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ElectroluxChina“NetworkStrategy”ProjectFinalReportPresentationBeijing,March10,1999ProjectIntroductionandBackgroundCustomerSurvey

-SurveyApproach

-SurveyResults

-FindingsandOpportunitiesLogisticsNetwork

-EOQinventorymodeling

-LogisticsnetworkmodelingRecommendationsandnextstepsAppendices-Processflow-CostanalysisContentsMajorBrandsMarketSharein1999ElectroluxObjectivesReduceworkingcapitalIncreaseturnover(throughgreaterproductavailability)ReduceoperatingcostsElectroluxChinahascommittedtoachieveBestPracticeServiceandCost,asbasisforrapidbusinessgrowthhighinventorycarryingcostin-storestock-outstoomanywarehouses:limitedinventoryandservicecontrol:SOPsystemsandproceduresforinventorycontrolarenotsystematicallyinplace/appliedlimitedknow-howandsupportunclearresponsibilitiesandperformancecriteriaElectrolux’ssupplychainobjectives...…aretoimprovecurrentperformance...…todeliverrealbottomlinebenefitsElectroluxChinahasidentifiedsupplychainimprovementsasoneofitscorporateprioritiestoimprovecustomersatisfactionandcostperformance.Satisfyrequirementsoftargetcustomers(betterthancompetition)AchievefullcontroloftheentirelogisticsprocessLimitedvisibilityandcontrol,appropriateperforrmancecriterianotinplaceLikelygapsinservicesatisfaction.RequiredServiceLevelsandcompetitors’positionarenotmeasuredTheoverallobjectiveofElectroluxChinaNetworkStrategyProjectistooptimizethedistributionnetworkconfigurationintermsof:-Meetingcustomerservice requirements;-Achievingminimumcosts;and-Controllingtheentireoutbound logisticsprocess.IncreasedRevenue

-Improvedproductavailabilityandpromisingcapabilities

-Scalabilitytomeetfuturebusinessrequirements.

-Improvedresponsivenesstomarketconditions.

-Optimizedfillratecapability.

-Moreflexible,responsivedeliveryoptions

-Morevalue-addedservices.Reducedlogisticscosts

-Improvedendtoendsupplychainvisibility

-Lowercost-to-serveintransportationanddistributionImprovedassetproductivity

-FewerstocklocationsthroughrationalizationtoachievehighernetworkproductivityReducedworkingcapital

-LowerLDCstocksthroughmoreflow-throughs,smallermorefrequentorders,centralizedslowmovers,betteruseofsupplierstocksetc.EXPECTEDRESULTSPROJECTOBJECTIVE:TheoverallobjectiveofElectroluxNetworkStrategyProjectistodeterminetheleastcostdistributionnetworkconfigurationtosatisfythespecificservicelevelrequirementsofitscurrentandfuturetargetcustomersProjectObjectiveandScopeThescopeoftheNetworkStrategyProjectistoanswerthefollowingquestions:Whatarethecustomerservicerequirementswhichimpactchanneldesign,logisticprocessandinfrastructure?Whatisthecurrentperformance(performancemeasureandcustomersatisfaction)ofElectroluxinmeetingtheserequirementsandwhatistheGAPversusthecompetitorsaswellasagainstthe“BestPractice”achievableinChina?ShouldElectroluxprovideinventorycarryingandtransportationservicestoourclients(withappropriatepriceincrease)?WhatotheradditionallogisticservicescanprovidecompetitiveadvantagetoElectroluxinthemarketplace?ShouldElectroluxchangethestructureofitsdistributionchannelsinChina(e.g.salestoretailers,vstodistributors?)CanElectroluxgainbyplantdirectshipping?Howmanydistributioncenters(DCs)shouldElectroluxhave?HowmanyRDCsandLDCs?WhereshouldtheDCsbelocated?Whichtypes/locationofcustomersandwhichbranchshouldbeservedbyeachDC?Whichcustomersshouldbeserveddirectly?ShouldallDCscarryallproductsorshouldtheybespecializedbyproductline?ShouldElectroluxcontractforwarehousingservicesoroperateitsownDCs?WhatimpactdodifferenttransportationmodeshaveonElectroluxlogisticsnetworkrequirements?Whatinventorycontrolprocedures(highlevel)shouldElectroluxestablishinordertosatisfycustomers,minimizecostandmaintaincontrol?Whatarethesystemsandhumancompetenciesrequirementstoachievetheseobjectives?IndevelopingtheoptimumsupplychaincapabilityforElectroluxChinaweareutilizingathree-phasedapproachtodevelopingandrolling-outthenewdistributionnetwork-ThisprojectcoversonlyPhaseIOverallApproachtowardsNetworkOptimizationBuild

