The Company With The Best Supply Chain Wins

Is there such a thing as the “perfect order”?

Not many distributors would disagree with this statement: “Our customer service sets us apart from our competitors.” In an article published in Harvard Business Review called “Staple Yourself to an Order,” the authors write: “Every time an order is handled, the customer is handled. Every time an order sits unattended, the customer sits unattended.” The authors go on to say that most senior executives are insulated from the details of the order management process, while the front line employees taking and filling the orders accept mistakes as an inevitable part of their job.

That article was written in 2004. It could have been written yesterday. There is no doubt that our customers now expect better from us, probably based on their consumer experiences with ecommerce. Call it the “Amazon Effect.” Customers have higher expectations of our performance, and they’ve become less tolerant of basic order-processing mistakes. In fact, they often view such mistakes as incompetence.

When something goes wrong with an order, the first temptation is to go on a witch hunt and find out who is responsible. Once you find that person, the situation is addressed, and that’s the end of it. You trust it won’t happen again. Folks in our industry are hardworking and well-intentioned. But sometimes they’re overworked. Sometimes they create a shortcut so they can hurry on to the next order. (And lots of orders is the goal, right?) Without fixing the root of the problem, the same mistakes occur again and again, driving our costs up 10-15 percent.

A “Perfect Order” is one that completely meets customer expectations. That means making sure the right product is delivered, to the right customer, in the right quantity, at the right time, in the right condition, at the right price, and with the right documentation. A whole chain of “rights” has to happen for an order to be perfect.

Transactions Gone Bad

Have you asked yourself why some former customers are now purchasing from your competitors? It may not have anything to do with pricing. When Red Ball Oxygen first started measuring order delivery, we found that we got about 67 percent of orders right. For every ten orders processed, we were messing up three or four. Ouch! If a problem came up, we dealt with it. Our customers seemed happy enough. But were they? Were we giving them reasons to seek competitive pricing, to find another supply source? And what was it costing us when there was a mistake?

For an order to be “perfect,” it must pass four tests:

  1. On Time Delivery (when the customer wants it)
  2. Shipped Complete (entire order complete in the first shipment)
  3. Received Undamaged (no product damages)
  4. Correct Documentation (no AR adjustments or credit notes).

To deliver the perfect order, we must ask a lot of questions up front so we understand exactly what the customer expects. After all, the customer is the one who determines if the order is perfect, and if we assume without asking, we are more likely to get something wrong. We also learned that even when the customer told us what they wanted, the person entering the order often didn’t document it. We didn’t capture what the customer wanted, and that information was not passed along. This information leak impacted the customer’s realization of Red Ball Oxygen’s customer service.

Here’s another example: How often do you need to contact a customer to clarify something after an order has been placed? That’s hard to do when the contact information isn’t on the order. We changed our order entry system to capture it up front, and now we print it on our pick slips. We also found confusion about pricing structures, product mis-information and repetitive coding mistakes.

Examining your mistakes is harsh and eye-opening. Are you missing delivery windows? Are credits being given because of a pricing error or product mix-up? There is a cost to these errors, not only financially but also to that well-honed belief that “customer service sets us apart.”

Success Rate

University of Alabama football coach Nick Saban says, “Success doesn’t come from pie-in-the-sky thinking. It’s the result of consciously doing something each day that will add to your overall excellence.” Getting a clear, data-based view of what is working in your supply chain and what is not will produce some surprising results.

After three years of work, Red Ball Oxygen’s Perfect Order success rate is in the low 90s. We still have a long way to go. I encourage you to be harsh on yourself. It does pay off.

Gases and Welding Distributors Association
Meet the Author
Bob Ewing is president of Red Ball Oxygen Company located in Shreveport, Louisiana, and at www.redballoxygen.com. He will present “Delivering The Perfect Order” on Monday, October 12, at GAWDA’s Annual Convention in Scottsdale, Arizona.