How ABC analysis can be used to improve the efficiency of the customer service activity

Running Head : ABC ANALYSIS

ABC Analysis to Improve Efficiency

of Customer Service Activity

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ABC Analysis to Improve Efficiency of Customer Service Activity

ABC Analysis explores or evaluates relationship of antecedents behavior and consequences . The ABC system provides information to improve the management and operation of ongoing activities . The goal of ABC should be to increase the value of the products or services provided to customers and to increase company profits by providing higher quality or added value to customers

at the lowest possible costs (Stock and Lambert , 2006 . ABC works toward improving critical organizational decisions in such areas as product design and mix (what to sell and provide , pricing conditions (what to charge , customer mix (whom to sell , sourcing (vendors , in house or outsource , markets improvement priorities (on what areas to concentrate ) and cash management (where to allocate resources . This analysis is used by Costco Wholesale Corporation , who looks upon themselves as the membership warehouse club that has the capability to sell top-quality food , hardlines , softlines , and other goods usually in a large number or bulk quantity at the lowest possible price . Costco now has over 457 stores which are situated in most parts of the United States and is still growing . Their success was mainly attributed to their sales volume , good consumer acceptance , generally good services and customer care , and the high product and service value . Furthermore , Costco sells provides or displays items or products from limited suppliers or from a small number of suppliers . Variety of items is also reduced and this is done to reduce the risk of purchase decision and encourages a consumer to buy such product or service

ABC analysis provides insights into the costs that go into the products and services that are provided to Costco 's operational forces . ABC provides a baseline assessment required to initiate a successful business process improvement (BPI ) program . ABC enables the functional area manager at Costco to quickly identify opportunities for improving a business process that , when reengineered , will have a high payback potential in the form of actual dollar cost savings , increased productivity , or higher output yield . One goal of an ABC analysis is to quickly identify resource-consuming work activities that are inefficient or redundant , and identify opportunities for reengineering that will produce real dollar cost savings , future cost avoidance , or higher output yield and /or quality . ABC provides managers with a road map that helps them streamline processes and improve customer service . It will also provide them with the necessary information needed to establish prices and rate structures , if applicable , for their products and services . Costco Wholesale Corporation 's goals are fashioned through the use of ABC analysis . Costco Corporation provides more discounts and cheaper prices to the customers , focusing more on the customer service activities , rather than to the competition . It uses ABC analysis to be able to provide lower cost and greater discounts . Through ABC analysis the corporation 's marketing style is modified to reduce the...