Logistics

ModelTask5Assess

AlternativesTask6Conduct

Review

SessionsTask7PresentResults,

Recommen-

dations

&Implemen-

tation

ActionPlansTask8Conduct

Visioning

SessionsTask1a.Initiate

Data

CollectionReview

Current

OperationsTask2Under-standServiceRequire-

mentsTask3Initiate

Detailed

Project

PlanningTask1Task4Full-ScaleImplementation

RolloutPhaseIPhaseIIPhaseIIIDistributionNetwork

ProcessDesignDistributionNetworkStrategyDevelopmentCUSTOMERSURVEYNETWORKOPTIMIZATIONProjectApproach1InitiateDetailedProjectPlanning1.aConductVisioningSessions2ReviewCurrentOperations2a.Understandcurrentnetworksetup2b.Reviewcurrentnetworklogisticsstrategy2c.Reviewcurrentcustomerservicestrategy3UnderstandServiceRequirements(customerinterviewsandanalysis)3a.Createcustomersegmentationframeworks5IdentifyAlternatives5a.Performdemandaggregationanalysis6AssessAlternatives7ConductReviewSessions8PresentPreliminaryResults&RecommendationsKeyActivitiesbyWeek(assuming10weeks)

123456789103h.AnalyzecustomerrequirementsandassessElectroluxGAP3k.AnalyzeCosttoServeandStrategicAttractiveness3l.DevelopRecommendedNewServiceOfferings3m.AssessLogisticsWarehouseNetwkStrategyImplications4InitiateDataCollectionCollectCurrentWarehouseNetworkDataa.FacilityOperatingCostsb.TransportationCostsc.InventoryCostsd.Demandvolumes3b.InterviewCustomersinLocation13c.InterviewCustomersinLocation23d.InterviewCustomersinLocation33e.InterviewCustomersinLocation43f.InterviewCustomersinLocation53g.InterviewCustomersinLocation65b.Selectionof5-8“bestoptions”ProjectWorkplanProjectIntroductionandBackgroundCustomerSurvey

