Customer Service

Post-Module Assignment

NAME: LUKMON SUMOLA

STUDENT NUMBER: D09118896
QUESTIONS ATTEMPTED: A & B1

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Introduction
Excellent customer service is from inside out, and from top till down. The way we serve
ourselves within the organisation will reflect in the way we serve our customers.
Everyone have a customer, everyone you encounter is your customers. Every contact with
customers is an opportunity to impress, to show how wonderful a company to do business
with. Customer perception is determined from the first encounter with your company
which is the moment of truth.

This essay intends to discuss the impact of ‘moment of truth’ to organisation. Every
contact with customers is an opportunity to impress and win-over the customers, the
implication of inability to impress is a lost of would be a loyal customer.

What is Customer Service to your organisation?

Martin,C (1998) defined customers service as the consisted provision of time and place
utility in the transfer of goods and services between buyer and the seller. In SCM context
customer service is not just about have a nice day attitude to customers, it includes all
factors involved in supporting and getting products to customers.

Memorable Service
Excellent customer service is the prerequisite for retaining and attracting new customers.
The first contact with customers presents an opportunity to provide exceptional customer
service or mediocre customer service that will linger in memory continuously. The only
time organisation have positive impact on the customer is when the service rendered
exceed customer wide expectation. Dissatisfied customers will tell many people, and
simply carry the business elsewhere, you want to be remembered for superior service you
render to your customers.

Moment of Truth
The point when the business meets the customers provides ultimate opportunity to serve
the customers, to turn dissatisfied customers to loyal customers. Every encounter with
customers that might result to positive or negative perception is a moment of truth that
can determined organisation success or failure. It provides the opportunity to impress
the customers to choose your company as the only alternatives. Customers are the

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bloodline of any business, you must gain their loyalty by providing service to delight
them at all time because their only source of revenue.

Peter Drucker points out that there is only one valid definition of business purpose, to
create customer and keep customers. Every interaction with customers must be enjoyable
experience, from the moment they enter your company, the way you greet them, attend
to their immediate needs, talk to them on phone, resolve their problems (See appendix
A). Everything you do must reflect customer’s satisfaction and revolve around customers
because this impression symbolised your company in eye of customers. Every encounter
with customers is a moment of truth.

Empower your staffs

The mammoth task of satisfy customers is not just the responsibilities of frontline
employees, all staffs should be trained to understand the impact of superior customer
service to the business. Although the frontline employees are first line of contact, they
must be properly trained to meet individual customer’s unique needs, and quick respond
to customer’s wants with respect and courtesy.

Frontline staffs must be permitted to take responsibility, take actions, in serving the
customers without waiting to take orders from superior, because the customer might not
be will to wait but carry his/her business elsewhere. Every moment of truth present an
opportunity to convert one-off customers to loyal customers. It is the responsibility of
your customer contact personal, do not let their attitude tear down your company,
equipped them with necessary skills and treat them well because the battle rises and falls
by them.

Conclusion
Every moment of truth is an opportunity to impress our customers, to create positive
perception of our organisation. To tell our customers or would be customers how
excellent organisation to do business with. If we refused to seize the opportunity, the cost
is a lost customers and the price paid is lost revenue. Create the moment of truth from
inside to outside.

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Reference
Veronica P. (1999) Being successful in …Customer care, Blackhall Publishing, Dublin.
Cook, S. (1992.) Customer Care, Implementing Total quality in today’s service-driven
organisation, Kogan Page Publishing.
Sweeney, E. (2007), ‘Understand customer Service’. In Edward, S (Eds) Perspective on
supply chain management and Logistics, Blackhall Publishing, Dublin.

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QUESTION B1

Compare and Contrast front-loaded and back-loaded customers service strategies from an
OPP perspective – assesses strengths and weaknesses and highlight the main impact on
SCM

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Introduction
The success of most frontrunner organisations is due to their ability to developed business
model difficult to imitated or delivered offering in a unique way that different from others.
They continuously meet customer’s needs and requirements in segmented marketplace
without jeopardise cost. First-class customer service strategy is a modern day norm, not
an exceptional as in the case of Amazon that strived to be earth most customer-centric
organisation and Zara that recognised customers as the heart of their business.

These two companies are run by proprietors, who understand psychology reasons behind
customers purchase and clearly understand marketplace, who think and act differently,
who focus on right goals. Those goals are communicated, described, and aligned to meet
customer’s specific needs, and then translated into right strategies built around customers
and offerings.

