Looking at our operations, I get concerned. Sales were up this year and we struggled sometimes to meet delivery commitments. Even heading into our slowest period, we ended up being late. What’s worse, I’m not sure what to do now, while it is slow, to get ready for what I believe will be an even stronger year next year.
Thoughts of the day: When making promises, your word is your bond — protect it. Figure out where the problem is — in sales, in operations or in the handoff. Beef up operations — get ready to handle 120 percent of next year’s sales forecast.
Your customers rely on the promises your company makes. They will pay for promises they can count on. And they will ask for price reductions from unreliable vendors — if they don’t switch vendors in favor of someone more reliable. Make sure your company’s margins and customer base are safe from losses due to missed promises.
Whenever there is a missed commitment, make note of it. Figure out where problems come from before jumping to solutions. Here are some questions you might want to ask:
• Did sales overcommit on delivery promises? Did they have to check with operations and get agreement before making an aggressive commitment? Or did they just make a promise in order to get the sale and then hand the problem to operations to solve?
• What about operations? Did equipment break? Supplies come in late? Did personnel shortages cut into production?
• Did operations agree to dates they had no chance of meeting? Is the workload accurately planned out? Which delivery targets get missed frequently: Specific products? Repeat clients? Special orders?
• What about the handoff from sales to operations? How often do the two groups get together to share information? How well do they work out disagreements?
• What about customers contributing to the problem? Do certain customers make unreasonable demands? Is it the standard orders or only custom ones that get into trouble?
• When there is a potential delivery problem, is there a method by which operations openly informs everyone? When a delay looks imminent, do salespeople have a say on who gets priority?
Done with questions? Now work on solutions. Start by writing out delivery standards for each product. Extend delivery times on products that are frequently late. Make it policy that commitments outside the norm have to be approved by a manager. Consider putting salespeople who consistently ask for exceptions on a rotation in operations to help them get a better understanding of what’s going on.
When the problem stems from operations, take a look at workflow. Look for bottlenecks. Software systems can help with planning. Increase inventory stock on items that frequently come up short. Consider replacing equipment that breaks — a new lease may cost less than repairs. Staff up and cross train to handle 110 percent.
Once a delivery problem is identified, focus on communication. Give people crucial planning information. Meet to discuss who to prioritize and who can wait. Keeping internal and external customers informed can bolster good will under difficult circumstances.
Be willing to cite a worst-case scenario. Saying there’s going to be a slight delay and then going back a second and third time with additional delays can eat into good will that was established by providing the first update.
Make sure sales tells operations about goals they’ve set. Give operations a say in what should be sold and what quantities it can handle. Match operations budgets to sales forecasts.
Looking for a good book? Try “Factory Physics” by Wallace Hopp and Mark Spearman.
Andi Gray is president of Strategy Leaders Inc., strategyleaders.com, a business-consulting firm that specializes in helping entrepreneurial firms grow. She can be reached by phone at (877) 238-3535. Do you have a question for Andi? Please send it to her, via email at AskAndi@StrategyLeaders.com or by mail to Andi Gray, Strategy Leaders Inc., 5 Crossways, Chappaqua, NY 10514. Visit AskAndi.com for an entire library of articles.