Our company was contacted by the Sales V.P. of a mid-sized consumer product manufacturer who had been frustrated by his company’s inability to make customer deliveries in full and on time consistently. Sales were being lost, stock-outs were common, and customers were frustrated with the level of delivery services they were receiving.
This project involved an evaluation of the client’s current service levels along with a review of the various kinds of problems that interfered with achieving the desired customer service quality. We found that there was a very loose customer service policy in place and that freight carriers were generally blamed for any delays that the client’s customers experienced. All in all, frustration and bewilderment appeared to set the tone for the typical business day.
Our approach included an upstream evaluation of the client’s order processing methods. We conducted a process-mapping phase that reviewed the flow of orders from the sales and sales broker staffs through the credit approval and customer service phases. We mapped the flow of materials and information through production planning, manufacturing, and then to the transportation/logistics and shipping departments.
An interesting observation was the number of days that each order spent either in transit or lodged in the various preliminary processes prior to shipment. For example, sales brokers tended to hold orders until seven days before a customer’s desired delivery date to assure that any changes in order quantities would be accounted for. We determined that such changes were infrequent (fewer than 5% of orders were changed), and that this “hold time” was just over an average of four days. The client’s credit department tended to hold orders for two additional days, even though 95% or more of the client’s customers showed no credit problems whatsoever.
By the time orders were delivered to production planning and then downstream to transportation and shipping, very little time was left to make delivery on the customers’ requested delivery dates. Freight carriers were called each evening and were then told about the client’s trucking needs for the following day. In many cases, carriers experienced problems getting equipment to the client’s place of business in a timely manner, resulting in delivery delays.
We developed a strategy that enabled the sales staff and the client’s sales brokers to increase the visibility of orders early in the cycle. By doing so, each participating department in the supply chain was made aware of pending orders. While this advance information enabled these departments to improve planning, contingency plans were established to handle exception orders that needed to be changed or held for credit reasons.
Bonus: Productivity Improvements
Another benefit was in creating the ability for the transportation and shipping departments to notify freight carriers of pending shipments well in advance of actual ship dates. Carriers were then able to participate in the planning process in order to make the needed equipment readily available for each day’s shipment needs. Feedback received from the client’s customers showed a substantial increase in their satisfaction with the service quality provided by this client.