When Can I Expect Delivery?

by Dave Garwood

What is the most often asked and very important question from customers? "When can I expect delivery of the product I just ordered?" They want a date so they know when to expect delivery. Seems like a reasonable request. And they want a reliable date! Missing the promised delivery date is near or often at the top of the list that:

• Frustrates customers
  
• Causes customers to go to competitors
  
• Loses business
  
• Causes dilution of sales people's time from selling and getting more business
  
• Creates internal company conflict, even shouting matches between departments such as sales, customer service and manufacturing
  
• Drives up the cost of doing business as the supplier scrambles to ship the late order
  

At the heart of the problem is a weak process for making the original delivery date promise. Unfortunately, most companies suffer from this weakness. Does your company? If yes or maybe, read on!

Three Approaches to Making Customer Delivery Promises

One method is to just say yes! Whatever date the customer requests, respond with "OK." Promise whatever date they request. As one frustrated sales manager said, "Why set off an alarm when we get the order? Give them the date they asked for. Manufacturing doesn't really know when they can ship anyway. Look at their track record. And there is a 50/50 chance we will hit the date or the customer will forget the date we promised. Besides, we have built a handy handbook of excuses for missed deliveries to deflect the blame a little. This may be our core competency."

While this method is often used, even if informally, it results in poor customer service and high risk of losing business and/or higher costs to run the business.

The second method is to use a "standard" lead time for each product category or group. For example, Model XXX's are 3-week delivery products. Model AAA's are 6-week lead time products. If we get one order for one AAA, the promise date is automatically 6 weeks out. If we get a hundred or even a thousand orders the same day, the promise date is automatically 6 weeks for all of the orders.

The beauty of this approach is it's simplicity. It's easy to administer -- and there is certainty of results. We can assign a clerk with a rubber stamp or a write a computer program to look at each order, determine the product group that it fits in, assign a delivery date and quickly pass the promise on to the customer within 24 hours or less. Of course, any similarity between this date and when the customer gets the product is purely coincidental! The delivery schedule and the manufacturing schedule are only in sync by accident, not by plan. In fact, if the AAA's are in stock, the customer might get a 6-week order promise one day and the product delivered the next! This raises a serious integrity question. If you use this method, expect missed deliveries, i.e., customer service levels will not be a surprise! They'll be lousy!

The third alternative is a process called Available-To-Promise (ATP). While ATP requires more effort at order entry time, the results are superior. In fact, this is the only good alternative!

ATP the Process vs. ATP the Technique

It is very important to understand the difference between the ATP technique, which is part of most ERP, MRP II and APS software products, and ATP as a process that uses the ATP technique.

The ATP technique answers a simple question ... How many of this product can I promise to a brand new customer without robbing Peter to pay Paul or changing the current manufacturing (or supplier) schedule? A calculation is made based on current inventory on the shelf, future delivery schedules and customer orders already committed. The result is a number, ATP, that identifies how much is left over and when it is available after I take care of all previous delivery promises.

What if the customer order for 50 Blue units is received March 1 with a March 29 requested delivery and the ATP date for 50 units is April 26? This is when an ATP process is needed, not just the ATP technique that calculated the April 26 number. We are in business to make customers happy, including delivering the product when they want it. So what's next?

Several options are available to solve the March 29 request date conflict with the April 26 ATP date. Can we pull up the MPS (two current supply schedules) to March 29? Will material and capacity be available to meet an earlier MPS date? Can we send the new customer partial deliveries -- 22 units on March 29, 22 units on April 5 and the balance April 26? Can we reschedule some of the customer orders already promised? Or some combination of these alternatives? If none of these alternatives work, the honest delivery date promise is April 26.

There will never be any clear right answer. But there is a clear worst answer! Promise a March 29 delivery without changing the MPS (or change the MPS without knowing if it can be done) or rescheduling any of the other customer orders. Just wait and let the customers know their order was rescheduled by letting it go late! When the delivery date goes past due, they'll know it must have been rescheduled ... they just won't know the new date!

The ATP process requires people to look at the conflict, investigate alternatives, make a decision and inform the customer. Sounds like a lot of work. Can we really afford the time to do this at order entry time? Wrong question! The question is "when are we going to do the work and how thoroughly?" The alternative is to toss the date out to the customer, wait for them to scream at their salesman or customer service rep and then do the work to find answers to the same questions. Or wait until we miss the date if we promised March 29 and then scramble. Unfortunately, by then we have lost valuable time to solve the problem (and alternative solutions) and now we are just doing damage control. The customer is already upset. I vote for looking for solutions at order entry time and be up front with the customer then, not after we have a promised date we can't meet or wait until the original date is late.

Beware: ERP, MRP II, APS and other software support the ATP technique. An ATP process is what gets results. The ATP process uses the ATP technique. The essential foundations to make the process work include:

1. Accurate inventory records
2. High performance (95+%) of meeting the master schedule
3. An honest delivery date request from the customer when the order is received

Tired of Irate Customers?

I am convinced that at least 50% of customer service problems are created the day we receive the order and make the delivery promise. The damage is done then. If you elect to avoid laying the essential foundations and use an ATP process, prepare to listen to irate customers for a long time -- if they continue to tolerate the poor performance. They may choose an alternative ... your competitors!