Benson P. Shapiro

V. Kasturi Rangan

John J. Sviokla

<article-ideainbrief class="article-ideainbrief">
 <h4 class="ideainbrief-title">The Idea in Brief</h4>
 <div class="ideainbrief-contents">
 If you’re like most managers, you pride yourself on providing breakthrough products and services for your customers. But if you can’t give customers what they really want—quick, accurate processing of their orders—even fantastic offerings won’t save you from annoying your customers and ultimately eroding your firm’s financial performance.
 The best way to satisfy your customers and spur profits?
 <ul>
 <li>Staple yourself to an order. Select an incoming order, then walk with it through your entire order management cycle (OMC)—the process you use to forecast sales, generate orders, establish prices, receive and prioritize orders, schedule production, provide the product or service ordered, bill the customer, and handle returns and post-sales service.</li>
 </ul>
 <ul>
 <li>Identify problematic steps in your OMC. Ask employees throughout your OMC—customer service reps, production schedulers, order processors, shipping clerks—what order-management problems they experience and why. For example, poor interdepartmental communication can spawn fulfillment delays, inaccurate or confusing invoices, and snarled claims processing—raising your customers’ ire and your company’s costs.</li>
 </ul>
 <ul>
 <li>Redesign your operations to satisfy customers throughout your OMC. For example, automate some steps to reduce the inevitable clerical errors that frustrate customers. Clarify who “owns” an order at each OMC step. And reward interdepartmental communication.</li>
 </ul>
 Your OMC is complex, and fixing it is no small feat. But the benefits—satisfied customers, brisker sales, lower costs—are well worth the effort.
 The Idea in Practice
 To improve your order management cycle:
 <h2>Draw Your OMC</h2>
 Build a detailed, tangible depiction of your OMC—so everyone has a graphic, shared picture of how the system works. Example:&nbsp; 
 One company built two OMC “war rooms” and covered the walls with color-coded poster board and knitting yarn that charted the path orders took through the company. More than 200 feet long, the chart also depicted problems and potential solutions. The chart enabled people from different functions and organizational levels to develop a common understanding of the OMC. Result? They could focus discussion of problems on facts instead of conflicting opinions about how the OMC worked. 
 <h2>View Your OMC Through Your Customers’ Eyes</h2>
 Determine how customers experience each step in your OMC, then redesign systems to improve their experience. Example:&nbsp; 
 One company’s in-house performance measurement system boasted 98% on-time delivery of orders, but a customer survey revealed that only 50% of customers were satisfied with deliveries. Investigating the discrepancy, managers realized they were evaluating delivery quality based on when orders were shipped—but the survey measured the date customers actually received orders. If an order comprised 100 items and the company correctly shipped 99 of them, the internal report recorded a 99% perfect shipment. The customer recorded that same order as a complete failure. The firm switched to the customer’s view as the basis for its delivery-tracking system. 
 <h2>Close Horizontal and Vertical Gaps</h2>
 Many OMC problems stem from poor communication and conflicting priorities across functions and between levels of hierarchy. To illustrate horizontal gaps: When orders get scheduled for production, production people want to minimize equipment changeovers to control costs. But marketing people want as many changeovers as necessary to cater to key customers. Result? Interdepartmental warfare and delays. As an example of vertical gaps: When customer service reps serving on the front lines prioritize orders, they do so with no understanding of the high-level corporate strategy formulated by senior levels. Thus they have no idea which orders are most important to that strategy.
 To close gaps, design performance metrics that enable you to assess and reward cross-functional collaboration. Initiate OMC-improvement projects that span multiple departments. Communicate corporate strategy to your entire organization. And use information technology to integrate OMC steps.
 </div>
</article-ideainbrief>It’s fashionable today to talk of becoming “customer oriented.” Or to focus on that moment of truth when customers experience the actual transaction that determines whether or not they are completely satisfied. Or to empower frontline workers so they can delight the customer with their initiative and spunk.

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Reprint: R0407N 

It&#8217;s fashionable to talk of being &#8220;customer oriented.&#8221; But regardless of how companies attempt to flatten their organizations or empower frontline workers, the simple truth is that every customer&#8217;s experience is determined by the order management cycle (OMC): the ten steps, from planning to postsales service, that define a company&#8217;s business system. Every time the order is handled, the customer is handled. And every time the order sits unattended, the customer sits unattended.
To find the gaps in an OMC&#8212;those places where a customer&#8217;s order is dropped or shunted to the wrong department&#8212;managers should try what authors Benson Shapiro, V. Kasturi Rangan, and John Sviokla did in their research. They &#8220;stapled&#8221; themselves to an order in the 18 companies they studied, literally following it through every stage of the OMC. Based on this practical approach, the authors point out potential gaps throughout the OMC. For example, marketing and production battles can erupt even during order planning, and some of the fiercest fighting can break out during scheduling, when the sales force may want quick turnarounds that are unrealistic for manufacturing.
Most companies don&#8217;t see the OMC as a whole system, especially because each phase may require a bewildering overlap of functional responsibilities. However, when managers take the time to track each step of the OMC, they&#8217;ll come into contact with customer service representatives, production schedulers, shipping clerks, and other critically important people. In this article, first published in 1992, the authors contend that managers who &#8220;staple themselves to an order&#8221; will not only move horizontally across their own organizations, charting gaps and building information bridges; they&#8217;ll also see the company from the customer&#8217;s perspective.

Staple Yourself to an Order

Reprint: R0407N It’s fashionable to talk of being “customer oriented.” But regardless of how companies attempt to flatten their organizations or empower frontline workers, the simple truth is that every customer’s experience is determined by the order management cycle (OMC): the ten steps, from planning to postsales service, that define a company’s business system. Every time the order is handled, the customer is handled. And every time the order sits unattended, the customer sits unattended. To find the gaps in an OMC—those places where a customer’s order is dropped or shunted to the wrong department—managers should try what authors Benson Shapiro, V. Kasturi Rangan, and John Sviokla did in their research. They “stapled” themselves to an order in the 18 companies they studied, literally following it through every stage of the OMC. Based on this practical approach, the authors point out potential gaps throughout the OMC. For example, marketing and production battles can erupt even during order planning, and some of the fiercest fighting can break out during scheduling, when the sales force may want quick turnarounds that are unrealistic for manufacturing. Most companies don’t see the OMC as a whole system, especially because each phase may require a bewildering overlap of functional responsibilities. However, when managers take the time to track each step of the OMC, they’ll come into contact with customer service representatives, production schedulers, shipping clerks, and other critically important people. In this article, first published in 1992, the authors contend that managers who “staple themselves to an order” will not only move horizontally across their own organizations, charting gaps and building information bridges; they’ll also see the company from the customer’s perspective.

Staple Yourself to an Order

Summary.

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