Customer service has suffered in the last few years. Yet providing a superior customer experience is paramount to success especially during these turbulent times of volatility, uncertainty, complexity and ambiguity (VUCA). As we see this trend become a reality across a wide spectrum of companies and industries, proactive backlog management has proven effective in ensuring consistent high service levels (on-time-in-full OTIF, quick lead times, and proactive communications).

The Customer Service Priority

Only organizations that provide a superior customer experience will succeed over the long term. Customer service matters especially in volatile and turbulent times. According to Salesforce, 88% of buyers say experience matters as much as a company’s products or services. Do executives pay as much attention to customer service as they do product and profit?

Since customer service suffered during and post pandemic, it has provided opportunities for those companies that prioritize service. According to Forrester, customer experience quality levels have dropped almost 20% in the past year while consumers have less patience than pre-pandemic (according to Netomi’s State of Customer Service Report). As forward-thinking executives see this opportunity, there will be vast opportunities for growth.

Although companies have struggled to satisfy customers, they must flip the equation to drive growth. According to the Digital-First Customer Experience Report by NICE, 95% of consumers say customer service impacts their brand loyalty, naming easy access, self-service, and professional agents as important factors. Every client has numerous examples that reflect this priority. For example, a customer of a building products manufacturer requested an expedite to satisfy a customer request. Because the manufacturer was willing to prioritize what their key customer needed, that customer looked for opportunities to expand business with them down-the-line. They knew that service was essential during turbulent times, and so proactively decided they wanted to partner with suppliers they could count on.

Backlog Management Processes

Although one of the best ways to improve customer service is to improve planning processes so that the “right” products are in the “right” place at the “right” time (read more about these processes in our article, “Proactive Planning to Grow & Scale“), one of the most important processes to ensure success is a proactive backlog management process.

An effective backlog management process sounds quite simple although no matter the type of business, it can prove to be essential to ensuring high customer service levels and OTIF (on-time-in-full). Backlog management can be as simple as downloading an open order report and “working” the report. In businesses that solely ship from stock, it can be essentially simple, assuming the “right” inventory is in stock. In this situation, the Shipping Department would go down the backlog report and ship orders with the only nuance being if they scheduled trucks or if customers picked up orders.

In most situations, the backlog will include orders that require more than just shipping. Typically, orders can be in multiple statuses. Several that pop to mind include:

  • Customer orders with inventory to ship
  • Customer orders with not enough inventory to ship
  • Customer orders waiting on a replenishment order (transfer order) from another facility
  • Customer orders waiting on a purchase receipt
  • Customer orders scheduled in production
  • Customer orders that have to go through multiple production steps in production
  • Customer orders that have to go through an outside processing step
  • Customer orders that require testing prior to shipment
  • Customer orders waiting on customer approval of drawings
  • Customer orders waiting on production engineering
  • Customer orders waiting on design engineering
  • Customer orders in a pre-engineering status
  • Customer orders that are ready to ship but waiting on the truck to be scheduled or the customer to pick it up
  • Customer orders waiting on international shipping paperwork.
  • Customer orders waiting on payment. This could be payment upfront or a customer on credit hold.
  • Customer orders waiting on quality holds.
  • Customer orders waiting on customer holds.
  • Customer orders waiting on responses from the customer.
  • Customer orders changes.
  • Customer orders that are backordered
  • Customer orders that are past due
  • Customer orders waiting on additional lines, items or orders so that they can ship efficiently
  • Customer orders that are waiting on items that must ship together. For example, in aerospace, there are often right and left parts. Without both, the customer cannot proceed.
  • And the list goes on……

Proactive Backlog Management Processes

Thus, given the number of statuses and situations that can arise during the order fulfillment process, proactively managing backlog includes determining which status orders are in and what it will take to get the order out the door on time. The reason it becomes complex can be due to several factors:

  • The number of order status possibilities
  • The number of people/ departments involved in the process
  • The communication links between the departments
  • System visibility of the order statuses and timeliness of transactions
  • Reporting capabilities to support the backlog management process

Our most successful clients put together a cross-functional process with a daily and weekly cadence with key touchpoints.

Client Success Stories on Backlog Management

A building products manufacturer that was 80/20 make-to-stock with a small segment of make-to-order products struggled with OTIF levels. Thus, instead of constantly looking in the rearview mirror and trying to explain past due, we worked with them to look forward. We developed a view of the backlog report that was due to ship in the next week.

Next, we developed logic to assign the orders due in the next week to specific people or departments. For example, if it was on customer hold, it was assigned to Customer Service. If it was for the Canada location, it was assigned to a different group. If it was a certain product line and didn’t have inventory to cover all orders, it was assigned to the appropriate planner to see if it was scheduled and on track. If it had inventory, it was assigned to Shipping to check on the shipping schedule and to follow up on transportation.

Although reviewed daily, we set a weekly cadence to get together as a cross functional team. We met each Friday to review past due, reasons for past due (which were summarized by category), projected shipments and/or projected past due, reasons for projected past due and action items if there was anything that could be done to get the order done on time. We also discussed recommendations and improvements to the process. By following this backlog management process as well as working on production and replenishment planning improvements, service levels went from 38% to the 90%’s. To hear from our supply chain consulting client directly, listen to our client success story video.

Similarly, in an aerospace manufacturer, past due was climbing, and so we worked with the client to implement a backlog process. In this situation, there were multiple steps to the manufacturing process. Thus, the main focus in managing the backlog report was to trace the progress through the shop. For example, as the item was staged for production, it went into a staging status. As it went through the first machine, it was labeled as step 1 (noting the machine name). Although it was planned for steps 2, 3 and 4 based on standard run rates and queue times, knowing the order started production in step 1 alerted future steps of progress. If materials were short that impacted step 3, the issue was noted and status tracked daily.

By meeting with cross-functional group on a daily basis, service levels were improved from the low 60%’s to the low 90%’s. Once they gained visibility to upcoming work with better clarity, they saw capacity shortfalls. By adding capacity where required, they improved to the high 90%’s. Once ahead of the backlog process, we looked for advanced technology solutions to automate and improve visibility across order statuses to minimize meeting time and to focus on exceptions instead.

The Bottom Line

A secret to success in improving service levels is to roll out a proactive backlog management process. Depending on the complexity of the business, a proactive approach to backlog management could be as simple as prioritizing shipping based on customer due dates or it could involve tracking multiple steps and statuses across multiple departments. Changing from reactive to proactive will rapidly improve customer service levels. If you are interested in talking about implementing a best practice backlog management process tailored to your business needs to improve your customer experience, contact us.

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