Flashcards in Exam 1 Deck (17)
what is the essence of business
generate, manage, and fulfill customer demand
name all 4 economic utilities
form, time, place, exchange
a proportionate savings in costs gained by an increased level of production
economies of scale
how do we compute customer value?
customer value = quality services / cost and time
a relatively recent concept adopted by manufacturers to deliver a service component in tandem with their traditional product - providing added value to customers, securing orders and boosting profitability
Servitisation of Industries
What is the perfect order for customer experience?
1. Correct order entry
2. items are available
3. ship date allows delivery
4. order picked correctly
Product as expected
Shipment not damaged
No customer deductions
No errors in payment processing
this is the elapsed time from customer order to delivery. standards should be defined against the customer stated requirements
Order Cycle Time
what does OTIFEF stand for?
On-time, In-full, Error-free
what is the Pareto 80/20 rule as applied to customers or products?
80% of profits come from 20% of customers
How do we compute ROI?
ROI = (Net Profit divided by cost of investment) X 100
what is a margin?
sales minus cost of goods sold
the amount by which the cost of a product is increased in order to derive the selling price
how do we compute C2C cycle?
the time that it takes to convert a payment for raw materials into collection of revenue for the finished goods into which those raw materials were built
the time it takes to procure, make, and deliver the finished product to a customer is longer than the time the customer is prepared to wait for
Lead time gap
the entire time it takes for a product to go from start to the customer. this includes procurement, manufacturing, and delivery
Logistics Lead Time
how do we calculate the logistics lead time?
logistics lead time = customer order cycle + lead-time gap