Although we work on many topics impacting manufacturers and distributors, we have found that the most popular – and vital – is customer service. Prior to the recession, most companies called for our inventory management expertise and how to understand and manage costs (and therefore strategically price); however, since the recession, almost everyone that calls has some element of the customer in their conversation.
As our passion surrounds customer service which must start with your customers (your employees), we love this development. From a financial point-of-view, the customer has a profound impact on business performance. Clients call for every one of these reasons:
- Business growth – certainly, you have no hope of growing your business unless you serve your customers well. Specifically, in today’s Amazon-impacted world, it must be an assumption.
- Delivery performance – unfortunately, there are a vast number of ways companies can get into trouble with delivery performance. There has to be at least 20 different processes that impact whether product and services will be delivered in a timely basis. And, that is before you talk about people and culture…. If you cannot deliver on time, not only will you incur extra costs in expediting but you’ll lose orders (perhaps even ones you don’t know about).
- Lead Times – every client talks about lead times. Customers are demanding a 50% reduction in lead times. Shortening the cycle translates to money and cash flow.
- Value-added service – we must stand out from the crowd with exceptional service – forget about growing the business, this is essential to MAINTAIN the business (and to have a decent work life). How are you adding value for your customers? It is not all about price! Do you provide service options? Do you provide value add ideas and options? When my laptop crashed, I was very interested in those companies that would expedite, no matter the fee.
- Margins & profit – do you look at service with a win-win eye? You better start! No one can afford win-lose propositions any longer. Find a way to increase your customers’ profits while increasing yours.
- Cash flow – an area tied directly to service is inventory positioning and levels. If you can count on high levels of service, you won’t need to carry as much inventory. Every dollar not tied up in your warehouse is a dollar you can invest into the business, your people and your life.
- Controlling overhead costs: This might sound strange but it frequently arises. If you need to upgrade your infrastructure as business grows and/or complexity increases, a compelling reason not to ignore this need is customer service. For example, if you have an ERP system that is highly customized and no longer will expand with your business, it will result in customer service challenges. Of course, most clients will attempt to address these issues without impacting customers. Since their business isn’t scaleable, they will have to employ people to fill the gap. And, instead of automating these tasks, the manual workload increases errors – impacting service levels.
Clearly, customer service should rise to the top of your list in terms of priorities – assuming you want to maintain and grow your business and/or would like to enjoy your work life. What programs are you pursuing to take your service to an entirely new level? What ideas do you have to take a leap forward?