This written will be drawn on case study of two successful business models, an e-retail
organisation Amazon.com and Spanish clothing giant Zara, subsidiary of Inditex. My
intention is to look at the similarities and differences of front-loaded (Amazon.com) and
back-loaded (Zara) customers service strategies from an OPP perspective, evaluate the
strengths and weaknesses of both strategy and the impact on SCM.

Company Overview
Amazon.com inc
Amazon offers wide range of products and services to customers in different categories
at competitive price through their e-retail websites, Amazon.com and Amazon
international. They manufacture and sell Kindle e-reader, purchase and resell products
from third-party sellers. The brand name popularised the online shopping experience and
command leading market position among e-retail companies. See Appendix A.1.

Zara
Zara operated apparel retail outlet with brick-and-click stores. The company sell apparels,
footwear, perfume, and other accessories direct to customers through their own retail
stores and online stores. Zara offers latest design fashion in a medium quality at low price
in low quantities, influence by customers fashion trend and taste to produce assortment
of cloths that befit their target group. See Appendix A.2.

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Organisation objectives
Amazon.com inc
The company intends to create and maintain shareholders value over long term without
sacrifice excellent customer service. Position itself as the low cost market leader, and
intend to expand product/services offerings to boost revenue and profitability. Remained
customer focus, never lost sight of customer and to be world largest selections, a place to
sell anything and everything online.

Zara
Zara seeks to satisfy the fashion demand of women, men, and kids globally by offering
latest fashion designer apparels and footwear at medium quality in a low price. It intends
to compete globally reaching wider fashion followers, and maintain shareholder value
over long term. Customers are at the heart of Zara business, delighting these customers is
the company objective.

Business strategy intent

Amazon.com Inc
Diversification and Expansion
Amazon continues to aggressively diversify into new products lines and expand by
forming strategic alliance, collaboration, joint venture, and acquisitions, manufacture and
sell Kindle E-reader.

Customer focus
Amazon provides range of innovative services and offering to meet three sets of
customer’s expectations and requirements, consumers, sellers, and developers. This
enables the company to improve customers base, extend brand to wider customers and
improve business growth.

Supply Chain Strategy

To achieve low cost objective Amazon invested heavily in fulfilment centres. This allows
Amazon to speed delivery, reduced cost structure, and procured products at low price due
to economic of scale, and storage capacity. The company utilised the extra capacity by
running e-commerce business for other retailers, such as Toys "R" Us and Target.

Information technology
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Amazon invested in information technology to ensure every contact with customers is a
satisfactory experience from the moment the customer visit Amazon.com, place an order,
e-mail message that follow with track and trace of order, and combined with the after sale
services.

Zara
It intends to position itself as a low cost leader, and to provide fashionable design at
medium quality to larger customers, respond quickly to immediate customers fashion
styles with assorted of small batches per product whilst revolve the business operation
around customers.
Market expansion and Penetration
To improve growth and profitability, Zara intends to expand at global level to reach out
to large customers, in 2009 Zara increases their present to 46 countries, and launched
online store in 2010.
Networking
To get closer to customers and continuous provision of trendy latest fashion, Zara reaches
wider customers through social network; Facebook, twitter etc, and launched iPhone and
Smartphone application specifically designed for Zara to updated customers of latest
fashion collections hitting their various stores.
Superior supply chain
Zara vertical supply chain integration used pull system to respond quickly to customers
demand. The business model reliant on state-of-art distribution centres equipped with
communications and information technology that respond swiftly to data transferred from
stores to designers, productions, and distribution centre.

Organisation structure
Amazon structure
Enable people and resources grouped by products department in different countries they
operated to work together in accomplish organisation objectives. They formed multi-
disciplinary team in each department working across all functions within the organisation,
enable collaboration, and create systems of accountability among teams to support
organisation strategy, this cross-functional team respond quickly to customer order and
deliver to promise.

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The structure enables teams to focus on customers specific requirements, while
generating internal synergy to meet and exceed customers expectations without
jeopardise inventory.

