Customer Service Gets Personal

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Businesses today face the unenviable task of reducing supply chain costs while increasing front-facing service to end customers. Technology and automation help integrate and expedite service, but they don't allay the problems and emotions—good, bad, and indifferent—that befall poor execution or unforeseeable exceptions.

The business-to-consumer universe is rife with examples of customer service gone awry, or simply, beep and "no reply." Manufacturers and retailers that fail to meet basic consumer expectations are destined to leave business at the door; and transportation and logistics service providers that similarly can't deliver invariably join the line.

For all the benefits technology wields in a world driven by connectivity and speed, it also abstracts the human interface: the firm handshake that instills confidence in a new partnership; the calm voice that offers reassurance when a shipment is missing; the steely eye that shows determination and perseverance in reducing inefficiencies and costs.

Good customer service is reactive and proactive; it is both a means toward a long and successful business relationship and an end in itself. Increasingly, it's personal.

For companies that demand premium customer service, it's there for the asking. For some, there's a willing ear on the other end of the line and on the other side of the table that's ready to listen.

AN ARM'S LENGTH RELATIONSHIP DOES NOT GO DEEP ENOUGH

There is a common and sometimes very real perception that when the economy tightens, customer service slackens. The pressure to squeeze out supply chain costs often lends itself to cutting assets, cutting labor, and cutting corners.

But consistent customer service can also be a path toward reducing costs and therefore a priority in good times and bad. Third-party logistics and carrier partners that focus attention on the customer bundle more value in the total cost of doing business and ultimately differentiate themselves in the marketplace.

"When your purchasing power diminishes, customer service provides the highest return on your limited resources," says Catalina Munoz, senior warehouse account manager for CaseStack, a Santa Monica, Calif.-based 3PL. "Setting yourself apart becomes even more essential to the entire value package for the customer."

Shippers, too, recognize that building a collaborative partnership is a timeless cost-cutting strategy.

"Cost pressures will always exist," says Fred Berkheimer, vice president of logistics for Unilever Health and Personal Care North America. "But you have to take a long-term view of customer service to reduce costs. Day to day, sound customer service is more important than ever. We look at our relationships with service providers and ask, 'how can we become more efficient together?'"

The consumer product manufacturer, which has U.S. headquarters in Englewood Cliffs, N.J., expects as much and more from its third-party logistics providers. In April 2002, the company found an eager partner in GENCO Supply Chain Solutions.

GENCO currently manages Unilever's entire distribution network, including three facilities totaling 1.7 million square feet. Beyond its operational capabilities, the Pittsburgh-headquartered 3PL has built a corporate culture that thrives on communication and collaboration.

"It's nice to say that you drive value for your customers, but you have to be able to back that up and measure it," says Herb Shear, GENCO's CEO. "My job is to be oriented to our customers' business and stay engaged with them. Finding out where customers are going strategically, and what they're looking for, is an important part of what I do."

The only way to benchmark performance is to get up close and personal with customers—and companies such as Unilever expect nothing less from themselves and their partners.

"We need to be open with our contracted service providers," says Berkheimer. "An arm's length relationship with a 3PL does not go deep enough. It will not reach that necessary level of collaboration."

THE FIRST AND MOST IMPORTANT STEP IS LISTENING

While supply chain partnerships grow increasingly more complex, and the underpinnings of successful collaboration reach deeper and further back in the supply chain, on the surface, customer service is reactionary. Whether it's identifying a supply chain exception and initiating a response, or managing day-to-day operations, there is a cause and effect.

Reactive is not a pejorative assessment, according to Randy Marshall, director of operations for Technicolor, a CD and DVD replication company based in Camarillo, Calif. "I tell my staff it's like a fire drill; don't be surprised when the alarm rings," he says. "I need to know that I have people and partners in place who are prepared and ready to act."

Melvindale, Mich.-based Evans Distribution Systems currently provides a variety of 3PL capabilities for Technicolor, from transportation and warehousing to other value-added services.

"For Evans to respond quickly to our changing needs, direct communication is necessary," Marshall adds.

That's why Evans places a premium on listening. The 3PL has crafted a nine-point system that outlines its approach to customer service, says Leslie Ajlouny,vice president of business development for Evans.

"This system helps us to ensure not only successful operations, but successful relationships," he says. "The first and most important step is listening. This is critical at the first customer meeting and remains our top priority throughout the relationship."

