Putting Your Customers' Needs First

• Customer Performance…Making Numbers Make Sense

Numbers have the property of making everything appear “exact and absolute”, but in truth, numbers are, at best, a relative measure of performance and value. Numbers can be miscalculated, misunderstood, misclassified, mishandled, misinterpreted, misleading, mismatched, misnamed, misplaced, misprinted, misread, misquoted, misremembered, misrepresented, misstated, or misused … and that is just for starters! Statistics is a mathematical science unto itself; even a person with the best of intentions can easily make assumptions about a number that is wrong or at least incomplete. That is why it is so important that for each numerical measurement users understand how the number is derived and what it really means. Some common misconceptions about numbers when evaluating customer performance measurements in a business are as follows: o Averages can be misleading …2 shipments per order sounds good. Of course, if your average order is only 5 lines, then 2 shipments per order translates to an 80% 1st fill rate at best. No one would consider an 80% fill rate to be terrific! Is it safe to wade across a creek that has an average depth of three feet? Not if you step into an eight-foot hole! Averages are the most frequently used statistic, but often fail to tell the entire picture. • The Median represents the point where half of the occurrences are higher than this value and the other half are lower than this value. • The Mode represents the most frequently occurring value among all the observations. • If Average , Median and Mode are the same number…you have a perfectly normal distribution of events. Most people simply use averages because that is all they remember how to calculate! • The bottom line is that averages are a perfectly good measurement, but you need to have a good understanding of the underlying data as well so that you know how representative the average really is to your situation. o Know what affects the number …if you are trying to explain why 1st fill rate is lower than expected, you need to know what events affect the number • Make-to-order lines will not be instantly shippable • Future dated orders and future dated lines will not be instantly shippable • Orders with drop shipped lines or expedited lines will cause the fill rate to be lower. Also, expedited line that ships ahead of the main order will destroy customer’s fill rate receipts measurement. • Stock items not shipped from Master Servicing warehouse but from the vendor plant will cause order line splits which will lower the order fill rate. • Ship Complete order requirements will usually delay shipment as all line items must be fully allocated before the order can be processed.