Amazon organisation Culture

Employees are encouraged to do something that will improve Amazon without seeking
boss permission. Workers are encouraged to make mistake and learn from the mistake.
The culture permits experimentation, problem-solving, and nurtured environment where
creativity and innovation flourished.
Encourage team work and create sense of community
Amazon recognised from the onset the value of team collaboration and good work ethic
among the teams. The culture creates sense of community and focuses employee’s
synergy on common objectives, of creating exceptional internal and external customer
service.
Recognised and celebrated employee’s contribution.
Amazon recognised that happy satisfied workforce impact productivity and quality
customer services. It encourages employees to make video about their Amazon working
experience in a scheme called "Tell Us Your Story" the winner recognised.
Young smart Staffs.
Recruited exceptional brilliant students to work for them, and created feel-friendly
working environment. Amazon recruitments slogan ‘Work hard. Have fun. Make history’
appease to young employees.

Zara organisation structure

The structure enables rapid communication and speedy response by placing cross-functional
teams grouped by products categories, co-located in close proximity to form cluster of skill-full
workers managing design, production, and distribution. The vertical integrated functions of Zara
was driven by multi-disciplinary teams, individuals team member representing each function
within the company, these cross-functional teams are working together to meet company’s
objective of superior customers service.

The structure reduces managerial hierarchy levels and decentralizes decision-making to facilitate
speedy response to customers needs. The product of this structure is highly trained multitalented
individual that can work in different department and respond quickly to any urgent departmental
need. This set-up enables free flow of information and data exchange among team member and
minimized bureaucracy.

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Zara organisation Culture
The prevailing Zara corporate culture play pivotal role in successful implementation of
the company strategy.
Experimental culture
The employees are associated with freedom, the culture permit staffs to experiment and
apply common sense in the process. They allow trying and making mistake, and learn
from mistake.
Creative and innovative
The company create environment that strongly favours human intuition, vision, and
judgment. The product development teams attend high fashion fairs and exhibitions,
travel to schools, clubs around the world to track current in vogue fashion, customers
fashion preference, and design inspirations.
Quick responsive workforce
The fast-fashion retail business model Zara adopted required flexibility and quick
responsive workforce, the working environment hectic create a culture of speedy
responsive workers, that always at their feet to act and make quick decisions
Staffs recognition
Zara recognise talented workers contribution to the growth of the business by promotion
within the business units. The corporate cultures celebrate staffs success and motivate
them by challenge individual staffs at the beginning of every year to personal
improvement programs. In fact, majority of zara managers start as a shop assistant.
Customer-focus
The customer assistants in Zara store understand that customers do not only buy products,
the experience as to be enjoyable. The team meet customer daily demand by ensured high
level of customer service as permit by individual countries culture. The team will review
basic customer service points for 15 minutes in daily team meeting before open hours.

Amazon Organisation Process

Amazon business model reliant on state of the art technological infrastructure to provide
excellent customer service experience to shoppers. The back-end ERP system interface

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with the web application in front-end to create satisfy experiences to customers, suppliers
and the resellers.

The e-Commerce technology in the front-end capture customers buying behaviour which
enable Amazon to offer individual specific items based on previous items visited or
buyers preference of the same item. It responds in real-time to input feed-in by shoppers
to create feedback loop and personalisation experience for customers. The ‘one click’
ordering removed hassle from purchase of products, preload of information in real-time
and provide the customers with multiple choices of similar products.

Amazon formed collaboration and partnership among the suppliers, sellers, and
independent producers through integrated e-procurement application that speed
information and communication through the supply chain. The information flows
triggered through automatic issue of purchase order (PO) to manufacturers or suppliers
of products. E-procurement application interface ERP system that link suppliers operation
with Amazon operation at the back-end. The operation linkage enhanced order fulfilment
from one end of the pipeline to another.

The customer’s orders are fulfilled through the state-of-art fulfilment centres and
warehouse. The plants reliant on ERP system to manage inventory, to plan, coordinate
and control replenishment order system, customer order cycle to order fulfilment cycle.
The information and knowledge base shared with suppliers using e-Collaboration tools.

Zara Organisation Process

Zara vertical integrated business model is powered by continuous flows of information
throughout the whole functions. The entire processes cycle reliant on state-of-art
information and communication system to respond quickly to customers demand.
In store articles
The general preferred display rules for every given items in the store is to have one of
each size on the floor and up to four of each items, The strict rule apply to all Zara stores
with exception in case of shortage of particular size and less store space.

