Processing customer orders perfectly is less expensive than making mistakes. More realistically, reducing errors saves operational expenses, increases service value to customers, and boosts morale due to the absence of angry customers. Think: Systematically reduce errors with Zero-Error Analytics in Distribution.

How to Systematically Reduce Errors with Zero-Error Analytics in Distribution

When you calculate the overall metric of credits issued per thousand line items processed, you start to see each line item as a chance to execute correctly.

• Keep a log at each activity station. You will start to see the areas from which most repeat errors are coming. Then, change the underlying system(s) to eliminate those errors.
• Rank all customers by both total credits and credits per thousand lines. You will find some customers that have huge numbers of credits and/or a ridiculously high ratio for credits/thousand lines. Their buying practices are causing both parties large, unnecessary hidden costs. Help them adopt practices that similar customers, who have lower credit/activity ratios, are using.

Uncover the Potential ROI Found in Credit Cost Reductions

• Here are a few credit scenarios showing their different costs.
  The lowest cost is probably when a customer did not get their contract price. You write a credit to give them the difference.
• A higher cost is incurred, on many levels, when you ship the wrong product and must write a credit and reship. That’s three times the transactional costs of doing it right the first time (DIRTFT). You must also consider the soft costs. Customers think less of your service value.
• Their anger demoralizes reps. You can’t sell partnership contracts if your service is weak.
  One in 500 customers may get enough imperfect orders that they switch to a competitor. What is the life-time-value cost of that lost customer?

When looking at boosting ROI with zero-error analytics keep in mind that each credit has the (ballpark) hard costs of twice your average order cost. When considering the additional payroll cost of a new full-time champion for both internal and customer credit reductions, way this against your cost reductions.

What’s Next?

To hear more on this topic, you can contact me for a demo on credit analytics (and lots more), or attend my live presentation at APIC on April 20-21 in Phoenix. Lastly, for a big ROI, hire a new consultant to run both your zero-error and big credit customer programs.