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Customer value
In this step, we define the concept of customer value.
We begin this week by focusing on the concept of customer value, as this forms an important part of a successful supply chain strategy.
Customer value is related to two main factors: perception of benefits and total cost of ownership. This can be represented by the following equation:
Customer value = (Perception of benefits)/(Total cost of ownership)
There are several factors that affect product/service costs (total cost of ownership), which include management, operating, inventory, maintenance, technical, training, disposal and acquisition costs.
Some strategies that can create a better perception of benefits to the customer include reducing prices, making it easier to buy and receive products, making products easier to us and maintaining a good brand reputation.
The diagram below provides a framework for how to link customer value to supply chain strategy:
Adapted from Christopher (2016: 40)
Your task
Consider a product you’ve recently purchased. Discuss the perceived benefits and what you paid for it.
References
Christopher, M. (2016). Logistics and supply chain management (5th ed.). Pearson.
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International Logistics: A Beginner’s Guide to Logistics Management
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International Logistics: A Beginner’s Guide to Logistics Management
