Not long ago, PNY Technologies, a manufacturer of computer memory cards, looked at the 1,000 orders a day shipping from its warehouse and thought it was doing a great job.

The company's retail customers disagreed, socking PNY each month with fines for late and inaccurate shipments.

'We were picking manually and customer compliance was a challenge,' says Jeff Olear, director of operations at PNY.

The compliance charges weren't just expensive. Poor service threatened the company's position as a valued supplier.

To improve customer service, PNY implemented a pick-to-light system that directed pickers to the right bins and eliminated errors. 'Our shipments are over 99% accurate,' says Olear. 'We saved enough through fines and the better allocation of labor to pay for the system in three months.'

As PNY learned, the game has changed. Distribution used to be about managing internal inventory levels and accuracy. Today, it's all about the order.

Anyone who ships to a large retailer knows there are costs associated with being less than perfect. Forget charge backs and fines: just responding to a customers' questions costs money.

There is no one way to meet customer service requirements. There are, however, keys to assessing the ability to meet customer service requirements.

• Communication counts: That means clearly defining just what the customer means when they talk about on-time delivery or packaging and labeling requirements.
• Be consistent: That means creating manual or automated processes that allow a facility to deliver orders the same way every time.
• Invest in IT: Warehouse and transportation management systems are central to increasing accuracy while controlling costs.

Sometimes, meeting customer service requirements is a matter of making certain that both parties aren't speaking in tongues when they assume they're speaking the same language.

Mary Haigis, chief marketing officer for Clarkston Consulting (919-484-4444), recalls a fragrance manufacturer that was constantly arguing over charge backs for late shipments.

The supplier assumed that on-time delivery meant having the product in the yard on the day it was due to be delivered. The retailer measured on-time delivery by when product was checked in at the dock, typically three days after delivery.

To avoid that kind of confusion, Haigis says suppliers should develop a score card for each customer that identifies the five to ten characteristics of an order that are important to that customer, and defines how those characteristics are going to be measured.

The result might require a change in business processes; it might require new equipment; or it might require an upgrade to information systems.

Consistency is the goal of that evaluation.

'The best facilities deliver the same way every time,' says Patrick Sedlak, vice president, Sedlak (330-908-2100). 'That way, your customer knows what to expect.'

Developing processes to deliver consistent performance starts with understanding a business's variability. Then stocking shelves and staffing shifts to meet peak demand.

Understanding variability comes from analyzing past, present, and anticipated future order profiles and volumes.

The step after that is to analyze existing processes to see whether a facility's systems and equipment can be tweaked or need to be replaced.

In some cases, existing systems—even manual systems—can be improved with simple measures. For instance, just sending pallets to the shipping dock in the sequence they will be loaded onto trucks can improve on-time shipments.

In other cases, new equipment may be the answer. Automation, when justified, can be phased in as volumes and complexity increase, says Gene Forte, CEO, Forte Industries (513-398-2800).

The first phase might be to implement certain modules of a best of breed warehouse software package and continue with a conventional rack and lift truck warehouse. Down the road, Forte ex-plains, you might automate with an expandable base system, like a single-level, full-case pick module that's expandable to two or three levels or a shipping sorter with five or six diverters that can be expanded to thirty or forty diverters.

Information management, especially execution systems like warehouse and transportation management (WMS and TMS), supports customer service in several ways.

For one, materials handling systems are dependent upon those execution systems for accurate inventory information.

For another, those systems provide real-time visibility into the status of orders and inventory. That allows you to make better commitments.

'If I know what inventory I have in my distribution or crossdock center, I'll know whether I can meet my expected ship date and manage my costs,' says Diane Magidson, product management leader, RedPrairie (888-624-8448).

Deciding what IT applications to implement, like deciding what materials handling solutions to implement, is a matter of collaborating internally with divisions within a company and externally with customers.

'So many times people tell me they want to improve customer satisfaction without ever talking to their customers,' Magidson says. 'The customer may have an entirely different view of your problems than you do.'

Getting that customer view of your operations is important. After all, going forward, the customer will still be king.

Click on the icon to read how QVC speeds orders to its customers.