Delivery System Capacity

“The secret of success is to do the common thing uncommonly well.” – John D. Rockefeller

One of the most important components of any company’s delivery system is capacity. You can only deliver as much product as your operation can produce, and that capacity threshold will impact not only your profitability, but your sales. It’s crucial that every business owner, manager and sales person understand production capacity. Here are some key things to consider:

Capacity Must Meet Sales Intentions – Sounds simple, but it’s often the Achilles heel of many companies. Management sets sales goal and intentions that far exceed what the production team can physically produce. If you are setting unprecedented sales intentions for your business, you must be prepared to acquire the necessary resources to produce the product at that level. Can your current production system accommodate a sharp increase in demand?

Capacity and Percentage Sold – It’s very important that production and sales meet regularly to monitor available capacity. If your production capacity is 100,000 units per month, and your sales team has already sold 85,000 units, you only have 15% remaining capacity. Another order for 30,000 units will create a backlog that will frustrate customers. Sales and production must always be planning for upcoming orders and how they will fit into the available capacity. Either that, or management must be prepared to do what it takes to increase capacity so that there is no backlog.

Manage to Customer’s Expectation – Your production system must be able to produce product to meet the customer’s expectations in terms of features, timing and service. The sales team should not make a practice of over-promising beyond what production can reasonably deliver. If the customer is expecting 10,000 red and blue units in 7 days, they will not be delighted to hear that they can only receive 7,000 blue units in 10 days. Production has to operate to the customer’s expectation, but sales needs to appropriately communicate that expectation.

Getting the Product Out the Door – It’s one thing to produce 10,000 red and blue units in 7 days, it’s another to get them safely to the customer. Production capacity doesn’t stop with manufacturing the product. Timely physical delivery to the customer is just as important. Do you deliver the product yourself? Do you rely on outsourced shipping? Who is responsible for making sure the product reaches the customer in good shape – sales or production? Your company’s system and capacity for getting the product to the customer as promised is essential for customer satisfaction.

Don’t leave any of these steps to chance. Clearly define delivery responsibilities at every stage of the production process. Consistently monitor your production capacity so that you are prepared for all orders and can anticipate breakdowns in advance. Always advocate for collaborative communication between the sales and production departments. Companies that go the extra mile to meet the customer’s expectations will reap the rewards of repeat business and good word of mouth. And that’s a winning formula for meeting sales and profit goals, even in the most unpredictable of markets.

Are you ready to win?

Designing a Delivery System

“You have to manage a system. The system doesn’t manage itself.” W. Edwards Deming

Our current blog series focuses on delivery systems. If you can get your product or service into the hands of your customer efficiently and effectively, you are creating an excellent customer experience that will have them coming back for more. As we said last week, you can have the best sales staff in the world, but if you can’t deliver the product, sales becomes meaningless.

So how do you start to design a top notch delivery system? The first step is to determine where you currently stand in terms of getting your product out the door. One of the best tools for analyzing your current system is our old friend the SWOT analysis. The SWOT analysis gives you a picture of your strengths, weaknesses, opportunities and threats, and helps you to rate yourself in some key areas:

Production Capacity and Capability – Take some specific measurements of your current system. How many units can you produce in a day? How quickly can you get them out the door? How many production errors do you allow for? How much extra capacity do you have to handle big orders? Is your work flow seasonal? Take time to analyze your capacity and how well your production staff are performing.

Getting Out the Door – How does your team do at getting the product out the door? This is really an efficiency question. Are you getting the product or service from your shop to the customer as quickly as you can? When was the last time you analyzed shipping methods and costs? Are there any gaps in your production process that could be tightened to speed up delivery? Does your company handle physical delivery or do you sub contract it? Who is responsible for making sure the product gets to the customer as promised?

Production Flexibility – This is another key barometer of your delivery system’s success. How flexible is your production system? Can you respond quickly and accurately to special orders? Do you know where you draw the line between what you will and won’t do? And can you measure for how those changes affect your profitability? These are all important questions when designing an effective delivery system.

Sales Flow – What does the path from sales to production to the customer look like? Who is responsible for what along the way? How do you follow up with the customer once the product has been delivered? This flow from the sale to the delivery is critical to the success of the customer experience. And a good customer experience is what improves your chances of repeat business and good word of mouth.

This week take a look at the key components of your delivery system. Analyzing what things are working and what aren’t is the first step toward designing a system that will be cost effective for you and that will meet your customer’s expectations. And we all know that happy customers are a big part of winning the game of business.

Are you ready to win?

Doing the Right Things Right

“The best interest of the patient is the only interest to be considered, and in order that the sick may have the benefit of advancing knowledge, union of forces is necessary.” – Dr. William J. Mayo

This past week I had the opportunity to visit the world-renowned Mayo Clinic in Rochester, Minnesota. If ever there was an organization that depended on and excelled at systems and structures, it is the Mayo Clinic. While their primary objective is delivering world class medical care, they realize that the only way to provide that care is to be efficient, well-organized, and completely committed to customer service.

Most of the patients at Mayo Clinic come there from out of town, so it is important that they accomplish a lot in a short amount of time. When a patient arrives at Mayo Clinic they receive a preliminary itinerary of appointments that all occur within the space of a few days. After an initial consultation with a physician, that itinerary may be completely changed in a matter of minutes. The patient will receive a new itinerary and may have up to four or five appointments with the appropriate specialists – that day. There is no waiting for weeks to get an appointment, no long and frustrating phone calls trying to reach someone who can answer questions.

The entire operation is focused on customer service. Patient records are communicated immediately to all the departments the patient will visit. Itineraries carry bar codes so that each department can quickly scan for patient information. The patient fills out forms one time at the beginning of the visit. There is very little waiting, and patients can often be seen early if they are running ahead of schedule.

Additionally, volunteers are in abundance, easily identifiable and very willing to help with directions and information. Never at Mayo Clinic is a patient met with an uninterested shrug of the shoulders or the words “I don’t know, that’s not my job.” At Mayo Clinic, it is clear that patient satisfaction is everyone’s job, and everyone is committed to that objective.

Does your business run like the Mayo Clinic? Are all of your employees putting the company’s best foot forward, committed to customer service even if it’s “not their job?” Can you envision what would be possible for your company if you developed the systems and structures that would enable you to deliver a quality customer experience, every time? Would this kind of efficiency and commitment take your company to the next level?

At Possibilities Unlimited, we support companies in developing ways to work smarter instead of harder. When breakdowns occur in company operations, it’s likely because there is not a clear strategy, or a system for accomplishing important tasks. As companies grow and change, it is imperative to develop clearly documented systems and structures to insure that the business operates at the highest level of efficiency. A smooth running machine has multiple benefits ranging from lower costs to improved employee morale, and, most importantly, customer satisfaction.

If you are ready to make some changes to the way your company operates, and would like some help crafting the procedures that will deliver on your company’s vision, we’re happy to help. The coaches at Possibilities Unlimited can give you winning formulas that will transform your company from average to world class, and set you apart from the competition.

Are you ready to win?