Customers Query
Customer feedbacks are valued as a means of improvement. Any query in regard to
products or the company that can not be resolved or dealt in the stores are assigned to

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specialised professional teams, consisted of multilingual personnel to make the query
easier. The team can be contacted by phone, email, or post.
Distribution network
Currently Zara has four logistic centres. The logistic ensures constant products deliveries
from distribution centres to the stores to meet immediate customers demand. The
replenishment cycle is twice a week worldwide, shorten production cycle to 15days.
Orders reached Zara European stores from the distribution centre within 24hours of orders
placement, and 48hours lead-time for US and Asia.
Information systems
The business model is characterised with flexibility, speed, visibility, and control,
supported with information and communication technology in all areas of activities. The
front-end Zara stores deployed TGT (Human Resource management modules) to give
daily updates and to establish communication links with other functions within the chain.
Tag apparel and footwear with labelling system. Zara deployed inventory management
system, delivery systems in the distribution centre, and administrative systems to
facilitate smooth operation.

Amazon People dimension

Amazon success is the products of its people, their commitment, knowledge, and past
experience. Amazonians are at the heart of Amazon success, their competency built
around the critical objective of satisfying customers.
Employed talented well educated people
Amazon noses around third level schools in search for brilliant young talent to employ
and retained, seek service of versatile people with related experience and good track
record, their skill-sets is the driven force of Amazon.
Employee involvement
Employees have voice in decision making, and compensate through stock options rather
than cash. They are encouraged coming up with ideas that will benefit Amazon.
Collegial Culture
There is sense of commonality among employees, the Amazon managers often look for
rites and ceremonies that will draw team together, developed common language to foster
cohesion and commitment among teams. The company have no dressing code.
Creative and innovation minded

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Continuous innovative approach nurture learning and motivation. Amazonian are
encourage to think creatively about the business, managers frequently hold problem
solving meeting to inspire employees.
Employees Empowerment:
Employees are encouraged to take ownership and involved in all aspect of decisions
making, they were encourage to use their initiatives, and acknowledge their
accomplishments.

Zara People dimension (Continue edit from here)

The success of Zara is the result of the employees that work relentlessly day-in-day-out to ensure
that the moment of truth is a delightful experience for customers. These employees are the
backbone of Zara, whose sense of responsibility, innovation, creativity, and swift response to
customers trendy fashion requirements drive Zara.
Skilful Designers
Zara creative and innovative designers are the intellectual backbone of the company they could
copy high street couture design with precision, or respond to store manager suggestion in regard
to particular design and deliver to market within short period.
Experience sale assistance
The frontline staffs are the first line of contact with customers, the battle raises and falls by
them, in Zara more than 80% of training budget allocated to store personnel. These groups of
staffs are courteous, knowledgeable, and committed to their work. They are well-trained to create
positive memorable experience that will linger in the mind of customers for long.
Promote Learning
Zara views training and development of employees as a key activity to company growth,
the company invested heavily on training and individual development of their staffs to
sustain high level of creativity and innovation the business model required. The company
ensure internal training given is adapted to needs of the groups and personal development
of staffs, the training program completion boost employee chance of promotion within
the company. To continue learning, Zara provides work manual in all store to be
referenced at all time.
Teamwork
The multidisciplinary teams work in collaboration ensuring market demand are met, these
teams are linked to goal of achieving excellent customer service. There sense of initiative
and enthusiasm, commitment and self-fulfilment are the key values that drive the
company success. The multidisciplinary approach enables the groups to resolve problem

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in time, quick responsive to market demand, make dynamic decisions quckly, and reduce
bottlenecks.
Employees Empowerment
The employees are granted great autonomy, freedom to make decision and take action
when necessary. The designers decide what clothes should be in stores at what colour,
select fabric, and print choice. They gather necessary customers intelligent and creatively
designed appropriate garments that match current fashion trend.

Front-Loaded (Amazon.com) and back-loaded (Zara) Strengths and

Weaknesses
Every business model have strengths and weaknesses, from customer service perspective
of Front-Loaded (Amazon inc) and back-loaded (Zara) the following represents the
strengths and weaknesses of both business model.

Front-Loaded (Amazon.com) strengths

 Accessible 24hrs, 7 days a week and location convenience.
 Well established brand name
 Knowledgeable and Intellectual workforce
 Highly automated fulfilment centre and warehouse.
 More products and services offerings

Front-Loaded (Amazon.com) Weaknesses

 Vulnerable to online frauds, application crash and hackers attack.
 High inventory holding cost.
 Technology outage will significantly affect operation.
 It depends on suppliers of products.
 Products lack touch and feel.

