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About the Authors

William (Bill) Cogdill
Director and Consulting Partner
Manufacturing and Logistics Business Unit
Cognizant


Bill Cogdill has over 40 years of marketing, operations and supply chain experience and is part of the consulting leadership team responsible for setting strategic direction for solutions that address client challenges. Bill can be reached at William.Cogdill@cognizant.com.

Girish Dhaneshwar
Director and Consulting Partner
Retail, Travel &Hospitality and Consumer Goods Business Unit
Cognizant

Girish Dhaneshwar has over 18 years of operations and supply chain experience and is part of the consulting leadership team responsible for setting the strategic direction and leading clients through transformational initiatives in supply chain. Girish can be reached at 
Girish.Dhaneshwar@cognizant.com.


   

Ganesh Iyer
Manager
Manufacturing and Logistics Consulting Practice
Cognizant

Ganesh Iyer has an extensive experience advising companies supply chain planning and execution issues across manufacturing industries. Ganesh can be reached at Ganesh.Iyer@cognizant.com.

Nishanth Vallabhu
Director
Business Consulting Practice
Cognizant


Nishanth Vallabhu has over 13 years of experience in the supply chain space working extensively with leading manufacturers and retailers. His current areas of interest include inventory optimization, deployment planning and sales and operations planning. Nishanth can be reached at Nishanth.Vallabhu@cognizant.com.

Supply Chain Comment

By Bill Cogdill, Girish Dhaneshwar, Ganesh Iyer, and Nishanth Vallabhu, Cognizant

April 25, 2013



Adaptive Supply Chains (Part 3 of 3): Beyond the ‘Perfect Order' Index: Getting a Truer Measure of Customer Value

Manufacturers and Retailers Need to Rethink Order Execution in Ways that Create Continuous Value for Customers and Resolve their Most Pressing Needs


Cognizant Says:

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Beyond the remaking of the "perfect order," manufacturers and retailers need to reimagine order execution in ways that create continuous value and resolve customers' ever-changing business needs.
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Manufacturers and retailers have long pursued the Holy Grail of consistently achieving the "perfect order." If a high percentage of your orders are "perfect," the theory goes, you will have happy customers who will repay you by ordering more. In its simplest (and most traditional) incarnation, a "perfect" order meets the elements of a product shipped in full, on time, undamaged and with the right documentation (including invoice). But many believed this age-old definition of perfect order left out too much. For one thing, it does not address whether or not the order actually met the customer's needs.

 

Over time, many people added their input to the concept of perfect order. R. "Ray" Wang, then a Forrester analyst, advanced the concept several years ago by writing that an order had to meet 20 different criteria before it could be considered "perfect." 1  Not surprisingly, Wang's expanded perfect order included elements for quality and consistency.

Given that "perfect order" means something different to just about everyone today, we revisited the concept to see where it retains value and where companies need to adjust it in order to align their customer value metrics to meet today's supply chain challenges.

Definitive statistics are hard to come by, but our conversations with inventory managers reveal that for most companies, not even 50% of orders approach perfection via the traditional definition. So, why is it so difficult to achieve? And, even more so, why do manufacturers and retailers even try?

To update the perfect order metric and make it useful in the context of today's dynamic demand-driven environment, manufacturers and retailers need to:



 

 

Rethink their response to the customer's real needs, as opposed to going on assumptions. How "perfect" do customers want the order to be? There may be elements of perfect order that are irrelevant to customers. Don't spend any resources trying to meet those elements. Amazon has revolutionized retail by offering standard two-day delivery and even same-day delivery in some cases. But don't assume that all customers need or even want this speed of delivery. Quality or flexibility may be more important. You need to know.   


  Reinvent your fulfillment operations from end to end.  It's not an easy undertaking, but you need to capture the right demand signals to gauge true demand as well as optimize warehouse operations. At the same time, companies need to integrate planning and execution to orchestrate on-time delivery.


  Rewire your performance measurement using better data. Manufacturers and retailers can tap a wealth of tools – especially social, mobile and analytics – to gather key performance data.



Beyond the remaking of the "perfect order," manufacturers and retailers need to reimagine order execution in ways that create continuous value and resolve customers' ever-changing business needs.

This white paper is the third and final installment in our three-part Adaptive Supply Chain Series. Part 1 of our series focused on supply chain strategy, revealing how companies need to adapt their strategies to simultaneously accelerate revenue growth and productivity while containing costs. Part 2 discussed how manufacturers and retailers should use demand and supply planning technology and techniques to arrive at an optimal inventory plan.


1 http://blog.softwareinsider.org/2008/06/09/order-management-hubs-20-steps-to-a-perfect-order/

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