The butler did it
Errors that get customers angry, and worse
by Dick Friedman
With apologies to authors of who-done-its, when customers complain about a mistake, the knee-jerk reaction is to say, “The warehouse did it.” Often, the warehouse didn’t make the mistake – someone in the office or field did. In this depressed economy, it takes only a few mistakes to lose business or customers. Retaining customers requires “back office” processes to be as error-free as warehouse processes.
This article outlines where to look in the back office, and key things to look for.
QUOTING
Customers get angry when the quotes they receive
contain wrong items/quantities/prices. They buy elsewhere. No one wants to spend time proofing low-value quotes before sending them to customers. But quotes worth more than a certain dollar amount should be checked by someone other than the person(s) who worked them up, and checked before being sent.
TAKING ORDERS
Unlike quotes, which should be reviewed before
being transformed into orders, orders that do not originate with quotes should always be checked to some extent; especially orders that are received electronically. Although sales orders are checked by the computer system for such characteristics as item code, few systems check for “reasonable quantity” for the customer and items involved. “Reasonable” could be based on the average or maximum quantity ordered within the prior six months or season. This step can detect the mistake of keying an extra zero when entering a quantity ordered.
MONITORING ORDERS
For some customers, orders received late are useless. So, for “future orders,” use the system to generate an alert if there is not enough inventory available X days before the due date. For such at-risk orders, someone should determine if needed inventory is likely to arrive in time; it may be necessary to temporarily rob Peter to pay Paul.
SPECIAL ORDER PURCHASING
Studies have shown that many special orders are money losers when all costs are taken into account. No one should increase that loss, or turn a profit into a loss, by making a mistake on a special order. As with quotes, special POs worth more than a certain dollar amount should be checked by someone other than the person(s) who worked them up, and checked before being placed.
INVOICING
If there are a large number of credit memos issued daily to customers because of distributor-made mistakes of any kind, do not print invoices without at least spot-checking invoices in pro forma format. A large number could be more than ½% of the total number of invoices printed/transmitted daily. And, of course, attack the root causes of these errors.
CUSTOMER RETURNS AND CREDITS
Traditionally, if items returned by customers might not be re-saleable, no credit is given until someone makes a determination. For customers who are being sold on credit, don’t wait. Give them a credit memo as soon as data for returns is entered into the system. If they can be trusted to pay their bills, they can be trusted to go along with debit memos that would be issued if items are found to have been damaged by them.
Dick Friedman is a recognized expert on systems and office and warehouse operations for fastener, tool, industrial and MRO distributors. But he does Not Sell computer systems. Based on more than 30 years of experience, he helps distributors prevent office and warehouse errors, often through quick, inexpensive changes. Dick is a contributing author to Industrial Supply, and consults with readers. Call (847) 256-3260 for a FREE consultation about preventing office and warehouse errors and increasing warehouse productivity.
This article originally appeared in the July/August 2009 edition of Industrial Supply magazine. Copyright 2009, Direct Business Media, LLC.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.
