Posted by Andrew Hereth on Thursday, March 11, 2010
In order to provide superior customer
service, you must have your product available. What they want, where
they want and when they want! We have already discussed that if the
product the customer wants is not available, they will buy the
competitors, or delay their purchase. But how do you supply a variety of
products, keep them current, and avoid obsolesce?
Lean inventory has been the goal of many manufactures and lean was
designed to minimize waste, and improve efficiency. In the automotive
industry this was the music that the manufactures marched to for many
years. Keep supply ready to build, but minimize the inventory of parts.
Only add inventory of parts at the moment they are needed. This lean
inventory process was designed to provide stock with a short lead time.
In reality the automotive manufactures are running very lean
operations, but also probably some of the least agile
operations. Lean by definition means with little fat. Agile on the
other hand means nimble. If a customer wants a car with the color and
the accessories they want, the lead time in weeks or months. Yet the
automotive suppliers have inventories of unsold cars. What can we learn
from this, and how can we use put agility to use to provide superior
First, lean does work well with products that are high volume, and
low in variety. A video game console for instance. A WII is a WII, but
they are also subject to obsolesce. Here lean makes sense; don’t buy
the components until there is demand.
But what of a computer? Here there are endless varieties and high
volume. In less predictable environment, agility is necessary for
superior customer service. Agility is not a single company concept but
must reach one end of the supply chain to the other. For a
manufactures to have agility in their manufacturing process, they need
agile partners. Those partners must be connected in a virtual supply
chain based on sharing of information. Here are seven steps to superior
customer service through agility:
Synchronize activities through shared information. EDI (electronic
data interchange) through web portals, or real time with RosettaNet.
Quality information available immediately.
Work smarter. Analyze business processes to determine where no
value is added, and time is wasted.
Partner with suppliers to reduce inbound lead times. Choose vendors
based not only on price but on response time. Time is money and there
is only one opportunity to be first in the market.
Reduce complexity. The simpler the process the more likely it can
be repeated, and less chance for less than perfect quality and customer
Postpone final assembly or configuration. This reduces the risk of
obsolesce and minimizes working capital tied up in unwanted finished
Manage processes not functions. Division of labor has created silos
in business so makes change slow, and department goals and budgets can
be at cross purpose.
Utilize appropriate performance metrics. Budget based metrics do
not encourage agility since cost is the only measure.
Lead time reduction, and perfect order rate create customer
satisfaction. A satisfied customer is a retained customer. A retained
customer is adds to the revenue of the company and minimizes selling
expense, which leads to greater profit.