Operation Management

Describe the whole supply chain from raw materials to customer service to end use

The zappos slogan is “power by service, delivering happiness”, what started in shoes has expanded in handbag, apparel and accessories. Their ultimate goal is to be the company that provide the absolute best service online. Zappos believes that when it comes to online approaches immediate gratification is a critical issues: the speed and ease which costumers receive approaches place a critical role, in whether or not that costumer will shop with you again.

In order to better understand Zappos' supply chain it is useful to understand what is a supply chain and how does it work.

The supply chain is a global network used to deliver products and services from raw material to end customers through an engine flow of information, physical distribution and cash, The goal of supply chain consists in upgrade the operations in order to boost speed and efficiency. The supply chain is guided by 7 principles:

1. Adaption of customer's demand: in order to comprehend customer better, customers are broken down into various teams, the so called “segmentation”. The most primitive means to section client is ABC analysis in which groups consumer is based on sales volume or productivity.
2. Customize logistics network: when customers are divided into section based upon solution requirements, it might have necessary to tailor alternative logistics networks to serve various sector.
3. Alignment of the demand planning across supply chain: supply chain professionals are instructed to share needed data with trading partners so nobody needs to keep unnecessary stock.
4. Differentiation of products near to client: Standardization is the complete opposite of differentiation. Some manufacturers create items that comply with laws of multiple nations.
5. Outsource tactically: it is advisable not to over-outsource company's expertise.
6. Establishment of an IT support Multi-level decision making: IT job should be performed prior to IT project. This will equip the organization with full understanding about procedure insufficiencies in order to identify what sort of innovation the company really require.
7. Adaptation of both service and financial metrics: Anderson et al suggested that activity based costing (ABC)  should be implemented in order to determine customer's liability.

Zappos's supply chain is guided by seven principles:

1. Customer service as a priority;
2. Hire people with positive attitude and empower them;
3. Measurement of satisfaction and not productivity;
4. Considering each contact as a business opportunity;
5. Promise less, deliver more;
6. Being partner with third party logistic provider (3PL);
7. Asking vendors for help

In order to offer the best costumer service it is needed to hire good people with positive attitude, trained, empower them and continue to be motivated to add value to the company.  Zappos believes that call centre is the core of the competency: therefore in order it is important to find people that are passionate to costumer service not just for the customer loyalty but for everyone that join the company.  When they started  their tag line was the web most  packaging shoes store,  as they  expanded  into handbag and shoes they need a new tag line, The products that they added are from customer feedback. In fact, even though people buy products online, they often call service staffs. Then, the company analyses the phone calls to determine customer's changing needs and trends in order to enhance the merchandising.