An in-depth case study looking at how Smith Corona set out to create a system for building the perfect order.
It doesn’t matter if you work in accounting, sales or logistics: If you promise 100 percent customer satisfaction to your clientele, you better make sure you can deliver.
Commitment to quality and service are essential if you want to build a repeat customer base. And if you can deliver a satisfactory experience from order entry through delivery nearly every time, it re-affirms to your customers that you do everything better than your competition — and are willing to commit.
With 120 different products in its warehouse, Smith Corona set out to create a system for building the perfect order. Executives wanted to get a better handle on efficiencies and create a better brand. They knew they had to focus on each step of the supply chain and staff began to look at the philosophy behind Total Quality Management (TQM).
Their goal was to develop a system that could track every product order, from the moment it was keyed to the moment it was invoiced to the customer.
Executives wondered, had they been delivering what they said they would? If they had failed, where were the challenges? In order to begin a thorough review, they knew it would require a rigorous set of checks and balances and qualitative measurement strategies.
The Research Begins
Every summer, the executives at Smith Corona recruit a group of college-age interns to manage a host of projects that address their competition in the marketplace. As a major manufacturer, they knew they were competitive in the thermal label market. But how much had they learned about order entry accuracy, order picking and deliveries? Were they doing a good job exceeding customer expectations?
In the summer of 2011, Smith Corona sought the advice of a professor from The Weatherhead School of Management at Case Western Reserve University. He recommended that they analyze their ordering process and carefully identify each of their successes and failures.
Executives hired a group of Case Western Reserve interns who were interested in supply chain management. Piece by piece, they looked at reports, interviewed departmental staff, and looked at how well the company could satisfy orders and meet delivery turnaround.
“We knew that continuous quality improvement had to be a hallmark of our business,” said Carl Kanner, Vice President of Business Development. “And our interns are a fresh pair of eyes with no preconceived notions. They were willing to take a shot at a project that could improve our competitive edge.”
The group developed a number of supply chain efficiency measures and reviewed every order from the previous year to determine what percentage had been “completed to perfection.” Each metric addressed six unique service components:
• Order entry accuracy
• Picking accuracy
• Order completeness
• On-time delivery
• Product shipments without damages
• Invoice accuracy
In order to measure each of the six components, they knew they had to look at things carefully. They needed to better understand how errors occur along the way and fix any issues that go unnoticed.
• First, they looked at order entry accuracy, which they considered to be the first component of the perfect order.
• Next, they clicked through line items in the order entry system to make certain that all fields and descriptions in the product database were updated.
• They looked at product specifications carefully and made sure employees understood the difference between items that were shipped as single rolls or in box quantities.
• Later, they looked at product layout in the warehouse, and whether items that looked the same could be moved elsewhere to eliminate confusion for pickers and packers.
Throughout the process of building the perfect order, they created a unique tracking system that made sense. Employee accountability became the mantra of the day. A scanner ID system helped identify employees who picked, packed and shipped products so they could be easily reminded to do better. Invoices were checked not once – but twice – to eliminate potential errors.
This concept behind the perfect order evolved from one report to another, tracking each element and citing the best reasons for improvement.
Next Up: Executive Viewpoints
We decided to talk with Patrick Mitchell, Vice President of Operations, to get a better understanding of the thought behind “POP” – the Smith Corona Perfect Order Project. “It’s basically a high-level report we generate that has all these components combined,” Mitchell explained.
“How much UPS do we ship? How much product do we have in stock? How much gets damaged in transit? What percentage of orders do we fill the same day? It was so important that we look at these things without measuring dollar value or loss. There would be too much noise in that level of tracking.”
As numbers were compiled and data sets compared, staff members were surprised to see just how complete, accurate and on-time their orders had been delivered to Smith Corona customers on any given day. “These were all the things that defined the perfect order, so we were happy to see we were doing a good job, but we also saw that we could improve,” Mitchell said.
It also became a team effort that required the commitment of employees in every department at Smith Corona. When employees first met to talk about the project, they understood that emphasizing quality had to be their number one priority. In the beginning, about 15-20 different staff members joined in on the conversation, and then the project morphed into something bigger. Sales people were asked to chime in. Accounting staff were asked to pull invoices. Each department was asked to develop their own set of metrics in order to better understand what was commonly missed.
This one project essentially involved all the people at Smith Corona who could define what the perfect order meant to each of them. “These reports helped us develop a more efficient shipping department, too, and we made sure that employees were rewarded for that,” Kanner said.
Over time, results proved the value of the project. Smith Corona went from a perfect order rate of 82 percent to 99.6 percent. Morale started to build. Then ironically, something interesting started to happen.
Management was so excited to have the new report in place, that team members actually got complacent. “We just stopped looking at it,” Mitchell said. “It was then that we realized this process had to be a constant – that it could really never end. We had to be continually improving – or else.”
Even today, employees are pulled aside to better understand why consistency in quality needs to hold steady. “There are no exceptions to this rule,” Mitchell said. “Even when they provide a really good explanation, they all know they can do better.”
The Perfect Order Project serves to motivate employees, too. When Smith Corona acquired new equipment in their warehouse, employees recommended how to best utilize existing space. Staff played an integral role in the process, re-organizing the layout of the warehouse so order fulfillment is streamlined.
Employees also volunteered to sit in on planning meetings so suggestions could be openly discussed. This proved to be important because over the next few months, the company will be expanding the warehouse, which will mean shifting some products and priorities. “We’re gaining another 50,000 square feet of storage and warehouse space, and some new shipping docks,” Kanner explained, “so management really needs to understand their recommendations on efficiencies in inventory.”
