Keur Knowledge Centre Article # 2020/07
www.keur.in
Urgent orders & committing unrealistic delivery dates
When it comes to quoting delivery times while
booking orders, common practice followed by
companies is to quote “standard” delivery times.
These standard times are given to sales team by
either operations team or top management. For
different products, there are different standard
times. For eg. for product A, it could be 4 to 5 weeks,
for product B, 8 to 10 weeks & so on.
This practice causes problems for both teams,
operations & sales, as it doesn’t address specific
needs of both these functions.
The problem for operations team:
Delivery lead times are actually dependent on
current order backlog. For eg. if a company has
current order backlog of 6 weeks & books an order
for product A with 4 weeks delivery, there is no way
it can deliver on time (the only way to deliver on time
will be by giving this order higher priority & delaying
some other order from backlog).
Since sales team has no visibility of current order
backlog, different sales people quote same standard
times for many enquiries & from time to time end up
doing over booking for certain period.
The problem for sales team:
Many times, “standard” delivery times given to them
are longer than what is acceptable in the market. So,
view of sales team is that they will not be able to
book any orders if they stick to standard times. Also,
there are reports of competition quoting much
shorter delivery times. In this situation, with sales
targets to meet, they end up booking many orders
with delivery times shorter than standard.
This creates an impression in operations that sales
book orders by giving unrealistic delivery dates in
order to meet their targets & then put pressure on
operations to deliver on time, which is going to be
impossible for them to do.
How should you proceed?
1. Set up a mechanism to provide visibility of
current order backlog to sales.
2. Define new rules of what delivery times to
quote depending on order backlog, rather
than blindly quoting standard times.
3. If you foresee regular opportunities to book
urgent orders (with very short delivery
times), keep some capacity reserved for such
orders so that they will not disturb flow of
already booked orders.
4. If your delivery times are longer than what is
acceptable in the market, launch
improvement projects to shorten them.
Word of caution:
a) Continuously booking orders with delivery
times shorter than capability of operations
& then putting pressure on operations to
meet committed dates creates chaotic
working. Eventually, delivery performance
will deteriorate to an extent that it starts
damaging reputation of company in
market.
b) If you have decided, as a strategic call, to
book some orders with shorter delivery
times, knowing very well that operations
cannot deliver in that time, be prepared to
accept delay. Don’t put pressure on
operations to try & deliver on time. If you do,
& they oblige, it will be by compromising
something – either quality or scope or
delivery of some other order. This, you may
not even come to know or even if you come
to know, it will be much later, by which time
damage to company would have already
happened.