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7 Ways to Improve Your Delivery Performance with Celonis
Measuring and improving your delivery performance is not an easy task. There are so many variables that factor into your overall performance – your ability to deliver on time and in full, your first-time-right rate or the percentage of touchless orders – to name a few. If you want to win the performance game, you’ll need a crystal-clear view of all these KPIs so you can get the insights you need to balance cost, cash and service levels.
But this is where it becomes tricky. Your delivery process spans various departments from Finance, to Procurement, Production, and Logistics. They all have different priorities, use different languages, and different tools. And they all impact each other. For example: if there’s a delivery block that requires review, production can’t start. If there were mistakes in the sales order document the order needs changes and time adjustments and that trickles down into order management and delivery planning in logistics. If sudden demand spikes hit, you might run into a shortage situation. And your teams and departments are all pointing fingers at each other.
Luckily, there are ways to solve these issues and prevent them from arising, so you can boost your delivery performance continuously.
We’ve collected the 7 best ways to measure and improve your delivery process, derived from working with top companies like Mars, Reckitt, GE HealthCare, Rational and many more, who excel in building trust in their customers by consistently exceeding their expectations.
1. Be clear about your targets
By deepening your understanding of your current performance levels, you’ll be able to set clearer measures, and more importantly, categories to qualify your results. In general, the main indicator of good delivery performance is your OTIF rate: that is, the percentage of on-time deliveries made in full. According to Deloitte, on-time delivery is the top factor when it comes to retaining customers – way ahead of price, shopping experience, and policies. Put simply: if you can keep your promises (like when goods or services will be delivered), you’ll keep your customers. So, understanding your current OTIF rate and why you may be missing it is the best place to start. But there are many reasons you could miss your on-time delivery goals — traffic, wrong or missing customer data, order changes, or order blocks, just to name a few. And one roadblock can have a trickle down effect on later stages of your process, so your delay keeps growing.
With Celonis, you can not only measure your OTIF rate, but also find the root causes for delays and bottlenecks in your processes. Uncovering these issues that are specific to your business will help you define your optimization targets to improve on-time delivery. That might mean communicating more realistic (read: longer) delivery dates while you fix your background processes to guarantee faster services.
2. Understand your delivery process end-to-end, then divide and conquer
You need to break up the information barriers between your departments. As mentioned in the beginning, your entire process leading up to the actual delivery is jam-packed with both upstream and downstream dependencies. Within that complicated web of interconnected processes, you won’t be able to spot your biggest optimization opportunities just by looking at KPIs in isolation. Maybe your delivery performance is not up to standard because of suppliers missing their promises to you. Or maybe it's due to managing orders on a first in first-out basis instead of by customer priority. Or maybe there are unnecessary delivery blocks getting in the way of meeting OTIF.
With process intelligence, you can look at your end-to-end process, drill down into specific sub-processes, and crucially, look at the intersections between processes. With this level of transparency, you’ll be much better equipped to handle the complexity created by multiple departments, thousands of customers and millions of cases. Plus, you can easily spot where and why you are losing time, and work on solutions.
3. Change notes are bad news
Do you know your average amount of changes per delivery? And whether these changes are postponing deliveries or bringing them forward?
Right behind late deliveries, the second most influential factor in customer satisfaction is changing delivery dates. If you change your schedule often enough, customers will lose trust in you.
The good news is you can use technology to take measures to increase both the number of touchless orders and your first-time-right rate. For example, you can use our Open Order Processing App to automatically detect and resolve order errors and blocks for timely processing. That includes finding orders with missing information to ensure smooth processing and avoid order changes.
4. Evaluate your supplier on-time delivery rate
Making sure you work with suppliers who keep their promises to you, can be a great boost for your delivery performance. Of course, you don't want to lose shelf-space to overstock. But if you repeatedly run into shortages or stock-outs that slow down production, it's time to evaluate your supplier performance more closely.
Perhaps there is a supplier who is usually very reliable but has repeatedly shown problems with one specific material. In that case switching to a different supplier might solve that problem. On the other hand, there might be suppliers who notoriously deliver too early, causing overstock, and taking up inventory. In that case you could adjust your inventory planning to free up space for in-demand materials.
By knowing the lead times on your supplier side, you can adjust your own lead times, and improve inventory management. That way you not only can meet the promises to your customers but also increase the overall resilience of your supply chain.
5. Understand your reaction time, so you can make realistic commitments
Reaction time is related to your ability to estimate delivery dates precisely, so you can make realistic commitments to your customers.
To optimize it, you’ll need to be able to answer questions like: how good is your reaction time? What factors are you taking into account for its calculation? What variables can be improved for a faster reaction? And are you sure you’re always prioritizing the most important orders?
The Celonis platform makes it easy to answer these questions, and measure and improve your reaction time by looking at your lead times. Lead times can be defined as the time period needed to provide a certain material or service. They can be measured in different ways and most of the time the calculation is made automatically by your ERP system. Factors like delivery or credit blocks, manual changes, or orders slipping through the cracks because everyone is working at full steam already can become unnecessary bottlenecks that increase your lead times. Luckily you have a few options to tackle those and prevent them in the future.
With process intelligence, you can understand how the process actually runs to identify if there are unnecessary bottlenecks affecting your reaction time. You can also use process intelligence to manage your reaction time in a smarter way. The Open Order Processing App, for example, helps you move away from managing orders on a 'first in, first out' basis to prioritizing the orders that are most important to your business.
6. Consider the effect of incoterms
Incoterms are a set of internationally recognized rules for the responsibilities of sellers and buyers. For example, they define who is responsible for handling transportation, insurance, documentation or customs clearance.
They are updated regularly, which means you'll have a number of contracts with different Incoterms in your systems. When you operate internationally, you should keep a close eye on your Incoterm changes, as they affect your delivery performance in multiple ways.
For example, just by including specific Incoterms in your contracts, you define who is responsible for arranging and paying for transportation, including potential delays or damages. This has huge implications for risk, cost, and schedules. Changes in Incoterms can shift responsibilities drastically. And they can easily pass under the radar.
But with Celonis you can track Incoterm changes to minimize risk, extra costs, manual effort and delays.
7. Augment your tech-stack with Process Intelligence
Machine Learning and AI are great tools to help you spot trends and make better decisions and more accurate predictions. Combining them with process intelligence, can help you get ahead of the competition, prevent shortages and improve your delivery performance at scale.
For example, you can use process intelligence to find carriers and routes that repeatedly cause delivery delays, despite shipping early. You can then set up alerts for these carriers and routes to minimize risk in the future. You can predict delays, use seasonal data to make better forecasts, or set up automations right where you need them. The best thing about process intelligent AI is that it really helps you to pinpoint the biggest value opportunities specific to your process, goals, and organization. So you can learn from past and present data to shape your future.
Celonis for Order Management
Want to learn more about our Order Management solutions infused with process intelligence? We’ve got you covered – from kickstarting your journey to value with our starter pack to apps that help you tackle the most common value opportunities in Order Management. The Celonis platform comes with everything you need to improve delivery reliability, wow your customers, and boost productivity. Learn more at our solution page.
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