-SurveyApproach

-SurveyResults

-FindingsandOpportunitiesLogisticsNetwork

-EOQinventorymodeling

-LogisticsnetworkmodelingRecommendationsandnextstepsAppendices-Processflow-CostanalysisContentsThesampleforthecustomersurveytargetedarepresentationofElectrolux’’scurrentoperationsinChina,anditscurrentandfuturemarket-CustomerSamplingMethodology-HistoricalSalesMarketGrowth&TrendsCurrentLogisticsOperationWherewerethehighestdemandareas?Wherearethecustomerslocated,whichhassignificantcontributiontoElectroluxrevenue?Whatarethecurrentcustomertypes?Wherearethekeyaccountcustomers?Whatisthecurrentsalesregions?Wherewouldbethepotentialhighgrowthareasforrefrigerators?Whatwillbetheemergingchannelforwhitegoods?Whataretheservicerequirementsfromtheemergingchannelplayers?Whatisthecurrentlogisticservicepattern,withregardtotheLDCs”distributionandthecustomerswhicharebeingserved?InterviewAreasInterviewCustomersSurveySampleSizeandCoverageInterviewAreasSurveySampleSizeandCoverageInterviewAreasInterviewCustomersSurveySampleSizeandCoverageTheprojectteamfocusedonobtainingasmuchcustomerdatathroughdirectinterviews.Acustomersurveywasfaxedouttobroadengeographiccoverage-CustomerSurveyApproach-FaxOutSurveyFocusedonseveralAC/ElectroluxchosenlocationsBeijing,Tianjin,Shanghai,Guangzhou,ChangsCustomerTypes Distributors: Provinciallevel,citylevel Retailers: Departmentstore,homeappliance store,chainstore KeyAccounts: InternationalchainstoresBroadgeographiccoveragetoincludeareaswheredirectinterviewscouldnotbeconductedStillaimedtoachieverepresentativesamplingofdistributorsandretailersDirectInterviewsIntotal,81customersurveyquestionnaireswerecollectedrepresentingabroadcrosssectionofElectroluxcustomers-CustomerSurveyBreakdown-DistributorsRetailersKeyAccountsProvincialLevel728InternationalChainStoreCityLevel12133DepartmentStoreHomeApplianceMultipleFormat10ChainStore7Total81SubTotal19593SuperMarket1-CustomerSurveyBreakdown-RegionsNCECGZWestCentralCSNEInterviewedSurvey2121957441076068Total4140Total6228155131281…andalsoElectrolux’’smarketsChangshaBeijingShenyangShanghaiChengduGuangzhouQingdaoSuzhouTianjinDalianKunmingNCNECentralECGZwCSProjectIntroductionandBackgroundCustomerSurvey-SurveyApproach-SurveyResults-FindingsandOpportunitiesLogisticsNetwork-EOQinventorymodeling-LogisticsnetworkmodelingRecommendationsandnextstepsAppendices-Processflow-CostanalysisContents8.AreyoubeingservedbyElectroluxdirectly?YesNoAllresponseswereinthe“Yes”categoryQuestion8Whywerenon-ElectroluxCustomersnotcoveredbythesurvey?Duetonewsurveyregulationswhichwererecentlyreleased(Dec.1999)bytheStateStatisticalBureau(SSB),acompanymustobtainpermissionandapprovalforallmarketsurveysconducted(thisapprovalcoverssurveyscope,approachandalsoareviewandapprovalofthesurveyresultsbytheSSBbeforetheyarereleasedclients).Theobstaclesputinplacebytheregulations(e.g.applyingforpermission,havingasurveyreviewedandapproved,etc.)couldhaveaddedseveralweekstotheprojectcommencementdateandadditionaltimebeforetheresultscanbereleased.Atthisstage,wearenotawareofanycompanieswhichhavesoughtandgainedapproval(includingGallup).ThekeyproblemisthatthesurveyreformshavingonlyrecentlybeenimplementedandthelocalbranchesoftheSSBarestillestablishingtheadministrativesystemtodealwithit.Therefore,themost”practical””approachforconductingtheprojectsurveygiventhecurrentenvironmentalconstraintswastocoveronlyourexistingcustomerssinceitwasunlikelythattheywouldreportthesurveytotheSSB.ElectroluxCustomer9.Salesrevenuegrowthinthenext1-2years<15%16-30%31-40%41-60%>60%Response:33%30%19%3% 12%Question9CommentsThemajorityofrespondentswerepositiveintheirsalesoutlookbothfortheirsalesoverall(rangingfromrefrigeratorstogeneralhomeappliances)aswellasspecificallyforElectroluxproducts.Typically,growthinsalesofElectroluxproductsresponsesrangedinthe10to30%band.Guangzhou,WesternChina,EasternChina,NorthEasternandtheNorthChinaregionswereanticipatedtoexperiencethegreatestsalesgrowthinthenexttwoyears.ChangshaandtheCentralregionsareanticipatedtohave.AndcustomerswhoisthenewentryintothemarketexpecthighergrowthratethantheothersNote:Datalimitationsinceresponsesweretailoredbasedonthepositionofthepersoninterviewed(i.e.ageneralmanagerofadistributorwouldhaveabroaderviewofsalesgrowthtothatofasalesmanageronlyinvolvedinthesalesofElectroluxproducts).SalesRevenueGrowth10.Whatarethekeybrandsofrefrigeratorinyourcurrentbusinessandwhatistheproportionofthesebrandsalesrepresentinyourtotalrefrigeratorsales?Whoselldirectly?Whosuppliesyoudirectly?Question10RefrigeratorSales

