH WITH CHARGE FOR ASSETS EMPLOYED
SUPPLIER A SUPPLIER B SUPPLIER C SUPPLIER D SALES
COST OF GOODS SOLD
VARIABLE MARKETING & LOGISTICS COSTS:
ASSIGNABLE NONVARIBLE COSTS:
SALARIES
ADVERTISING
INVENTORY CARRYING COSTS LESS:
GROSS MARGIN
TRANSPORTATION
RECEIVING
ORDER PROCESSING
PLUS: DISCOUNTS AND ALLOWANCES
MARKET DEVELOPMENT FUNDS
SLOTTING ALLOWANCES
CO-OP ADVERTISING
NET MARGIN
_
_
CHARGE FOR ACCOUNTS PAYABLE
CONTRIBUTION MARGIN
SEGMENT CONTROLLABLE MARGIN
_
_
Trang 12IMPACT OF LOGISTICS ON RETURN ON NET WORTH
net sales total assets
STRATEGIC PROFIT MODEL
X
$
$
$
$
$
$
%
Net Profit Margin
net profit net sales
÷
Net Profit
Sales
_
Gross Margin
Total Expenses
Sales
_
Cost of Goods Sold
Variable Expenses
- Sales increase due to better
customer service
- Fewer LTL shipments
- Fewer freight claims
- Lower freight costs
- Insurance
- Taxes
- Variable Storage costs
- Inventory risk costs
$
$
$
$
$
$
$
÷
Sales
Total Assets
+
Fixed Assets
Current Assets
Inventory
+
Accounts Receivable
+
Other Current Assets
%
Return on
Net Worth
Net profit
net worth
Total assets
net worth
Net profit total assets
=
=
Financial
Leverage Return onAssets
X X
- Fewer employees required
- Lower third-party warehousing costs Reduced IS costs
Reduced cost of supervision
Reduced inventory investment
Reduced due to more prompt paying customers (reduced errors)
General and Administrative
Information Systems
Warehousing Costs
Inventory Carrying Costs
Transportation Costs
- Lower cost due to new or more efficient manufacturing facilities
Logistics’ Impact
Lot Quantity Costs
- Reduced order management costs
- Fewer last minute production changes
Less warehouse space required
Increase investment in modernized production facilities
- Lower cost of purchased materials
Asset Turnover
Trang 13How Logistics Affects EVA
Working Capital
Fixed Assets
Transportation Costs Warehousing Costs Lot Quantity Costs Information System Costs Non Cost of Money Components
of Inventory Carrying Cost
Equipment/Vehicles Accounts Receivable
Land/Facilities (owned) Inventory
Equipment/Facilities (leased)
Net Operating Profit After Taxes (NOPAT)
EVA
Capital Charge
Expenses
Cost of Capital
Source: Douglas M Lambert and Renan Burduroglu, "Measuring and Selling the Value of Logistics," The International Journal of Logistics Management, Vol.11, No.1 (2000), p.12.
Trang 14Selling the Value Advantage
customer’s perspective
Copyright © 2001 by The McGraw-Hill Companies, Inc All rights reserved