CUSTOMER PROFITABILITY MATRIX

The high net sales value customers who are relatively cheap to service are worth their gold.

These customers could be more profitable if the costs of serving them could be reduced.

Customers relatively cheap to service, net sales value is low

These customers should be looked carefully

The Resource Environment

The Value Chain Michael Porter (1985)
Firms Infrastructure

Secondary Activities

Human Resource Management Technology Development

Procurement
Inbound Logistics Outbound Operations Logistics Marketing & Sales Service

Primary Activities

Overview
External Factors
Social Ecological Political Technological Economic

Organisational Strategic Plan

Manufacturing

Marketing

Physical Distribution
Adapted from Capacito, W., & Rosenfield, D.B., (1984), Analytical Tools for Strategic Planning, 15(3), pp47-61, Council of Logistics Management USA.

Finance

Logistics

Functional Strategic Plans

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Strategic Logistics Planning

Business goals & strategies Quality of Individual link of logistics system 1. 2. 3. 4. 5. 6. 7. 8. Facility location Operations strategy Inventory management Information systems Material handling Traffic & transportation Planning & control Organisation Customer service requirements

Integrating logistics planning

Design of integrated logistics management system

Overall performance
Adapted from Capacito, W., & Rosenfield, D.B., (1984), Analytical Tools for Strategic Planning, 15(3), pp47-61, Council of Logistics Management USA.

Pressures Influencing System

New customer Service requirements Changing costs

Regulatory change

Logistics System

Pressure for financial performance

Constantly improving IT availability

Adapted from Capacito, W., & Rosenfield, D.B., (1984), Analytical Tools for Strategic Planning, 15(3), pp47-61, Council of Logistics Management USA.

Pressure to reduce inventory Requirement for innovation and efficiency

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Conflicts of Interest
Sales & Marketing
High revenue through: High levels of availability Rapid introduction of new products

Higher Lower

Customer Service

Production

Cost effective production: High constant capacity utilisation Longer production runs, Fewer set up costs Tight budgets for: Stocks Cost

More Fewer

Disrupting factors in production

Finance & Control

Higher
Lower Stocks

Adapted from Capacito, W., & Rosenfield, D.B., (1984), Analytical Tools for Strategic Planning, 15(3), pp47-61, Council of Logistics Management USA.

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Trade Offs in Global Logistics

Costs Transport Source to User Inventory Material Production Localised Global

Important to recognise trade offs. Key to recognise the service needs of the market
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