BrandNameElectrolux

Haier

Rongsheng

Xinfei

Meiling

ChanglingPercentageof

TotalSales(%)PurchaseDirectly

fromVendorbyRetailerGoodsShippedDirectly

fromVendortoRetailer

DaysInventory

SiemensDR60%21%DR23%27%DR19%14%DR17%13%DR9%9%DR6%8%DR8%17%92%91%84%86%86%95%91%91%94%83%72%92%86%92%1715N/AN/A15N/AN/ADRDRDRDRDRDRDR12181616161917Comments8outofthe26customerswhodistributeElectroluxrefrigeratorsonlysellElectroluxproducts.Over90%ofthecustomerspurchasedirectlyfromElectroluxandarealsodirectlyservedbyElectroluxForeignplayers,suchasCarrefour,ItoYokado,keeplowinventorylevels,typicallylessthan5days.Incontrast,theaverageinventorylevelforlocalplayersvariesfrom7to30days.CustomersinCSandNEholdinghigherinventorylevelthanotherregionsElectroluxhaslowerinventorylevelthanthecompetitorsatitsretailershop,buthashigherinventorylevelatitsdistributorsitesLegendD:DistributorR:Retailer11.Pleasespecifytheamountoftherefrigeratorsalesin1999Question11CommentsWholesaleRetailAverageVolume19994,752units,4,640unitsMarketShare(%) 28% 24%RefrigeratorSalesNote:Theseresultsareonlyforhighlevelreference(1)Except8outof19distributorswhoarepurelydoingdistributionsalesand36%ofretailerswhoonlyhaveretailsales,therestareallcarryonmultiplerolesinbothdistributionandretailsales.(2)Thedistributionsalesisquitelowbecausesurveyincludesanumberofnewdistributors,andthesalesnumberisalsoskewedbyretailerswhohaveweakdistributionsales.(3)Theretailsalesnumberisskewedbyacoupleofretailerswhoseretailsalesisevenhigherthanmostofdistributorssalesduringayear(4)Themarketshareofretailerslookshighersincethedataisskewedbysomedominantlocalretailchainsanddominantretailersincountylevelcities.12.Doyouexperiencethesalesfluctuationindifferentmonths?Yes,thefluctuationisasfollowsNoPeakmonthsare______________________,Sales_______________units/monthNormalmonthsare____________________,Sales_______________units/monthLowmonthsare_______________________,Sales_______________units/monthQuestion12SurveyResultsComments92%ofrespondentsconfirmedtheseasonalnatureoftheirsalesTheperiodjustpriortoChineseNewYearandthesummermonthsarethetwopeakseasonswithsalesvolumesaround80%higherthantransitionalperiods.The2-3monthsafterChineseNewYearandNovemberarethelowseasonmonthswithaveragesalesvolume26%lowerthantransitionalperiods.May,OctoberandDecemberarethetransitionalmonthfromnormalseasontopeakseason.PeakseasonsAverageSales(Units/month)MonthsTransitionalperiod(s)LowseasonsJanuary(pre-ChineseNewYear),JunetoSeptemberMay,October,DecemberFebruarytoApril(postNewYear)November849472351SeasonSalesFluctuationOrderingOrdering-TableAOrderingServiceImportanceandCustomerSatisfactionProductAvailabilityAbilitytoRespondtoUrgentOrdersOrderFrequencyMinimumOrderSize1.1Ordering1.ItemsNo.Satisfaction(Electrolux)Importance4.1421354.1421353.642135SatisfactionGenerally3.9421354.1421354.3421354.6421354.6421354.0421353.53.5421353.7421353.7421353.6421353.84213542135aRatefromElectroluxSalesManagersRatefromElectroluxcustomersA4.03.8Ordering-TableA“AbilitytoRespondtoUrgentOrders””,and“ProductAvailability”rankedthemostimportantfactorsfromthesurveyThoughaboveaverage,thecustomersatisfactionratetowardsElectrolux’sabilitytorespondtourgentordersscoredrelativelythelowestamongallthefactors.Customersfrommostoftheregions,suchasCarrefourBeijing,GuangzhouDepartmentStorecomplainedthatthereisnodifferentiationinresponselevelsbetweenthenormalordersandurgentordersTheoverallcustomersatisfactoryratetowardsElectrolux’sorderingservicelevelisparticularlylowintheGuangdongregionMostoftheretailersshowedlackofunderstandingforminimumorderquantityandorderfrequencyastheyarepresentlyorderingbasedondemandandpaymentcredit,andregardminimumorderquantityaslessimportantinaffectingtheirbusinessrevenues.Severalcustomersindicated““1”asdesiredminimumordersizeOrderingServiceImportanceandCustomerSatisfactionOrdering-CommentsOrderingService-BestOrderingService-CompetitorFeedbackfromSurveysOrdering-Competitor1.MinimumOrderSizeBestWorstElectrolux4(2-EC)Haier3 3(2-W)Siemens 3(2-W)Xinfei 2Best-Overall,Electroluxdoeshavethemostanswersforbest,buttheresponseswerequitespreadoutgeographically.ElectroluxappearstobeslightlystrongerinEasternChina,whileSiemensappearstobeslightlystrongerinWesternChina.Worst-HaierclearlyhasthemostmentionsanditappearstobeweakestintheWest.Data-Dataisscatteredacrossanswers.Minimumordersizeis1,butitisverymuchdependentonwhothecustomeris.Similarlyfortheworse2.OrderFrequencyBestWorstHaier2 