Customer Responsiveness

Before settling on the sweeping set of changes necessary through­out the company, we tried or seriously explored several simpler alternatives, attempting to provide the level of QR service required. The following are examples of some of these alterna­tives, and their results:

1. Building finished goods inventories to provide additional buffer stock of the items our major customers order so that we could meet their fill rate and timeliness criteria

— This raised our inventory levels overall, dropped our financial performance, forced us to lease outside ware­house space to handle the overflow from our primary distribution center, and increased our handling costs as well as adding to other inventory carrying costs.

— We were not able to raise our customer service perform­ance to the required levels on a consistent basis using this approach. Raising inventory levels to the levels required to provide Quick Response service as demanded by our key customers would have been cost-prohibitive without great improvements to our operational procedures and support­ing computer systems.

2. Changing selected segments of our current operations, and enhancing (rather than replacing) our existing systems to provide Quick Response customer service

— This was done on a piecemeal basis, within budgetary constraints, but produced only minimal results. For exam­ple, a two-year project to upgrade our Customer Order Entry/Processing System did cut two days from the initial Order processing time. However, we still could not process orders fast enough and consistently enough to meet the stringent requirements of key customers without consider­able (costly) special handling and without reducing our service performance on orders for our other customers.

— Doing this creates the appearance of Quick Response for a time, but cannot sustain QR performance for long. If manufacturing works to a different set of performance measures and does not make the products needed to meet customer demands, Quick Response soon becomes a hol­low concept. Manufacturing flexibility and responsiveness are keys to true QR performance.

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