For some companies, a customer service representative who is attentive and outgoing makes a world of difference. Michael Bojorquez, distribution manager for Air Liquide Electronics, a distributor of compressed gases based in Freemont, Calif., likes the fact that when he calls his motor freight carrier, Con-way Freight, its agents go the extra mile in making time to answer his questions.

"When I call Con-way, I don't have to identify myself. They know who I am and who I need to talk to," he says. "If someone doesn't have an answer, they get back to me—on the phone. They are persistent and go out of their way to contact me."

For others, fielding phone calls from the CEO is an expectation, not an exception. "Herb Shear is the only CEO I work with who might not call me for one month. He spends the time to find out how we think. When he asks questions, he creates value for Unilever," says Berkheimer.

Building a corporate culture that places a premium on "listening" requires customer-facing employees who are prepared to answer and respond to questions and problems that arise. Companies that value the importance of customer service unequivocally support and empower their staff in a similar manner.

"Training experienced and new team members is an ongoing, never-ending process," explains John Hockmuth, vice president of sales for Burris Logistics, a Milford, Del., refrigerated warehouse and distribution company. "The more each team member knows about their individual job and the internal customers they serve, our product—which is service—will be delivered to our customer more consistently."

Conceptualizing service as a commodity perhaps abstracts the emotional value implicit in human communication and collaboration. But it does capture the gravity "service" providers place on not just delivering the goods, but delivering on promises, and often times delivering above and beyond what is required. This is when communication escalates, and where personal touch becomes a value-added differentiator.

PERSONAL RELATIONSHIPS ARE MUCH STRONGER THAN A CONTRACT

"When we need a Herculean effort—60 trucks out to manage a retailer's promotion, for example—it's not unusual for GENCO's people to work day and night to make it happen," offers Unilever's Berkheimer.

When the going gets tough, transportation and logistics providers really show their mettle; and what doesn't break the chain only makes relationships that much stronger.

For Cephalon, an international bio-pharmaceutical company headquartered in Frazer, Pa., GENCO is very much a part of the corporate fold—beyond its role managing reverse logistics and returns management. "It's all about building relationships and treating vendors as an extension of the enterprise. GENCO is Cephalon," says Randy Bradway, vice president of commercial operations, Cephalon.

"As with any operation, when people are involved, mistakes happen," he adds. "The process of dealing with the 'oops' is what makes relationships work. GENCO is touching our products and customers every day. How do you provide incentives to people doing your work outside the enterprise? Open and constant communication is key to building this type of collaborative culture."

Tony Cerro, senior logistics planner for Irving Tissue, a Philadelphia tissue product manufacturer, shares a similar appreciation for its warehousing and distribution partner—Shippers Warehouse of Georgia, based in Jonesboro.

"Shippers Warehouse moves a lot of BJ's Wholesale Club volume for us, which requires multi-stop loads and coordinating with club stores to schedule and accept deliveries," says Cerro. "In the few instances when problems occur—a driver oversleeps or a truck breaks down, for example—Shippers Warehouse is there to reschedule shipments and turn things around."

In worse case scenarios, personality makes a big difference. "Cracking jokes during a resolution helps avoid the blame game," he adds. "We bring a positive approach to dealing with our customers and service providers and Shippers Warehouse buys into that."

General Electric Appliance (GEA) shares a comparable bond with its third-party logistics provider, TMSi, Fernandina Beach, Fla. As a "team" they make site visits to customer facilities, and have customers visit their facilities.

"There's nothing fancy about it, but this connectivity is important," says Todd Greener, manager, parts operations for GEA, Louisville, Ky. "Key customers come to our warehouse and meet with our site leadership team and they can't tell the difference between GEA and TMSi. The partnership is transparent."

Such transparency is often manifest in how organizations as a whole communicate with customers. At GENCO, everyone—from top to bottom—is involved in customer relationship management.

"We survey customers proactively every quarter to measure progress," says Shear. "Many companies execute a similar Q&A review, but outsource it to a third-party provider.

"We believe it's important for senior management to actively engage and interact with customers during this process. Otherwise it's too easy to get diverted," he adds.

Involving senior management in the process also helps eliminate bureaucracy so that when a problem occurs, everyone knows about it.

"At GENCO, customer service starts at the top and runs through the entire organization," says Bradway. "All employees have religiously adopted Herb Shear's customer service culture and they take it personally. Personal relationships are much stronger than a contract."

When push comes to shove, empowerment and responsiveness are often key factors in managing supply chain exceptions quickly and efficiently. Mark Menotti, traffic manager for Southwire Company, a Carrollton, Ga.-based manufacturer of residential, commercial, industrial, and utility wire and cable products, knows this well.

