At Risk of Losing Their Largest Customer, A Manufacturer Improves On-Time Delivery by 45% in 6 Weeks

A furniture company had a problem with their on-time delivery for as long as anyone could remember - on average over half of their deliveries arrived late at the customers. The company did not receive adequate data from their transport suppliers to understand if the plant was producing late or transport took too long. However, based on their calculations they believed most of the pieces were leaving the plant on time, so transport was thought to be the problem.

Suddenly, one of their largest customers reached out concerned with the high number of late deliveries. If the company was unable to rapidly increase delivery performance they would lose this customer, worth 25% of the plant’s sales volume. With a chance they might lose their largest customer, everyone was under pressure to increase the number of on-time deliveries. However, no one could see how to fix the problem. The company engaged Stroud to help them solve it.

Rather than just focusing on the orders from the perspective of the plant, the team looked at the entire delivery process from start to finish. They asked, “from the customer’s perspective, what are all of the steps from order intake to product arrival?”

A newly-formed team dug through the production and delivery systems and discovered that there was a crucial error in the calculations for transport time. Certain system parameters were configured such that the customer’s desired delivery date was being interpreted by the manufacturing plant as the date by which the product should have left the plant. This meant that the system was setup to finish production on the day the customer was expecting the piece of furniture to arrive at their facility.

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With these parameters corrected, the company immediately saw a 15% improvement in on time deliveries. This small, though critical, success inspired a behavior of not guessing when facing with difficult problems, enabling the team to tackle problems previously viewed as either unsolvable or part of the status quo. WIth this mindset, the team improved product prioritization, achieved parallel production and optimized transportation to achieve to a 95% on time performance level within 6 weeks. This enabled the re-building of a strong professional relationship with their previously dissatisfied customer and protected 25% of their sales volume.

 

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