2Electrolux2Best&Worse-ScatteredresultsacrossseveralplayerswithnoclearindicationofbestplayersSlimleadsbyHaierandElectroluxbothrated2mentionsinthebestcategory.Interestingnote,isthatHaier’sresponsesinECratesitasthebestbyonedistributorwhileitistheworsebytheretailerData-Nospecifics3.AbilitytorespondtoUrgentOrdersBestWorstElectrolux3Haier4 2(2-EC)Samsung 32Xinfei 2Rongsheng2Best-Haierhasthemostmentionswith4(whicharespreadthroughoutChina).Electroluxnexthas3mentionsbutallfocusedonEC(2retailers,1distributor).Samsungalsoappearsmoderatelybetterwith3mentionsoverall,2beinginEC.Worse-MostoftheworsecasementionswerefairlydistributedwiththeexceptionofHaierwhichhad2mentionsinEC.4.ProductAvailabilityBestWorstElectrolux2Haier3(2-SC)7(4-EC,)Xinfei 2(2-EC)Siemens4(2-CS)Rongsheng2Best-ModeratefeedbackwithbestforElectrolux,HaierandXinfei.HaierappearsslightlystrongerforproductavailabilityinSCwhileXinfeiisstrongerinEC.Worst-Haierappearstohavetheworseproblemswithproductavailability,particularlyinEC.Siemensalsoappearstohavesomeproblems(focusingonCS).Data-Onlyseveralpiecesofdatagivenforbest(rangesfrom70to100%)13.WhatisyoucurrentordertransmissionmodeFaxTelephoneEmailOther__________Ordering-Question13OrderTransmissionModeSurveyResultCommentsManycustomershaveapreferenceforutilizing““interactive”(i.e.telephoneorfacetoface)orderingmodessothattheycangetaclearideaofproductavailabilityCurrently,norespondentsusee-mailtoplaceorders.PresumablythisisbecauseofthelowlevelofITinfrastructureinChinaandthatvendorshavenotdevelopedthistypeofservice.CustomersinGuangzhouregionaremoreopentoadoptingnewtechnologiesthanthoseintheNorthChinaandCentralareas.Customersandsalesstaffindicatedproblemswithcurrentorderprocessingrelatedtotheheavilymanualworkprocessinvolved,multiplehand-offs(betweenElectroluxlogisticsandsalesdepts)andproblemswithoutdatedinventoryinformationonproductavailabilityinLDC.14.WhatistheorderfulfillmentperformanceofElectrolux?Orderfulfillrate___________88%Backorderrate___________8%Orderunfulfilledrate___________4%SurveyResultsCommentsTheaverageorderfillrateis88%,therateofbackorderis8%,andtheunfulfilledrateis4%.CSregionhasthehighestorderfulfillrateat92%,enhancedbyitscloseproximitytothemanufacturingbase.SincetheLDCsinNEregionusuallyhavelargeinventoryanduseLDCstoservealmostallthecustomers,theorderfulfillrateisalsoveryhigh.TheorderfulfillrateinGZregion(Guangdong,Fujian,Guangxi)ranksthelowestat73%,duetothelackofeffectiveandefficientcommunicationonbothlocalinventorylevelandinventorylevelinRDC.Orderfulfillmentperformanceisrelativelybetterinbigcities.AlmostalltheresponsesfromShanghaisaidthefulfillrateis100%.Keyaccounts,suchasCarrefourexperiencedhigherrateofbackordersduringtheweekendwhenElectroluxhasnopersontakecareoflogisticsservice,andtheyusuallykeeplowerinventorylevel(SalesManagersinbothGuangzhouandShenzhenwereconcernedaboutthelackofavailableandtimelyinventoryinformationintheRDC,sincetheycouldonlyreceivetheinformationonamonthlybasis).OrderFulfillmentOrdering-Question14ElectroluxStockouts-FrequencyOrdering-Question1515.HowoftendoyouexperiencestockoutofElectroluxproducts?(frequencyandthenumberofunits)SurveyResultCommentsRespondentsindicatedthatmoststockoutsoccurduringpromotionalperiodsandnewproductlaunch.Outof16responseswhoregisteredstockout,3aredistributors,9areretailers,and4aremultipleretailformatsGenerallyspeaking,customersexperiencedstockoutrangingfromoncetomorethan10times,respectively.Andtheunitsforeachstockoutrangedfrom1to200eachtime.ThestockouthappensmoreofteninGZregionswhosebusinessisstillininfancy,alsothesmallcitieswithoutLDCsTianLiFei,adistributorinShenzhen,experiencedstockoutpriortotheChineseNewYear,2000periodwiththeproductshortageestimatedaround200units.NumberoftimesrespondentsexperiencedstockoutofElectroluxproductsOnce3Two6Three2Three1Five1Ten2Fifteen1Note:limitedresponse16companiesregisteredstockoutsElectroluxStockouts-ValueLossOrdering-Question1616.Whatistheestimatedvaluelossforstockout?