The Customer's Voice: Food Processing Company
Customer service can mean different things to various people, but the focus should always be the same—satisfy the customer. The paths taken to achieve this goal vary, and along the way the focus is often lost, resulting in unhappy customers. Many procedures are defined, sophisticated systems installed, and departments created to perform the customer service function. However, when you ask the question, “What does your customer really require?” you may get a number of different answers. As relationships between the customer and supplier evolve, they settle into acceptable, not desired, performance levels. This acceptable performance becomes viewed as the customer’s true requirements. This may be acceptable for the short term, but if a new supplier arrives who can actually meet the true requirements of the customer, the business may be at risk.
Losing sight of the customer’s requirements is one common shortcoming of Customer Service Departments. Another common shortcoming is not tracking the levels of service provided to customers. This makes it difficult to understand whether or not the customer’s requirements are actually being met. In addition, measured fluctuations in service can alert an organization to shortcomings in their internal processes. By tracking service performance internally, any necessary corrections can be made proactively before they become major issues with the customers. Losing sight of your customer’s requirements and your own actual service performance can affect your business in many ways.
A food processor, Company A, was recently purchased by a new parent company. The parent company wanted to determine the customers’ service requirements for Company A as well as for a similar company they already owned. A customer service organization could then be designed that would efficiently utilize the combined resources of the two companies, while meeting all customer requirements.
To begin, customer contact lists were acquired from each company. Acquiring these lists was not a simple task. The order processing systems did not have updated customer master files, which made obtaining complete customer lists with names, addresses and telephone numbers a difficult undertaking. When the target list was complete, personal and telephone surveys were scheduled that covered over 50 percent of the sales of the two companies.
The results from the survey were striking. Many customers purchased product from both companies, and their perceptions of the parent company were terrible. These customers feared the impact the parent company would have on Company A. Not only was service poor, the parent had a reputation for purchasing smaller companies and making changes without consulting or communicating with customers.
Customers feared a repeat of this kind of treatment after the second acquisition. What disturbed customers most was the complete lack of communication. Customers were upset, and did not view the transition of ownership as a positive change. However, even before the acquisition, customers were not ecstatic about the service performance of Company A.
The lead-time performance of Company A was far below that of the requirements stated by customers, which was around ten days. In fact, lead-times were almost a week longer than required, at over 17 days. Competitors were meeting the ten-day requirement, which further eroded sales. The initial reaction to this information was disbelief. It did not seem possible that the lead-times could be approaching three weeks. After spending time thoroughly evaluating the process, it was determined that there were several reasons for the lead-times being so long.
The procedure for creating the final product often resulted in off-spec material, which delayed the customers’ orders. Customer service representatives could not view inventory levels, which left customers uninformed on when stock may actually be available. After an order was entered, company policy was to accept any changes up until the point of delivery. Orders were often already sent to either Packaging or the shipping docks when the change was entered. Making the requested changes resulted in even longer delays.
The company began to realize the dire situation they were facing. The entire order management process had to be redesigned. Customers were still reeling from earlier changes by the parent company. They did not understand the lasting impact their lack of communication would have on many of the customers.
The company began two projects after the survey was completed. The first involved reengineering the business processes that caused the poor service. Many facets of the supply chain were examined, including forecasting, production scheduling, inventory planning, customer service, packaging, and warehousing. The goal was to design one flow of information and materials that would meet the requirements specified by the customers of both companies.
The second project involved communicating the new customer service awareness to existing and past customers. Many customers were still upset with service performance, and were close to removing their business. The company wanted to assure the customers that a repeat of the past performance would not occur. They were aware of their issues and were hard at work attempting to fix them.
It is crucial with very agitated customers that a company let their customers know they are already working to solve their problems. To do that, they must clearly understand what those problems are. This company had let service decline to the point of near catastrophe. There are many companies who are much more active in this area, and look to resolve customers’ issues before they become major problems.