Recently, I ordered a laptop online and was instantly given a promised delivery date and the product was to be delivered at my house. It is only when I was fully prepared for the laptop and was eagerly waiting for it to come, I got a mail from the company that the delivery will get a little late (by a week) due to sourcing issues. I had good faith in the orgnization's overall abilities in addition of their product quality and though I was disppointed a little bit but did not think bad about the company. It is only when they again sent a mail saying that the new promise date can not be met, I got not only worried but started thinking that what might be the issues the company is facing to deliver the product ontime. The image of the company in my eyes started getting dim and my confidence was shaken.
After few days, to my disbelief I got another mail from them telling me about another delay and this time I got furious and cancelled the order with them immediately. Though, this is not an incident that many will face in life but it surely emphasises the role of ontime delivery in not only customer satisfaction but long term brand building also.
As supply chains become increasingly more global in nature the ability to effectively manage a network of distribution centers is becoming a required core competency. Unfortunately, a surprisingly high number of companies that currentlypractice multi-site distribution are experiencing real challenges in this area impacting profitability.
There are still a few companies that have mastered warehouse network management which allow them to provide better customer service but with minimum extra costs. These companies, inturn have reached the level of
• 99% or more on-time and complete orders
• Less than 1% of orders containing a backordered line
• Lower inventory carrying costs over two years
• Reduced inventory write-offs for spoilage or obsolescence over two years
Since last few years I was of the opinion that supply chain visibility can drastically improve ontime delivery without increasing inventory carrying costs and not only this, the other thing which is equally important these days is that after you receive the goods from the supplier,the ability to execute the fulfillment as early as possible also adds to your capability to achieve better ontime delivery targets. This belief of mine has been validated time and again when I talk to my friends in differnt leading manufacturing companies handling supply chain roles.
In large organizations, couple of another areas that need attention are: 1. Improvement in item identification process - It is seen that there are times when they lose sales just because they do not know what item exactly is required by the customer and this happens more in spare parts business. 2. Reduction in manual steps in the process of demand fulfillment - The more the manual steps, more is the probability of delaying the fulfillment process and hence low on time delivery realizations.
These steps are small and can be achieved easily but the real issue is to understand these fully and gather management focus to take action in these as Supply Chain will likely to remain as one of major focus areas in coming time, for organizations who intend to lead in their areas of operation.
while you can have systems that can give you full visibility to your supply chain, the uncertain part is still the forecast accuracy. Poor forecast accuracy can still cause poor performance on OTD even if you have full visibility.
ReplyDeleteAlso many times higher priority customers get preference if the planning system has to reschedule...so maybe you were not a preferred customer :-)
Well said mate! But, we need to look at the fact that even after getting firm order and sitting on it for 3 weeks before providing me the last rescheduled date (when I cancelled order), the company was not able to meet the promise date, so is it that a large company ( a major brand of computers) does not have a decent forecast accuracy? It is possible but I will still put my money on other factors stated in article.
ReplyDeleteI take your point on preferred customer theory but do you think any org can become a Best in class org in ontime delivery by focussing only on preferred customers - as we say it in India that Customer is God Sent and God can never be more preferred or less preferred...what say?