Logistics quality as a competitive factor

Logistics quality as a competitive factor

Anyone who buys a product today expects far more from it than just the fact that it works reliably. This is just as true for the customer in the fashion boutique as it is for the buyer of a machine tool. The “classic” product quality – i.e. the physical, sustainable functionality of an item – has almost become a hygiene factor. They are taken for granted without being honored. However, if this quality feature is not right, there will be a lot of dissatisfaction.

In addition to this traditional focus on product quality, other dimensions such as logistical quality have now come to the fore. It is primarily measured in terms of delivery capability, adherence to delivery dates and quantity compliance. The times when the focus in many production companies was on capacity utilization are not so long ago. Production orders were scheduled according to this and not according to meeting deadlines; customers waited more or less patiently. Today, the planning focus is on high delivery capability and meeting deadlines. Customers want everything as immediately as possible; and if a delivery date is required, then it should be reliably met.

The more interchangeable a product, the more interchangeable the supplier behind a product, the more important the factors of the supplier’s ability to deliver and adherence to delivery dates become in competition. In business-to-consumer business, “ordered today, delivered tomorrow” has almost become the expectation of customers. Although some suppliers are making efforts to have such premium services paid for separately, it can be assumed that competition will ensure that this premium service will be provided at no extra cost in the medium term.

You don’t test quality into a product; you create it in the design of the components and anchor it in the manufacturing processes. It would be a massive waste to have to produce a million parts in order to sell eight hundred thousand good parts. However, it would possibly also be massively wasteful to obtain 999,997 faultless parts from a production batch of one million parts; the manufacturing costs would possibly increase exorbitantly as a result. Six Sigma is not always economical to achieve.

The same applies to logistical quality. It cannot be achieved through stock levels, but must be anchored in the planning and scheduling of the value chain. The high delivery capability of a stocked product requires that stock is available so that picking and shipping can be initiated immediately. High availability of a complete order consisting of several order items requires even higher availability of the individual items: With 95% readiness for delivery of the individual items, there is only an approx. 60% probability of being able to deliver the entire order in full for an order of 10 order items. Only with 99.8% availability of the individual item have the chances improved to 98%, but with 75% more safety stock on each of the 10 individual items. And so it is important to balance delivery readiness on the fine line between too much and too little stock in such a way that the market accepts the logistical quality and ideally even rewards it in monetary terms. In any case, you should be able to afford them economically. As a general rule, inadequate quality is the death of any company, but too good quality can also cost you your neck.

Picture of Prof. Dr. Andreas Kemmner

Prof. Dr. Andreas Kemmner

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