(in%oftotalvolumesold)0.1-4%4.1-6%6.1-8%8.1-10%>10%Response:60%17%8%4%10%SurveyResultCommentsAhighproportionofcustomerswhoindicatedsaleslossduetostockoutsasover10%werefromtheGZregion,especiallyforthecustomersinGuangdongandFujianwhichexperiencedseverestock-outsduringthelastyear.AsconfirmedbybothcustomersandElectroluxsalesmanagers,someofthereasonsforstock-outsarehighdemand,lowinventoryandlackoftimelyinformationoninventoryandproductavailability.-OrderingPerformance-“AbilitytoRespondtoUrgentOrders”,and““ProductAvailability””wereidentifiedasthemostimportantfactorsfromthesurvey,whichElectroluxperformedrelativelyweakcomparetootheritemsinorderingservicesTheorderfulfillmentperformancevariedsignificantlyacrossthedifferentregions.MarketsinwhichElectroluxhavehadalongerhistoryofoperation,wereincloseproximitytothemanufacturingbase,orweremorematuremarkets,(i.e.Shanghai)reportedbettercustomersatisfactionTheoverallcustomersatisfactionforElectrolux’’sorderingservicelevelishigherthanthecustomer’sgeneralexperiencewithinthemarketplace,withtheexceptionofGZregionStock-outsoccursmoreoftenduringpromotionalperiodandnewproductlaunch.CustomersinGZregionexperiencedmorestock-outsandhighervalueloss(>10%)duetothegrowingdemandscausedbyheavymarketingcampaign,lowinventory,andlackoftransparencyforinventoryandproductavailabilityinformationSomekeyaccountswhoseinventoryleveliskeptlow,suchasCarrefour,experiencedbackordersduringweekendswhileElectroluxhasnologisticscontactsTheorderprocessingworkflowisstillverymanualandpaper-basedwithquitelowefficiency.Andcustomerstendstoprefer““interactive”orderingmodestogetbetterideaofproductavailability.Summary:OrderingDelivery-TableBDeliveryDelivery-TableBDeliveryServiceImportanceandCustomerSatisfactionDeliveryLeadTime:UrgentOrdersDeliveryLeadTime:StandardOrdersOrderFulfillmentFrequencyofDelivery2.1Delivery2.ItemsNo.4.3421354.2421354.2421354.0421354.0421354.0421354.6421353.8421353.7421353.7421353.5421353.442135SatisfactionGenerallySatisfaction(Electrolux)Importance4.3421354.2421353.742134.9aRatefromElectroluxSalesManagersRatefromElectroluxcustomersADelivery-TableBDeliveryService(continued)SatisfactionGenerallySatisfaction(Electrolux)ImportanceShippingFlexibilityAccuracyofDeliveryPackagingQuality(Productprotection)Punctuality2.5ItemsNo.4.2421354.2421354.2421354.2421354.5421354.6421353.942133.842133.842134.7421354.142134.442135aRatefromElectroluxSalesManagersRatefromElectroluxcustomersA4.14.7OrderFulfillmentInmostregions,customersaremoresatisfiedwithElectrolux’sorderfulfillmentthantheotherbrandsingeneral.ButinbothNCandGZ,thesatisfactionlevelisbelowtheoveralllevel.Customers’desiredorderfulfillrateis96%onaverage,whichishigherthanElectrolux’’scurrent88%orderfulfillrate.DeliveryLeadTimeCustomers’desiredleadtimeis2-4days.ThesurveyindicatedthatElectroluxhasnostandardorderleadtime.Itvariesfromthesamedayto15days.IntheextremecaseofGuangzhouDepartmentStore,theintervieweesaidtheleadtimerangesfrom3-15days.Forurgentorders,thesatisfactionwithElectroluxisbelowtheotherbrandsinGZ,NCandNEregions.Thecustomerdesiredleadtimeis1.5daysinaverage.Currently,theElectrolux’’sleadtimerangesfromthesamedayto15days.Thecaseofthe15daysleadtimeoccurredtoaparticularcustomer,GuangzhouDepartmentStore,whichalsocommentedthattherewasnodifferencebetweenurgentandstandardorderleadtime.Delivery-CommentsDeliveryServiceImportanceandCustomerSatisfactionDeliveryPunctualityandAccuracyFromthesurveyresult,Electrolux’’sdeliverypunctualityis89%andtheaccuracyonquantityis93%.IntheGZ,NCandNEregions,thesatisfactionwithElectroluxdeliverypunctualityisbelowthegenerallevel.InGZandNEregions,thecustomersarelesssatisfiedwithElectroluxdeliveryaccuracythanthegenerallevel.PackagingQualityInCentral,GZandNCregions,thecustomersarelesssatisfiedwithElectroluxpackagingqualitycomparedwiththegeneralservicelevel.Thecustomersmentionedthefollowingbrandsfortheirgoodpackagingquality:National,Siemens,Haier,ShanglingandMeiling.OtherDeliveryServicesAstothedeliveryfrequency,Electroluxdeliversgoodstocustomersbasedontheirorderscurrently.Becausemostofthecustomershaveonlyonesitefordelivery,sotheneedforshippingflexibilitylikemultipledrop-offpointsarenotthatimportantcurrently.Delivery-CommentsDeliveryServiceImportanceandCustomerSatisfactionDeliveringService-BestDeliveringService-BestDelivery-Question17ToleratedLeadTime17.Whatisthemaximumtoleratedleadtimewithwhichwillnotinfluenceyoursales?7-10days5-7days3-5days2days1daysamedayAstothelongesttoleratedleadtime,themajorityoftheresponsesis3-5days.

