The Changing Needs Of A Steel Metal Sheet Company
This well-established company manufactures and sells mainly to the building industry for construction of commercial and residential infrastructure. They are well-known and well-respected throughout the industry by everyone from master builders to tradesmen and architects.
The company has been trading for close to 30 years, over which time the directors have built good, solid relationships with related associations and organisations within the building industry.
Sales have been progressively good, with a sales growth of 8-9% each year, and profit is almost within, if not exceeding, target.
The company’s customers love them and trust them with repeated orders. This is largely because the company is very dependable and flexible and will “bend over backwards” for their customers. Well, for their major customers, anyway!
On occasion, the major customers place their orders past the cut-off time yet request delivery within 24 hours—and, very often, the company complies with this “one-off request.” The problem is that this “one-off ” request happens at least twice a week.
This unofficial arrangement has been going on for months, and, because the customers hold major accounts, the problem has always been overlooked.
The company believes they are serving their customer well, because they always hold up their promise to deliver within 24 hours. The question the company has failed to ask themselves is: “Do they have a service level agreement?” This would enable them to see why cut-off times are not being respected, by the customer and by the customer service team who accept the orders.
I can almost picture the faces of the production and logistics managers whenever they receive this demand for a quick turnaround, as they madly rush to get it done and delivered in next-to-no time.
This extra pressure causes stress, frustration and increased safety hazards due to rushing. It also causes small orders from other customers to get pushed back, because the major client takes priority.
The dynamic of big account holders placing orders after the deadline has become the rule, rather than the exception. As a result, the teams are not engaged or happy.
Can you imagine what the production and logistics teams are saying about the customer service team who accept these orders?
Occasionally, the operations/sales manager gets notified of these situations, but because they are important customers, the level of “trust” overtakes everything else, because when customer and company managers talk to one another, trust is taken for granted and it is assumed that all orders must be fulfilled, regardless of the details of the internal processes.
The unhappiness and lack of engagement is ignored. The customer service team always applies double standards— to maintain “good quality service” to the customer no matter what, while overlooking the impact on the internal customers, their colleagues.
The big customers always get their delivery, but the experience is not good for the customer or the company. While the customers’ needs are met and taken care of through immediate manufacture and delivery, the way in which their needs are met is unhelpful.
It causes complacency, as the customers believe they don’t have to bother making an effort to get their order in on time; miscommunication, as different standards are applied to different customers; and compromised relationships between external and internal customers.
Because the goal posts have gradually shifted from the usual 24-hour cut-off, there is now an expectation that no matter how late the order is placed, the products will still be delivered the next day.
In reality, about 30% of the orders placed after the cut-off are not delivered the next day because the company simply cannot fulfil the demands being made.
However, because the practice has been in place for quite a while, the customer no longer sees it as their fault. This means that they feel the late deliveries are unreasonable. As a result, this adds to the major clients’ bad experience, even though they are the ones making unreasonable demands.
But what about the experience of the smaller customers whose orders have been pushed back, even though they diligently place their orders way ahead of time? Clearly, their experience is also going to be bad.
Everybody works madly on the symptoms, without ever looking at the root causes of why these customers are placing their orders late, and why the customer service team always accepts the orders after the cut-off time.
Not only this, but the company has failed to analyse their internal production order and planning processes. They haven’t even begun to look at the reasons why they are unable to deliver within the specified time.
If the industry is really demanding such quick turnaround times, are there reasons why the company is not meeting these times? Are there ways in which they could optimise further? Are there opportunities for them to improve their systems and equipment, so that they can respond to the changing demands of the industry?