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Plastic Perspectives

Here we go again! ... with 1Q 2003 in the history books, we still have a persistently sluggish plastics economy, with growth rates small or non-existent - and once again the cry is "wait ‘till next year when gasoline prices come down." Yet this is the most persistent period of stagflation that we have seen since the 70’s with no relief in sight.

What to do? We believe in going back to basics ... enhance customer service!

Service differentiation is the solution to the high cost/poor service spiral. The dilemma of customer service can be resolved by thinking carefully about your customer’s real product requirements, your customer relationships and your supply chain economics.

The three steps to profitable customer service:

1. Understand Real Customer Needs

This sounds simple enough - just ask the customer, right? There are two problems in asking what cycle time is required. First, the customer may not know his or her own real needs, especially in companies where the purchasing group is separate from operations.

Second, most customers will ask for shorter and shorter order cycle times if they don’t trust the vendor to keep its delivery promises. Spend time on the customer’s premises observing the product inventory and usage patterns and developing a joint understanding with the customer’s operations managers on appropriate service levels.

2. Align Service Intervals With Customer Relationships

Not all customers have equal importance – although in most warehouses it is "first come, first served." Most order fulfillment and service measurement systems do not differentiate between important steady customers and intermittent customers. Set different priorities for the different customer types and watch complaints decline and service and commensurate profits increase.

3. Align The Supply Chain With The Service Interval

Decide which are core customers and core products and match them up in the most profitable (for the customer and for the supplier) ratios so that service differentiation can create a competitive advantage for you.

What do you do when a sales rep asks for fast service for a non-core customer as a "foot in the door?" Say, just have the customer sign a volume contract, and we’ll offer the same service levels as for our other loyal core customers.

Plastics Industry Outlook for 2003, By Selected Resins (includes polyolefins, nylon, PVC, PS, ABS, ETP’s, and TPE) and by Major Markets (in descending order). Source- American Plastics Council.

■ Packaging ■ Export
■ Building and Construction■ Furniture
■ Consumer and Institutional ■ Machinery
■ Transportation■ Electronic

We salute the 20th anniversary (October 2002) of the National Plastics Center and Museum (NPCM) in Leominster, Massachusetts. Many new exhibits have been added, including one on automotive use of plastics coming this year. In addition, three PlastiVans travel throughout the United States promoting the industry. To date, 40 states have been visited. We urge our readers to look for these vehicles visiting their area as well as planning a visit this summer to this outstanding industry-wide effort that benefits us all.

For more information, click on the Author Biography link at the top of this page.

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