The project became over-arching in that each component begged another question or unraveled the process in greater detail. “If a product failed, for example, we wanted to know if it was a problem with the adhesive or the paper had been at fault,” Kanner said. “Smith Corona has an extensive quality control department to keep track of these issues. This process made us want to know whether everything a customer asked for was arriving promptly and in the order they expected. When we looked at the numbers and saw that one-one-hundredth of our sales dollars came back, it made us look at things more closely.”
Although the Perfect Order is a concept that was internally developed, it is clear that its impact is far reaching. “Every return, every error becomes a teachable moment for us,” Mitchell said. “So if we can take a look at our quality control measures and see what’s happening in shipping, or how the sales department and order entry is being managed, or that systems-wise, everything looks good, our customers are going to learn to appreciate and value everything we do here.”
“This process made us want to know whether everything a customer asked for was arriving promptly and in the order they expected.” — Carl Kanner, Smith Corona, Vice President of Business Development
Ensuring the Perfect Order: The Top 5 Tips
#1 – Stay on Top of Keying Errors
Let’s face it – if you own a company that orders, sells and ships product, you likely have a standard order entry process that begins with a fax, an e-mail, a completed web form or phone call. Once that information is received, a chain of human error can essentially devour the perfect order.
Maybe the person who placed the order entered an incorrect quantity. Or maybe the product description is incorrect in the database, so an inside sales rep chose the wrong item. Maybe the system has an incorrect box quantity listed, or perhaps there is someone in your warehouse that pulls the information incorrectly, packs it wrong, or ships it to a wrong address.
In the case of Smith Corona, most order entry mistakes occurred as the result of typographical errors by sales staff. Errors also occurred when a regular staff person was away and a substitute was working in his or her place.
Where to Begin: Start with a checklist to see where improvements can be made. Review every field in your database to make sure no stone is left unturned. An empty quantity or description field in your computer system can cause order entry errors, warehouse staff confusion, misplaced units and mislabeled products.
Better yet? Send out order and service satisfaction surveys to your customers every quarter or twice a year. You’d be surprised how much you can learn just by asking.
#2: Watch How Products Are Picked And Packed
Smith Corona knows the importance of well-defined pick slips since it fulfills thousands of orders in any given week. As soon as an order is placed, pick slips are placed in a bin for UPS or a bin for freight orders. As pick slips are scanned, product racks are identified and warehouse pickers move to specified locations to fill orders.
Before they instituted the perfect order system, minor errors occurred. Maybe the product scanner detected an incorrect product ID or an item similar in name/ID number. Or maybe the picker assumed an incorrect box quantity versus a single roll, or found a box that was labeled incorrectly.
Where to Begin: Watch for mixed products on skids and pay attention to box counts. Institute internal accuracy checks each step of the way. Pay attention to product placement in the warehouse. If a product is sitting next to a similar product that looks confusing, move it to another location. Hold warehouse pickers accountable for picking and packing mistakes, and generate regular error reports so you can determine where problems occur.
#3 – Look at Delivery Bottlenecks
Many companies claim to offer same-day delivery, but do they actually track the result from start to finish?
Smith Corona wanted to make sure they weren’t over-promising and under-delivering, so they set up a metric to define what same-day delivery means so that employees – and customers – understand what to expect. If an order was received, processed, picked and brought to the loading dock the same day, this was considered to be a successful same-day shipment.
Where to Begin: The goal at Smith Corona was to improve upon a completion rate that varied between 82 and 98 percent on any given day. Since all late deliveries were due to employee error, Smith Corona was diligent about employee training and making it a number one priority. They also over-emphasized cut-off times to ensure that customers knew when orders had to be entered. This built in extra lead time so support teams weren’t scrambling to get orders out by the deadline each day.
#4 – Ship Without Damage
There are reasons that products get damaged in transit, so if you need to review basic packing procedures, make it a top priority. Damaged products are an easy way to lose great customers and ruin the perfect order.
Damaged materials usually happen during the packing process, or in transit. Smith Corona wanted to determine the best way to track this, so they created a list of checkpoints in the warehouse to identify where damage might occur. They wanted to address any problems that involved insufficient packaging, wrong-size pallets, tow motor incidents, and boxes that appeared to be over-strapped or under-wrapped.
Where to Begin: Increase the number of staff trainings and hold people accountable for their mistakes. Schedule periodic meetings between warehouse staff to discuss handling and improvement measures.
#5 – Review Invoice Accuracy – Not Once, But Twice
You would think that invoice accuracy is automatic, especially for companies that have Enterprise Resource Planning (ERP) systems in place. For Smith Corona, there are a lot of variables for invoicing that dictate its perfect order success rate. Executives there realize that any errors in freight are caused by entry error during the invoice creation process.
If product is shipped via UPS, their system will manage the invoicing. But if product is delivered via freight, a bill of lading is scanned and invoices are hand- typed. Because of this added “human” component to all freight invoices, staff knew they had to improve upon the 96 percent success rate from previous years.
Where to Begin: Double-check or triple-check every freight invoice to make sure numbers aren’t transposed or forgotten. If a delivery description is incorrect in the database, change it immediately. Don’t wait for someone else to catch an invalid number or an incorrect box quantity.
About the Author
Maria Dimengo has been writing about corporate and small business marketing for more than 25 years. She currently resides in Cleveland and is pursuing a master’s degree in non-profit management.