If you walk into a UPS store and ship a box, you will not fill out a paper form.
ID: 462413 • Letter: I
Question
If you walk into a UPS store and ship a box, you will not fill out a paper form. The associate will type the name and address into the UPS register. If you walk into a FedEx store to ship a similar box, you will complete a form. Operationally, do you see the difference and do you see the costs? What does FedEx do with that form? I am not asking that you answer that specific question, but how many layers of cost does YOUR organization impose? Or, do you see other companies that impose costs on you as their customer? Discuss your observations. I want you to be able to open your mind and your eyes and see these things
Explanation / Answer
The layers of cost that organization imposes are for customer acquisition, engagement, communication, transaction, feedback, reconciliation, conflict resolution. This particular related to transaction cost. It generally includes documentation, productive time cost, infrastructure cost.
Documentation costs are related to all the physical paper work that goes into a transaction, such form filling, contract signing, proposals, post sale documents, such terms and conditions, user manual, warranty documents. Time costs related to the employees spend work hours with a customer to facilitate the transaction. Infrastructure costs related to physical offices, branches, point of sale, service centers and any other physical touch points. Infrastructure also includes internet portals, extranet, emails and social media that the company uses to transact with customers.