to Improve On-Time Delivery
By Tom McBride
for Creative Solutions, Inc.
Do you know how much late deliveries are costing your organization? Some of the costs are immediate and obvious, such as angry customers, premiums for airfreight, and monetary penalties. Other costs are often a direct result of late deliveries but are more difficult to quantify. Some of these are listed below.
· Loss of customers and market share
· Difficulty in obtaining new orders
· Time wasted tracking down and explaining late orders
· Problems with cash flow
· Inflated inventories
· Lowered productivity and profits
The cumulative impact can be devastating to overall performance, and some organizations have great difficulty emerging from their “rut” of delivering late. I have witnessed organizations that pay tens of thousands of dollars annually in penalties and others that have established and maintained horrendous reputations for being late.
Even though most companies do not have such dismal reputations for delivery, nearly everyone needs to improve to some degree to remain competitive. Whether your current on-time delivery is 15%, 99%, or somewhere in between, you can make marked improvement by taking the following steps.
· Set “on-time delivery” as a top goal of your organization. Set targets for improvement, and promote your goal heavily throughout the organization at every opportunity. Emphasize that no sacrifice in quality will be tolerated.
· Align the organization. Make on-time shipments part of performance reviews, management incentives, or profit sharing. Apply this concept to all functions within the company and not just to the production department.
· Measure progress toward your goal. Appoint “shepherds” in the organization to champion key milestones on your projects, and frequently post progress. Discuss the latest results, regardless of whether the news is good or bad.
· Identify and redesign “key” processes that are preventing on-time deliveries. You may need to revamp how your organization schedules and communicates, or you may discover that bottlenecks need to be eliminated. You may even need to rethink how promises are made to customers.
· Celebrate successes and encourage those who fail while giving their best effort.
Following these steps will no doubt improve your results
over time. Measure your success by
the rate at which you reduce the “gap” between your current performance
level and perfection (100%). For
example, if you are 40% on time now, you could set a goal to reduce the
“gap” by 50% per year. This
would establish the first year’s goal as 70%, the second year at 85%, the
third year at 92.5%, and so on. By
continuing to close the gap, you will eventually lead your industry in on-time