KPIs: The Customer View of How Well You Deliver
Whether you’re a member of HR delivering a service to your internal customer or a manufacturer delivering a product to an external customer, you will find yourself in a similar situation. Your customer’s perception of you is driven by two steps in your overall process.
- How easy was it to order your product or request your service?
- How timely was delivery of your product or service?
I will write the remaining portion of this article from the view of a manufacturer, but the concept translates into internal service delivery models as well.
In reality, the process of delivering your product to a customer has many steps after ordering and before delivery, but it’s all invisible to your customer. To your customer, everything in between is wait time and the entire experience with your company looks like this.
So how do we set up KPIs to improve our customer “delight” levels? You’ll notice that I didn’t say customer satisfaction levels since merely satisfying our customers is not our goal. Our goal is to delight them so they spread the word of how wonderful we are and they become ambassadors of our product.
Modern Customer Expectations
With internet ordering capabilities, customers expect easy ordering and quick delivery. On the ordering side, we can seek customer feedback on the experience and gather ideas for improvement. For delivery, we need to take a look at the entire process.
Once the order has been received, we need to track it through each step in the order fulfilment process. After many such orders, we will be able to see the length of time orders typical spend in each step and then identify the best places for improvement.
This is where the practical 80-20 rule comes into play. Were most orders delayed due to a shortage of inventory? Due to transportation problems? Incorrect purchase orders for customers that order by phone? It’s important to track the variation of each step in your fulfilment and the sources of variation within each step.
What to Track
Many companies track the average of each process step, but ignore the variation within the steps. This can hide valuable opportunities for improvement. These types of measurements should also be ongoing in order to see when process steps are beginning to slow down. Proactively monitoring key processes within the company will help to avoid surprise drops in customer delivery capabilities.
Is Early Delivery Good?
When we set up KPIs for delivery measurement, there is one final word of advice I will provide. It has to do with how you count a “successful delivery.” If you are shipping products to consumers, they are likely to be delighted if a product is delivered ahead of the promised delivery estimate. In these cases, a successful delivery is one which arrives on or before the promised date.
However, if you are shipping products to manufacturers, they may be more interested in product delivery occurring within a certain time frame and may not be delighted if their order arrives early, especially if their inventory capacity storage is tight.
In both of these cases, it is important to align your KPIs to the expectations of your customers.
[Aside: Trends show that supplier delivery has slowed and it has become even more important to understand the variations in your supplier delivery. See the following article for “Better Inventory Planning.”]
Tracey Smith is an internationally recognized business author, speaker and analytics consultant. She is the author of multiple books and hundreds of articles. Tracey has worked with and advised organizations, both well-known and little-known, on how to use data analytics to impact the bottom line. Her career spans the areas of engineering, supply chain and human resources. If you would like to learn more, please visit www.numericalinsights.com or contact Tracey Smith through LinkedIn. You can check out her books on her Amazon Author Page.