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.

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Keys to Effective Delivery Systems

“It is through cooperation, rather than conflict, that your greatest successes will be derived.” – Ralph Charell – Business Book Author

We just completed a series of blogs on sales and marketing plans. A well thought out and executed sales and marketing plan is essential for any business to be profitable. But even the best sales and marketing plan is worthless without a delivery system to back it up. You can sell millions of units of a product, but if you can’t get it to the customer, you are playing a losing game.

How do you develop a delivery system that will appropriately support your sales efforts and seamlessly complete a positive customer experience? Here are a few things to consider when you create your delivery system:

An effective Delivery System requires coordination between Production and Sales to fulfill the customer’s expectation. – This is the essence of the delivery system conversation. Both Production and Sales must be aligned on their commitment to represent the company in the marketplace. They are interdependent players on the same team. Each has a specific role to fill, and they must communicate and work together to make sure the customer is getting what he wants, and when he wants it.

Production must be clear on what is and isn’t possible and communicate that to Sales. – The Production team has a responsibility to the Sales staff to be clear about what is possible. How many units can they produce? How quickly? How much flexibility do they have for special orders? If Sales doesn’t have a grasp of what they can sell, the result will be unhappy customers.

Sales must understand production capabilities and communicate those to the customer. - The follow up to the previous point is that the Sales staff must be able to articulate to the customer what’s possible. Sales should only promise things they are positive that production can deliver.

Both sales and production must be willing to explore creative solutions to customer concerns. – A good delivery system depends on Sales and Production being allies in the effort to produce products and services that customers want and that satisfy customer concerns. Depending on your business, there will always be times when sales and production need to think outside the box. Maybe production can create the product in a special color. Maybe Sales can work with the customer to agree on a delivery schedule that insures a successful and well-made product. Creativity and a willingness to partner together go a long way toward fostering happy client relationships and driving the company to profit.

Have you reviewed your company’s delivery system lately? Are there times when your sales and production teams see themselves as adversaries instead of allies? What can you do to design a delivery system that will insure that the customer is satisfied? If you would like guidance on how to create an effective delivery system, give us a call. We’ll help you find the win-win solution that works best for your company and your customers.

Are you ready to win?