Back-loaded (Zara) strengths

 Close proximity of production
 Cluster of multidisciplinary teams
 Highly Skilful designers
 Highly trained and knowledgeable shop assistant
 High-profile location

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Back-loaded (Zara) Weaknesses
 Highly assets intensive business model
 Artificial scarcity created will generate negative experience in eye of customers
 Carry extra capacity
 Total sales achieved by store managers affect promotion and compensation.

The impact of Front-loaded and back-loaded customer Service Strategy on SCM

The key objective of supply chain management is to enhance customer service, and
optimise total supply chain investment and cost. Increasingly time to market is becoming
competitive advantage as in case of Amazon that respond to order with speedy delivery
and zara that compressed design to store lead-time cycle. The two customer service
strategies are driven by customers demand, meeting and exceeding customers specific
requirement without jeopardise cost and investment is supply chain conundrum.

Inventory to cash
Transportation cost
Infrastructure investment
Lead time compression
Front-loaded (Amazon) customer Service Strategy impact on SCM
The front-loaded customer service strategy reliant on fast, efficient, and flexible order
picking. at reduce cost of picking and packing whilst increase cost of transportation due
to frequent delivery of small batch order to various customers.
The
Lead-time cycle reduction impact on working capital, reflect on cash flow.

Back-loaded (Zara) customer Service Strategy impact on SCM

Two issues that should be considered when deciding whether to vertically integrate is
cost and control. The cost aspect depends on the cost of market transactions between
firms versus the cost of administering the same activities internally within a single firm.
The second issue is the impact of asset control, which can impact barriers to entry and
which can assure cooperation of key value-adding players.

Read page 89 of SCM perspective Sweeney

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The key to success of front-loaded (Amazon) and back-loaded (Zara) strategy is in
understand customers expectation and using internal capability to meet those
expectations. the customers they served as
the Effective elimination of error associate with paper driven processes.
reducing transaction costs between buyer and seller

The information and communication technology played a centre role in evolution of

supply chain management and e-business is a subset of SCM that heavily bui

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Conclusion
The success of most of

today’s businesses depends more on

human assets than on physical or financial assets. Buildings, equipment,
manufacturing facilities, and most technologies can be readily
purchased,but the human talent and know-how needed to drive our
knowledge-based industries are much harder to come by.

Reference:
1. Amazon.com, Inc. 2009 Annual Report,
http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsannual
2. Saunders, R, Amazon.com way, secrets of the world’s most astonishing web business,
Capstone Publishing. (2001).
3. Inditex group, Annual report 2009,
www.inditex.com/en/shareholders_and_investors/investor_relations/annual_reports
4.

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Appendix A: Company Profile
A.1 Amazon.com
Amazon.com Inc. was incorporated in the state of Washington in 1994. Opened online
store on July 1995 and offer Earth's biggest selection of books. The company is
considered as the biggest online book store, growth and expansion propelled Amazon to
different direction to become Earth's biggest place for anything, provide diversified
products offering such as, books, VHS tapes, DVDs, music CDs, computer software ,
video games, electronics, MP3s, clothing, furniture, toys, tools, kitchenware and food
items. Amazon seeks to be earth most customer-centric organisation for three primary set
of customers, consumers, sellers, and developers.

Amazon operations are geographically grouped into two business segment, North
America and International both combined employed approximately 24,300 full-time and
part-time employees as at 31st of December, 2009. Amazon generated gross profit of
$5.91 billion in 2009, sales revenue increased 28% ($24.51 billion), 15 times higher than
10 years ago, cash flow increased 114% year-over-year to $2.92 billion in 2010. The
numbers of varieties of products available for shipment increase more than 50% and 21
new products categories was added globally in 2009, which include automotive in Japan,
baby in France, shoes and apparel in China.

A.2 Zara
Zara is a subsidiary of Inditex fashion distribution group which consisted of eight
commercial formats. Zara was launched in 1975, and open it first fashion retail store the
same year in La Coruna in Spain, specialised in apparel, footwear, and accessories for
children, women, and men. Zara is one of the largest apparel retailers in the world and
the most lucrative among the Inditex group. The Inditex business model configuration is
vertical integration of all the fashion business productions, from concept to design,
manufacture, physical distribution, and sale at own global retail stores.

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Within short time frame, Zara becomes renowned brand name globally with 1,608 stores
spread across the continent in 74 countries, and contributes 63.8% total sale of Inditex
group to generated 7,077 Net Sales as at end of 2009. The inditex group employed 92,
301 staffs of which 81.4% are women and 18.6% are men with 140 nationalities.

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