Southwire has been working with A. Duie Pyle, West Chester, Pa., since the mid 1990s and the LTL company is a preferred provider in its carrier alliance program. Menotti recalls sending a shipment out for next-day delivery and overlooking a 24-hour call for appointment provision on the bill.

"At 11 p.m. I realized the problem. So I called A. Duie Pyle and spoke with a night shift worker who said the shipment was indeed waiting at the terminal. He authorized the shipment to move without the consignee's approval,"says Menotti.

PEOPLE, NOT TECHNOLOGY, IDENTIFY TRENDS

For many companies, customer service is as much a part of anticipating demand as it is reacting to change. Technicolor's Randy Marshall appreciates the fact that Evans insists on face-to-face meetings when bidding on new business.

"Evans goes to great lengths to understand unique project requirements," he says. "We meet face to face, it emails back an assumption of the requirements, I verify and/or correct that assumption, then Evans bids on it. Rather than focusing on price from the start, it determines what my company needs."

By assessing requirements in advance, there is less risk that a project will grow beyond the allotted budget and that Technicolor underbids a customer.

The ebb and flow of communication among supply chain partners also facilitates better strategic planning and innovation. Service providers rely on customers to share information so they can anticipate shifts in demand and evolve their services to account for these changes. Shippers, too, value the objectivity their partners bring to the table when assessing broader business trends and challenges.

Cephalon's Bradway enjoys the quarterly "brain dump" meeting with GENCO. "We throw our cards on the table, pull out our crystal ball, and look into the future to see how we can work together to avoid problems and manage change," he says.

Because GENCO serves multiple customers in the pharma industry, it is privy to emerging trends that it shares with Cephalon.

"GENCO may see a high volume of product returns coming from one pharma chain, a specific geographic location, or a group of manufacturers. It tracks cross-industry or cross-manufacturing patterns. People, not technology, identify trends," adds Bradway.

Then there are examples where customer service is both proactive and reactive, and where competitive hubris surrenders to outsourcing altruism. Unilever's Berkheimer recalls a failed technology installation at one of its 3PL facilities.

"A WMS conversion at a third-party facility went awry," he says. "We were a day-and-a-half late with shipments, trucks were waiting, and retailers were screaming. Our third-party logistics provider couldn't fix it. Herb Shear called, asked if we needed help, and that was that."

GENCO shipped a busload of people to the facility. They worked in shifts, and in 10 days they fixed the conversion problem in a competitor's facility.

"We understand Unilever isn't going to give us 100 percent of its business, so we're there for the customer. It's about building a long-term relationship," observes Shear.

Sometimes that requires separating emotions from business. "We look at the outsourcing process holistically with every part in mind. The idea is to raise the tide and float all boats," adds Berkheimer.

IT BLOWS SILO THINKING RIGHT OUT THE DOOR

For transportation and logistics service providers, customer service plays a critical role in their evolving value proposition. A proactive approach enables them to anticipate need, scale investments in technology and services, and better match resources to demand.

"The more we communicate with customers, and understand how their business is trending, the better off we all are for it," says Shear. "If a customer tells us business will be off 20 percent next year, we need to identify areas where we can pull costs out and make operations more efficient."

This attention to detail, continuous interaction, and inquisitiveness is nothing less than grassroots demand-driven logistics. Customer service breaks down walls and foments supply chain synergies beyond contractual obligations.

"Our management structure with TMSi encourages broader thinking," says Greener. "Traditional 3PL relationships often focus on labor costs and basic customer service metrics. But warehousing has a tremendous impact elsewhere on transportation and quality control."

The trust that GEA and TMSi have built opens up new avenues for collaboration and innovation. "Establishing this type of relationship blows silo thinking right out the door," says Ron Cain, CEO of TMSi.

As a whole, customer service is an expectation. Sometimes it's difficult to place a value on something that is ephemeral, evolving, and emotional. Only when problems arise, or challenges present themselves, are these expectations satisfied or spurned.

Businesses that approach customer service as a core competency, and deliver beyond what is expected, instill these values in their employees, then empower them to act. The human component is paramount.

In this sense, customer service is a marriage of ideas and a contract without license. It is expressive when it needs to be and felt when it's supposed to be. When customer service is lacking, it's glaringly visible. When it's apparent, it's discreet, and everyone benefits.

"Our goal is to be an extension of our customer but transparent in everything we do," says Hochmuth. "If our customers succeed, then we have succeeded."

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