However, measuring order fill rates will not by itself diagnose operational problems. For example, a workstation manufacturer fills orders of multiple products that come from different divisions, and customers demand to receive each order in a single shipment. The manufacturer has merging centers where products are consolidated before they are shipped out. Overall order fill rate is an appropriate performance measure, but measuring it will not help the firm identify which divisions are slowing down order completion.
Conventional fill rate measures also inadequately measure the degree of order lateness. Hence, two supply chains with the same 90 percent product fill rate may differ drastically on how promptly they fill the remaining 10 percent. A large computer and instrument manufacturer was chagrined to learn that the service target it applied to its suppliers was not the same as the one it used to measure its own performance. Employees in the purchasing departments recounted the difficulty of convincing themselves, let alone suppliers, that they should be using a more stringent standard with vendors.
Other critical service measures are often not tracked. These include total order cycle time or total response time to an order; average backorder levels; average lateness or earliness of orders relative to customer due dates; and backorder profile, that is, backorders that are one week late, two weeks late, and so forth.1
Pitfall 3: Inaccurate Delivery Status Data
When customers place orders, they want to know when their products will arrive. While waiting, they may also want updated order delivery status, especially when the order is late. We do not understate the significance of on-time delivery, but we contend that not enough attention is paid to providing customers with timely and accurate updates on the status of late orders. The consequence is dissatisfaction, confusion, and loss of goodwill.
However, measuring order fill rates will not by itself diagnose operational problems. For example, a workstation manufacturer fills orders of multiple products that come from different divisions, and customers demand to receive each order in a single shipment. The manufacturer has merging centers where products are consolidated before they are shipped out. Overall order fill rate is an appropriate performance measure, but measuring it will not help the firm identify which divisions are slowing down order completion.Conventional fill rate measures also inadequately measure the degree of order lateness. Hence, two supply chains with the same 90 percent product fill rate may differ drastically on how promptly they fill the remaining 10 percent. A large computer and instrument manufacturer was chagrined to learn that the service target it applied to its suppliers was not the same as the one it used to measure its own performance. Employees in the purchasing departments recounted the difficulty of convincing themselves, let alone suppliers, that they should be using a more stringent standard with vendors.Other critical service measures are often not tracked. These include total order cycle time or total response time to an order; average backorder levels; average lateness or earliness of orders relative to customer due dates; and backorder profile, that is, backorders that are one week late, two weeks late, and so forth.1Pitfall 3: Inaccurate Delivery Status DataWhen customers place orders, they want to know when their products will arrive. While waiting, they may also want updated order delivery status, especially when the order is late. We do not understate the significance of on-time delivery, but we contend that not enough attention is paid to providing customers with timely and accurate updates on the status of late orders. The consequence is dissatisfaction, confusion, and loss of goodwill.
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