But you’re going to have to serve somebody, yes indeed,
You’re going to have to serve somebody,
Well, it may be the devil or it may be the Lord,
But you’re going to have to serve somebody.
– Bob Dylan (Gotta Serve Somebody / Slow Train Coming
In your business, you’ve got to serve somebody. There is a focused, or at least tacit agreement, that your company wants to give the customer what they want. If a good price is something they want, you try to make it efficiently and price it accordingly. If quality is something they want, you try to meet the specifications called for. If certain features are what they want, you try to create a product or service which includes them.
But, your company’s environment and the markets they serve seem to be on the bring of chaos some days. This may mean it takes longer to determine how to make something efficiently. To determine the level of quality a customer wants may take more time based on new or unexpected expectations. And, developing or designing new features can take much longer than planned.
Customers know what they are going to get, but forcing them to guess when they will get it.
Sometimes, customers are willing to wait. They understand novel things take time. The general perception in the industry may be that prices, quality and the desired features may not be available from everyone.
But, what if someone in your company made the decision to make a promise to a customer about when they will receive their order? Now, we have a deadline and only so much time to deliver.
If you deliver on time, congratulations! But, if you don’t deliver on or before the promised due date, customers who find this an important date don’t seem to take it very well. It may be a single occurrence and find a way to live with the delay. If missing due dates is a reoccurring pattern with your company, they may begin to loose trust in your ability to meet your delivery promises. They may not order from you again or in more damaging cases, expect you to pay penalties for the damage caused by delays to their timeline.
Why would your customers feel this way?
Let’s take a look at the ways a delayed shipment causes damage. Don’t your customers have their own production schedules to meet? A supplier who delivers late, rescheduling will be necessary. By rescheduling, priorities must be changed to what they can work on. Sometimes crews have to be moved from one location to another; this take time. Subcontractors have to be put off and may not be available when you need them again. Equipment use goes down since a machine, or a whole line of machines, need to set-up for something which can be run. And, the Finance department may complain about the higher work in process and take on more working capital debt.
The folks who run your customer’s production operations will realize they will have even less time. They want to deliver a quality product to their customer, too. Will they cut corners to do that? Could there be issues that come back as higher service costs in the future? Will they have to work overtime and cut into the already thin margins?
Yet, some customers have learned to live with late deliveries from their supply base. They will place orders with you sooner than they usually do. They are hoping it will give you more time and give you another chance to deliver on time. Or, they will hold inventory of a few, key items to ensure they have, at least, some raw materials available. But, when this inventory is based on a forecast or a guess, obsolete or slow moving inventory has its own problems.
But, that’s the way things are.
Yes, it may be true that you and your competitors don’t always deliver on time. Your customers don’t have much choice when it comes to deciding on who is more reliable. Your customers want you to be more reliable because they have their own lean, cost, and on-time performance objectives. When a supplier delivers late, these important measurements are effected.
Your customer’s labor, inventory carrying costs, engineering, overhead costs can go up; Finance is concerned. Your customer’s Sales folks may have to raise prices and work harder to close a deal. Your customers margins may be squeezed and limit the amount of cash coming into the business; the CEO is upset.
Suppliers who deliver late don’t make it any easier to improve a customer’s profits.
What, isn’t it my customers responsibility to make a profit? Of course, but look again at the impact your poor deliver performance has on their ability to do that. If I was in their position, I would always be on the look out for a better solution to my late delivery problems.
If I could find a supplier who’s deliveries are on time, every time.
If they didn’t compromise on their product development, quality, customer service, lead-time or pricing. And, if they could sustain their on-time delivery reliability over the long term, I would begin to trust them again.
You may call me anything but no matter what you say
You’re still gonna have to serve somebody, yes indeed.
– Bob Dylan (Gotta Serve Somebody / Slow Train Coming