-Amongstretailers,36%oftheresponsesare2days.

-Amongstdistributors,53%oftheresponsesare3-5days.Becausethefactoryisinthesameregion,ElectroluxservicesthecustomersinCSwithshorterleadtime.Thecustomersgetusedtotheshorterleadtimecomparedtootherregionsandtheirtoleratedleadtimeistheshortestamongalltheregions.InNEregion,allthecustomersarefoundtobeservedbyLDCs.Hence,theyarealsogettingusedtoenjoyingtheshorterleadtime.LongestTolerableLeadTimeNCECGZCSCentralNEW7-10days3-5days3-5days2days3-5days2days2-5daysResponsesDistributionMajorityofresponsesbyRegionSurveyResultComments451813321583007-10days5-7days3-5days2days1daySamedayRetailerDistributor18a) WhatisyourviewonpickingupproductsyourselfatyournearestElectroluxWarehouseinsteadofElectroluxdeliveringtheproducttoyou?b) WhatifElectroluxprovidesselfpickupandElectroluxdeliveryservicesatdifferentprices?CustomerPickupDelivery-Question18CustomerResponse(s)Almostalltheretailers,whetherpresentlyreceivingdeliveryservicefromElectroluxornot,didnotwanttopickupgoodsfromtheLDCsAvarietyofreasonsweregivenagainstcustomerpickup:

-lackoftransportationcapabil