If you’re like most manufacturers, your on-time delivery rate could use some improvement. This is most critical in a just-in-time environment. But it can be an issue for every manufacturer in terms of building customer satisfaction and maintaining a competitive edge.
5 Ways to Improve Timeliness
Several factors can affect your company’s ability to deliver products on time. Here are 5 tips to consider:
1. Start with measurement. On-time delivery is typically measured as the percentage of time that goods reach customers’ loading docks by the due date. Manufacturers should routinely analyze this metric, investigate what contributed to both meeting and missing due dates, and learn from past successes and failures. Continuous improvement is the ultimate goal, not necessarily meeting a certain hurdle rate.
2. Quote realistic due dates. Unrealistic due dates have consequences — and none of them are good. You may have to go into overtime, disappoint the customer or reschedule another customer’s order.
When committing to a specific due date, take into consideration historical output data, as well as current and expected plant capacity. Don’t quote on a best-case scenario. Factor in some wiggle room for an equipment breakdown or another big customer wanting a rush order. Of course, if the customer needs the order sooner than your realistic due date, you may have to add capacity.
3. Adopt or upgrade finite capacity and scheduling software. Managing the many variables affecting production is almost impossible to do manually. Fortunately, computer programs can help enable your company to create realistic plans and schedules displayed on monitors throughout the plant. More importantly, it helps you react to changes and communicate them quickly. Software also enables you to generate “what if” scenarios to prepare for unexpected events, such as an employee’s absence or a delay in receiving raw materials.
4. Simplify your shop floor configuration. Do you have a traditional functional layout in which, for example, all welding work goes to a welding department? Consider converting to customer-focused cells arranged so that work flows logically from raw material to finished goods. This model can be better at adapting to change than the functional model, and flexibility is a key benefit of cells in terms of achieving on-time delivery.
5. Shorten customer lead times. The shorter the time between order entry and delivery, the fewer uncertainties you’ll have to deal with. Manufacturers with short customer lead times tend to have the highest on-time delivery rates.
Seek Outside Opinions
Successful manufacturers excel at meeting — or exceeding — customer expectations. Setting realistic delivery dates and consistently meeting them can help your company build customer loyalty and long-term value. Contact your CPA for help brainstorming ways to improve your company’s on-time delivery rate. He or she knows industry best practices that could take your business to the next level in customer service.
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