Case Study: The High Service Sponge

Case study answers

The High Service Sponge

On September 26th, Diane Clair, Director of Logistics at Dynamic World Corporation (DWC), a leading consumer packaged goods (CPG) company, had been running non-stop all morning. Now, as she sat down to put the finishing touches on the logistics team’s five-year technology plan, she was running behind. Tomorrow morning, she would be arguing for some big dollar investments in new demand management planning systems.

No sooner had she clicked open her PowerPoint presentation, than she heard an agitated knock at her door. Doug Hassle, DWC’s North American Vice-President of marketing stood there - and he wasn’t smiling. Diane responded, “Good Morning Doug, come in and sit down.” As Doug entered, he said “Diane, the wheels just came off. Deb Gale, General Merchandising Manager (GMM) over at Monster, Inc., just called. She was ticked. Your team missed a delivery window at their Denver cross-dock facility. Worse, this is twice in one week we have failed to deliver as promised. Monster is our largest, most demanding customer. Deb made sure I remembered that little detail. She didn’t hesitate to share her feelings about our recent fulfillment failures.”

“Sound like you’ve had a tough morning, Doug. Sorry about that brutal call. Let’s find out what happened.” Diane said as she picked up her phone. She dialed David England, a senior transportation manager to find out what happened. Dave responded quickly, “the shipment left our Distribution Centre (DC) on time. Our tracking system says the truck should arrive in about an hour. I’ll make sure it does and shoot you a text when it is docked.” David hesitated, and then expressed disbelief at Deb Gale’s negative perceptions of DWC’s delivery record, noting “I can’t imagine why Deb Gale is so upset. We’re an industry leader. Our on-time delivery and complete orders performance is outstanding. We’ve never performed better.”

Confident Dave would resolve the immediate crisis, Diane hung up. Doug, however wasn’t placated(calm), and said as much. “Diane, for someone who just dropped the ball with our most important account, David sounded a bit overconfident. He might not really grasp the situation.”

Inwardly, Diane scowled(bad tempered way), she trusted Dave. “Well, let’s double check and see how we are really performing”. Diane picked up the phone again, this time calling Paul Osterhaus, Vice President of Information Technology, to verify DWC’s delivery performance. With just a few clicks of the mouse, Paul pulled up the key stats, confirming that DWC had dramatically improved its on-time delivery over the past year. He said “You guys have really done a nice job. You’ve bumped your performance from 95% to 98 percent on-time delivery over the past twelve months, and your shipping 97 percent complete orders. It seems you’re hitting on all cylinders and achieving best-in-class standards.” Paul added, “With service levels looking so good, you should be able to justify those new IT investments.”

Doug still wasn’t convinced, saying “I’m sure you like what you’re hearing, but those stats don’t change the fact that Deb Gale just chewed me out. We’re clearly not delivering to Monster’s expectations. And though the chargebacks for late deliveries make these failures expensive, the real cost is relational. We can’t afford for Monster to drop us as a supplier or to reduce the number of facings they allot us. Deb drove this point home, saying “You can’t afford not to meet our needs.” She’s right! Our other key accounts are just as demanding. If we are dropping the ball with Monster, we are likely disappointing the others as well. Come January, Monster is tightening its delivery time windows and Deb informed me that they will expect us to take on more value-added service.”

As Doug stood up to leave, he added, “By the way, they are lengthening payment terms – effectively paying less for what we do. I hope your team can raise the performance bar.” Diane acknowledged that DWC needed to step up service even higher, concluding “You’re right, today’s market is a tough place to do business. Our best customers are more than happy to soak up every ounce of service we can provide – and then they squeeze us a little more.”

Still unsettled after Doug left her office, Diane called David to begin a new conversation on DWC’s customer fulfillment capabilities. After her initial greeting, Diane said “David, despite all the customer-oriented initiatives we have pursued over the past two years, we dropped the ball today – and not just any ball.” She smiled as she continued, “IF we are going to drop a ball, let’s make sure doesn’t belong to Monster. Today’s experience reiterates our need to rethink our service strategy. Not all customers are created equal; yet, we still measure and manage to averages. Across-the-board excellence is a great goal, but maybe our one-size fits-all approach is outdated. We just don’t have the resources to be perfect all the time. So, what are we going to do about it?

 David, this is a big deal. I don’t want to have this same conversation with Doug again. I need you to put a team together and get this figured out.”

Questions to Consider:

1. What service experience should DWC promise to Monster Inc.? What service experience should DWC promise to the balance of its customer

2. What infrastructure should DWC put in place to deliver this promise to Monster Inc

3. What 10 questions would you include on DWC’s customer-satisfaction checklist to make sure you had a comprehensive, well-thought out customer fulfillment strategy in place? Create that Checklist below.