The Curious Case of "Being On-time"
Updated: Apr 3, 2021
Improving Customer Experience in B2B organisations
Within seconds of aircraft’s touch down on the tarmac, cabin crew team announces “we are pleased to announce that we have arrived on our destination ONTIME”! The customer is still in the aircraft which is still to reach the terminal and passengers are yet to come out and collect the baggage but for the airline the target of being On-time has been met.
In another story “Two employees with a leading International airport were suspended for ‘fudging’ on-time data and were found to be favouring some airlines to report better performance. Airline Industry competes and thrives on on-time performance and despite third party monitoring and public scrutiny, on-time performance & customer experience is perennially low.
In numerous other industries and more specifically in B2B industrial products companies, a similar behavioural pattern is visible wherein companies are in a self-fulfilling prophesy of reporting higher on time performance while the true customer experience remains abysmally low. One B2B customer had pointed out that “when he places a small order of say INR 200 order on an online shopping site, he is provided with end to end visibility but when as a corporate customer he places large value orders on his suppliers, he has to do repeated follow ups with the sales reps and gets no visibility of order status. In B2B environment the challenge of delivering outstanding Customer Experience is turning out to be a serious challenge as the same B2B customer experiences higher level of service while shopping for his personal needs as compared to when dealing with suppliers/vendors.
On time in full (OTIF) or on time delivery(OTD) is a critical Key Performance Index in manufacturing, projects and other service organisations and reflects ability of the organisation to service customer requirements in a timely and complete manner. It is one KPI which also reflects how strong is the customer focus and how good is the internal integration/ coordination between functions to achieve high levels of service. Some of the common issues and behaviours that are observed in measurement & management of on time are
Customer order information accuracy: with the risk of generalizing, this issue stands out as starting point of all OTD/OTIF inaccuracies. Invariably one would find delivery dates loosely defined or not defined at all. In addition, for large orders with multiple shipments this information may be missing or in projects environment the due date applicability may start only after drawing approvals which leads to open ended interpretations from both customer and service organisation side
Self-fulfilling prophecy: On time measurements are defined on what is most convenient to the service provider than the service receiver. In multiple manufacturing environments despatch dates ex-factory or adherence to marketing team dates may be treated as 100% on time in full while customer waits endlessly for his goods/service.
Limitation of end to end tracking: ability to capture the attributes and requirements from the order placement till the point service is delivered is limited and sometimes the information can reside with third party service providers which once again limits the data accuracy. Despite the advancement in technology, lot of data capture still remains manual & fragmented making it error prone.
Loss of sales: this is a common behaviour pattern used by sales teams to ensure they maintain upper hand in organisations wherein lower OTIF levels is used to justify lower sales in any month. Sales team enjoy the power of customer information they possess and sometimes use it in ways to suit their own and not company/customer needs.
Ability to capture delay/failure information: large organisations process transactions of large number of customer line items on a daily basis and to capture the correct reasons for each delayed line item with accuracy is quiet a challenging task. Also given the varied reasons of an on time failure like delayed customer payments, delayed transport clearances makes it even more difficult to capture the reasons & root causes accurately.
The issue list and the associated challenges could be endless however for companies trying to achieve world class levels of service some of the initiatives below will be helpful
Building the service orientation: Bringing the focus of the organisation and linking an operational measure (OTIF) to strategic outcome could be a starting point. Leaders need to showcase examples and also mine data to prove the impact of good service on organisations profitability. For example, a fabric manufacturer never truly realised the financial impact of lower on time performance till deep data mining revealed that customers with lower on time performance were also lower on the overall sales realisation. Further analysis and discussions with customer & the key account managers revealed that due to lower on time performance they were losing 2-3% of margin on every order simply because the salesman was never in a strong negotiating position. It is a well-established fact that Pricing is a huge lever for profitability and a 1% increase in profitability can lead to 15-20% improvement in bottom line. Leaders who want to drive Service Orientation in the company need to develop stories which can clearly explain to people how poor customer service is impacting them. Without such robust business case, higher service orientation as a philosophy can be quickly accepted but will never become a strategic priority.
Start the improvement cycle with Key Customers: Mapping of Customer Value Proposition for your Key customers can be a good starting point to clearly identify if on time performance is a hygiene factor or a business critical dimension for your customer. Not every customer including your key customers may have this as a business critical metric and to develop an insight on how your lower on time performance could be leading to a financial/reputational loss for your customer will help in designing appropriate solutions.
Map the “Customer Journey”: Demystifying the customer and their hassle & delights is also a great enabler to help people understand how current processes & systems are impacting the customer. Too often it is seen that organisation have little or no understanding of the customer’s product usage lifecycle and associated experiences. By using tools such as Customer Journeys mapping, organisations can help employees see how customer perceive their organisation and what needs to change.
Shifting the power to the customer: In today’s digital environment shifting the power to customers can be a game changer. More so in B2B environment, providing customers with self-service models which allows them to directly book orders, select associated services and tracks delivery schedules online, log complaints and visibility of complaints resolution process can be truly transformational. Some of these will soon become hygiene factors for business to business relationships and companies who move ahead faster will reap benefits.
Streamlining “internal” processes: while many companies have put in place lot of efforts in order to fulfilment cycle and have significantly improved forecasting & planning capabilities some commons gaps must be addressed. One such gap is the absence of formal lead management process and fragmented planning & scheduling process. Delivery commitments are typically made before the customer formalises an order and sales teams need lot of support from supply chain & planning teams to ensure they commit a feasible delivery date. Unfortunately in many organisation, the integration of lead management & planning/scheduling is not formal enough leading to inconsistent customer experience. Organisations trying to improve customer experience must formulate formal ATP (available to promise) and CTP (capable to promise) processes and integrate them with lead management systems. In order to ensure that these processes are working well, KPI’s such as ‘% orders declined due to ATP/CTP’ should be measured and monitored at regular intervals.
Use Analytics & Predictive modelling: Analytics & modelling of past performance on lead time of supply chain processes for committing delivery dates should be explored. While building the predictive model inclusion of parameters which drive supply chain variability must be included to drive higher accuracy of results.
Streamline customer communication channels; Customers of B2B companies generally rely on sales reps as the sole communication channel, however for a variety of reasons they are dissatisfied with the response they receive. B2B companies must put efforts in creating alternate channels such as toll free service numbers but enough care is required while designing the processes around these alternate channels. B2B customer need quick responses to their queries involving deliveries, credit notes etc. and the person attending to such customer must be fully enable to answer such queries. To start with pilot runs must be conducted with limited services to check the efficacy of such alternate channels before going live with full service capabilities.
Finally the responsibility & accountability of on time & customer experience as a KPI needs to be carefully defined as this KPI cuts across the organisational processes and no individual function is responsible for it. To ensure that every function is accountable for this a proper KPI tree must be drawn up and sub process KPI must be identified. Managing this KPI tree can be a mammoth task and automation & integration with existing ERP system must be done on priority.
To sum it up, organisations must realise that Customer Experience is the new competitive battlefield and those who can provide higher levels will reap benefits of higher customer loyalty and higher profitability, however to achieve it will need a coordinated effort on changing mind set, behaviours, systems and processes.