Do you know how much late deliveries are costing your organization? Some of the costs are immediate and obvious, such as disgruntled customers, premiums for freight, overtime pay and possibly customer imposed monetary penalties. Other costs are often a direct result of late deliveries but are more difficult to quantify. Some of these are;
- Loss of customers and market share
- Difficulty in obtaining new orders
- Time wasted tracking down and explaining late orders
- Problems with cash flow
- Increased inventories
- Lowered productivity and profits
The cumulative impact can be devastating to overall performance, and some organizations have difficulty overcoming delivering late. Over the years, I’ve worked with 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 poor reputations for delivery, nearly everyone needs to improve to some degree to remain competitive. Whether your current on-time delivery is 35%, 99%, or somewhere in between, you can make improvements by taking the following steps.
- Set “on-time delivery” as a top performance measurement of your organization. Set targets for improvement, and promote your goal heavily throughout the organization at every opportunity.
- 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 leaders 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 those 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
- Celebrate successes and encourage those who fail while giving their best effort.
by Craig Corsi, Lean/Continuous Improvement Specialist
Learn more about NWIRC’s Lean Together, working group for operational excellence.