April 2008 | Commentary | Viewpoint

Perfect Order Fulfillment: Getting it All Right

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The journey through the supply chain is filled with constant movement and activity, and each step holds the potential for delays, wasted money, and errors. The complexities of an extended supply chain make the odds against fulfilling a perfect order overwhelming.

The Supply Chain Council describes perfect order fulfillment as a discrete measurement defined as the percentage of orders delivered to the right place, with the right product, at the right time, in the right condition, in the right package, in the right quantity, with the right documentation, to the right customer, with the correct invoice. Failure to meet any of these conditions results in a less than perfect order.

The requirements for a perfect order can be daunting; yet despite the challenges, companies can achieve high perfect order rates. The perfect order rate has become an important indicator in measuring supply chain performance.

Companies that boast some of the highest perfect order rates carry less inventory, experience shorter cash-to-cash cycle times, and have significantly fewer stock-outs than their competitors.

Imperfect orders lead to increased labor costs for shipping, the need to provide replacement product, and lower revenue due to lost sales and customers. By minimizing imperfect orders, companies can achieve greater efficiencies and increase customer satisfaction.

Easy as 1-2-3

The good news is that companies can increase the odds of achieving a perfect order through extended visibility across the supply chain. Visibility applications can provide a comprehensive view of supply chain performance through integration across disparate systems.

Supply chain visibility applications can contribute to higher perfect order rates in three ways:

1. Measuring current conditions. What gets measured gets action. Measuring performance across various areas of the supply chain is critical to understanding where to make the most dramatic improvements. Using supply chain visibility applications to isolate problem areas initiates process, technology, or operational improvements necessary to increase performance.

Many supply chains are comprised of disparate systems that are not fully integrated. Supply chain visibility applications bring cohesion to disparate systems by analyzing data from multiple sources to identify specific points in the process that may require attention.

Whether problem areas are isolated to a particular region, a specific process, or even an individual location, supply chain visibility applications can deliver vital information to help companies make the most effective decisions.

Visibility solutions also provide powerful abilities to drill down to the detailed information that comprises high-level metrics. Viewing the detailed data behind the metrics provides compelling information that can help companies identify improvements to increase perfect order rates.

For example, if on-time delivery performance has slipped, the ability to view the vendors with the lowest on-time performance can lead to understanding root cause relationships. Identifying the factors that contribute to performance measurements are key to prioritizing the actions to take for continual improvements.

2. Monitoring improvements. Once the key metrics are measured, companies can design effective implementation strategies to target the areas that most need improvement.

As soon as companies act to improve their problem areas, they can monitor the supply chain through visibility applications to track the progress of improvement initiatives. Whether in the form of a dashboard, email, or mobile devices, information is readily available to capture current supply chain performance and trends over time.

Company executives can monitor their supply chains more strategically by viewing end-to-end processes and overall performance. Visibility solutions display one version of the truth by incorporating data from multiple sources. As a holistic view of the supply chain expands, so does the opportunity to make mid-course corrections that can improve perfect order rates.

3. Maintaining supply chain performance. By spanning the extended supply chain, visibility applications can become a valuable asset in maintaining perfect order rate improvements.

Whether through real-time alerting to conditions that may result in a less than perfect order to displaying orders at risk of out-of-stocks, companies can maintain performance levels by acting on issues as they occur.

Alerting through dashboards and mobile devices accelerates the ability to address issues that could negatively impact perfect order rates.

Visibility applications can be enhanced over time to accommodate the ever-changing demands of the supply chain. As companies continue to refine their perfect order rate goals, visibility applications can adapt and help maintain perfect order improvements.

Supply chain visibility applications can increase perfect order rates without significant financial impact. Achieving a balance between the cost of improvement and the cost of imperfect orders can be challenging.

A Healthy Balance

Companies can reach a healthy balance when setting perfect order goals by taking on manageable projects that yield noticeable improvements without tipping the scale on implementation costs.

As problem areas are isolated, targeted improvements can bolster the return on investment to offset the cost of implementing change.

Achieving perfect orders is a lofty goal. As companies continue to adapt and improve supply chain performance through extended visibility, the goal becomes more attainable.

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