Customer Value Funnel
Customer value is what buyers get in a form of utility from products and services they are paying for. This demonstrates that there is a difference in how different groups perceive customer value. While trying to increase the value customers get from products and services, those who are manufacturing products will have to arrive at some kind of a conclusion in their assumption as to what would satisfy the needs of the customers, hence the value customers will get when they buy their products.
The same applies to service where some kind of service has to be rendered in order to charge customers who are willing to pay for the service they get, as long as it has some value in it. Both manufacturers and service providers have different roles to play since manufacturers, for the most part, do not sell their products directly to consumers. They sell their products through distributors that are middlemen between manufacturers and retailers.
The point to highlight here is the final products that reach the consumers will have to include all the cost incurred through the process. This means the presence of the middlemen will raise the final price consumers pay for products. How Wal-Mart Optimizes, Communicates and Delivers Customer Value This is where the supply chain management the largest retailer in the US Wal-Mart is using is creating value to the consumers because most of the time it manages to eliminate the middlemen and buys directly from the manufacturers (CFAI. 2008).
By doing so, it is able to avail the right items, to the right customers that are willing to pay for them, at the exact time they need it, by applying the most efficient methods, so that it will be in a position to introduce cost-saving. Cost-saving is one of the main values that could be passed to customer provided that the goods they are buying have the exact utility they are looking for. Wal-Mart is showing a high success rate in its effort to deliver value to its customers, by being in a position to offer the lowest price in a given locality, flunked by the assortment of vast range of products.
Among the factors that contributed to such success rate are its highly automated distribution centers that had shown a proven result in reducing shipping cost and time involved and its computerized inventory system which speeds up the checking out process and the time needed to record the transaction at multiple terminals. Accordingly, the company’s own distribution centers that were numbering more than 40 at the end of the 1990s that could contain more than 80,000 items were responsible for supplying the various company outlets that used to get up to 85% of what they sell from these company owned distribution centers.
Whereas, the best competitors of the company were only getting 50-65% of their inventory form their own distribution centers that resulted in enabling Wal-Mart to replenish its inventory in two days, while it takes its competitors five days to do it. Such advances the company has over its competitors had enabled it to create value to its customers by availing a vast number of items under one roof, while at the same time offering a much lower price than its competitors to the point where wherever a Wal-Mart retail store was opened it would end up driving a big number of smaller competitors out of business.
Another technology that enabled the company to do a very efficient business was its use of barcode that could be read using a hand-held computer that enables workers to spot how many of a given item is available on the shelf and where it is located in the big stores. This is in addition to the computer system that will inform immediately to the distribution centers and the manufacturers when an item is paid for enabling both to know in advance how much and when to do the replacement.
This alone had saved everyone involved time, because it had been possible to deal with the vast items exactly according to their demand, which will add to the efficiency and space in the distribution center that could stack only items that are moving through the payment system quickly because of their high demand. Employees could also locate items easily in the large stores enabling them to give efficient service.
Those who are benefited from such a system include the packaging departments that would know exactly which products and in what quantity to package for a given point in time, which saves them time and eliminates the unnecessary paperwork. This system has also enabled supervisors to monitor their employees effectively so that they will deliver an efficient service for the customer. Another effective feature that enables the company to add to the customer value is the company’s logistic system that has more than 3,500 company owned trucks that enable it to make its own decision as it sees it fit, instead or relying on others.
This had enabled the company to deliver goods to the stores within two days without interruption making it possible to replenish each store at least twice a week, which would be expensive and impossible if it was relying on other truck companies. What this translates to for the customer is they will always find what they are looking for whenever they visit the numerous Wal-Mart stores. This was made possible by the numerous innovations the company had been introducing to its logistic system that had enabled it to become not only very efficient but cost effective.
The inventory system had also some input in order to make what the company is doing successful. One such system is the ability to replenish a given store within a day if the need arises. The company has in place IT and communication system to enable it conduct an effective tracking system across the country. In fact, the company has an effective satellite tracking system that has up to the minute detail of what is taking place across the US with a glance of a screen.
If those in charge want to send a general message across the stores they have a TV studio at their disposal that they can use to communicate their message across the country or they can make individual contacts with each store using telephone. It is possible to say that it is the bringing together of many factors that allowed the company to offer prices that are low and can change from day to day reflecting the cost involved, where there are times customers would pay the most lowest price available nowhere else.