How to Improve Customer Shipments With OTTO - A Case Study
Setting Industry Service Standards
Shenandoah Manufacturing, a $20 million producer of poultry-raising equipment (heaters and brooders), had been having difficulty for some time shipping orders to customers in a timely manner. They had successfully implemented a popular ERP system and had been using it for more than 3 years, yet the situation didn't improve.
Customer Service Representatives were complaining about the frequent backorders and late orders. Employees were giving it their best effort, but were frustrated, and customers were threatening to take their business elsewhere.
The company considered installing an APS system as a possible solution, but found implementation would be difficult, expensive, and running the system might be a challenging task as a number of key business practices would have to be changed. A consultant familiar with OTTO suggested they look at that product as an alternative to APS. Several OTTO aspects cited by the consultant convinced them to consider a cursorily review. Specifically:
- The non-intrusive nature of the product.
- It's relative inexpensive initial investment.
- The low overall total cost of ownership.
- The integration with their ERP system.
The initial demonstration was impressive. OTTO was installed on Shenandoah's server within 45 minutes of arrival and, most impressively, it was fully functional with their real “live” data immediately. Needless to say, the demo was well received. Even more importantly Shenandoah was able to “test drive” the software to prove its applicability before making any dollar commitments.
According to Mark Shank, Information Systems Manager, some baseline measurements were made last year, and it was determined that approximately 50% of their customer orders had shipped on time. As they began using OTTO, on-time order performance rose to 90% for the month. And Shenandoah caught up on its entire backlog and started working ahead on February's orders. In February on-time shipment performance jumped to 92% and subsequently on-time performance has ranged somewhere between 98.3% and 99.5% — well above the 96% goal set by Management.
OTTO provides the means for keeping the whole production organization focused on the few things that have to happen as the ship date approaches to get each order shipped on time. Components that have the potential for delaying an order are identified so they can be managed. Shenandoah's staff, a precious and limited resource, now concentrates on analyzing information and managing the right things at the right time rather than digging out date. To quote one production control individual: “what use to take hours now takes seconds.”
According to Roy Hackett, Plant Manager: "Knowing the right things to pay attention to at the right time — information provided by OTTO — has allowed on-time shipping to be improved by 40 percentage points in less than one month and a lead time reduction from 3-4 weeks to 1-2 weeks on the most important products"
Guessing at what and how much of the work being processed is for real customer orders versus planned orders is eliminated which is especially important when capacity is short during the heavy portion of the business cycle.
“By focusing on the right things at the right time, production expedites and interruptions are far fewer, production flow is much smoother and productivity is significantly improved.”