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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
Paperwork complete
Timely arrival
Product as expected
Shipment not damaged
Correct invoice
Accurate overcharges
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


refers to the stage in the production process where customer orders are accepted by the manufacturer

Demand Penetration Point