Customer Logistics

In this chapter, we explore several examples of how suppliers quantitatively analyze their relationships with their customers to facilitate the development of customer logistics initiatives that will benefit both themselves and their customers. When a supplier develops a major logistics program that targets its entire customer base, typically the firm must group its customers into several different segments. Therefore, we present two illustrations of customer segmentation schemes, and we outline the criteria suppliers employ to group their customers. Next, we present an example of the type of customer bracket pricing program that suppliers frequently offer in an effort to influence their customers’ ordering behavior. We discuss the financial efficiencies that these types of customer logistics programs can generate, and then offer an example of the broader Customer Logistics Order Management (CLOM) programs that suppliers can layer on top of their bracket pricing initiatives in order to create additional shared financial and service benefits with their customers. Finally, we review a situation in which an individual customer approaches a supplier with a collaborative logistics proposal, and we illustrate how the supplier should analyze such a proposal.