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When Your Supplier Fails to Deliver, Literally

The business suffers when a supplier or a service provider fails to deliver. Worse, a customer may be inconvenienced because of this. No matter how sound and effective our inventory management and courier coordination may be, there will really be instances that sh*t happens and there’s nothing much we can do about it except manage customer experience and minimize business impact.

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It happened again.
Courier failed on their next day delivery promise, took them 3 days to deliver. Client expected the item one day after purchase due to an urgent need. Good thing he still accepted the product. The previous customer to suffer such inconvenience was less forgiving, demanding his money back and won’t ship back the items unless he gets the refund.

angry face by _gee_, on Flickr

Another instance, we promised a customer that he’ll get the product the next day, as courier is scheduled to pick up the items today. Motorized pick up never came, and we had to ship the items via a bigger more known courier, at much higher rush rates just to meet the next day delivery promise.

The business suffers when a supplier or a service provider fails to deliver. Worse, a customer may be inconvenienced because of this. No matter how sound and effective our inventory management and courier coordination may be, there will really be instances that sh*t happens and there’s nothing much we can do about it except manage customer experience and minimize business impact.

At this day and age of online stores, door to door delivery is the norm. Sometimes, a purchased item may not arrive on time or worse get lost during shipment. Yes, item may be insured by the courier but damage has been done, to the business and worse to the expectant customer. Changing your service provider might be a good solution in hindsight, but still Juan has to deal with the issues at the moment:

  • an irate client (who did not receive his purchased items within the promised delivery date)
  • a tarnished reputation, your customers might think that maybe you’re one of those dubious online stores, bad publicity and bad word on web; and
  • a dilemma since the purchased item is in “transit limbo” — Juan does not know whether it will still arrive at the destination, albeit late, and whether customer shall still receive it if it arrives at last OR will s/he demand his/her payment back. The latter means you’ll have to ask the customer to send back the good to you, at your extra expense. Lost sale plus lost customer. Can’t do much here but endure the wait.

All these, and perhaps more, just because your service provider did not deliver. Might not be your store’s fault, but in the eyes of the customer, it’s still your fault.

Operational glitches happen to all businesses (even gigantic fast food chains suffer from this) but still it is not an excuse not to minimize these occurrences.

Frontliner Problems

Whenever the MRT bogs down or the ticket turnstiles malfunction (both of which are frequent), passengers become irate and chances are, they vent their anger towards the security guards, who for all we know are outsourced from agencies by the MRT. Generally, we tend to vent our frustration to helpless frontliners (other examples are bank tellers or waiters), whom in actually, may just be following protocol and can do little to fix your concern (Hence the usual movie line is “I’d like to talk to your manager”).

In running a business, we may get the rants and criticisms of unsatisfied customers even if the problem wasn’t completely / really our fault (e.g. like a courier failing to deliver on time, or an expected shipment of inventory / new materials again not arriving on time, or at all).

consult



Manage Customer Expectations

Transparency might lower customer expectations a bit (for the better), so explain and disclose as much as you can. At the onset, tell them that purchased items will be delivered by a third party, within their promised turn-around time (not yours) and that once you hand the item to the courier, your hands are tied and fingers crossed that they deliver as promised.

In case of failure, help out with the tracking and follow up. And tons of apologies to the customer. Of course the customer might wonder, if the service provider is that inefficient, why is this business still partnering with them? Minus pogi points for your business. Some customers, upon knowing the process, might even prefer a different courier, one whom they trust and whom they’re willing to pay the rates for, so your business may also consider this.

Concentration Risk

It might be ideal to have a wide array of options for service providers. Nonetheless, like all risks, a business can only do so much to minimize it but will not be able to eliminate it. Say a business decides to kick out the incompetent service provider in favor of a promising one. Once the business commits to this new provider, its hands are once again tied and fingers are crossed. There will still part wherein all the business can do is trust and pray that the new provider lives up to expectations. If it fails like the previous one, then the business still suffers. When we commit, be ready to get hurt. As John Legend says, “love hurts sometimes if you do it right.”

Maybe a better option is to have another option, a plan B. Or C. It goes without saying that this may be a more expensive option, otherwise it would have been option A right? Like a back up courier, or an alternative immediate source of supplies in case delivery of raw materials suffer a delay. Then include a provision for these costs in pricing your product, so that every successful sale and delivery pays for the expense of once in a while unfortunate incidents.

Where,

Provision = (Chances of Failure Happening) x (Incremental Cost for resorting to Plan B)

For example, usual delivery costs P80 while plan B delivery is PHP140. Say there’s a 20% chance that Plan A courier will fail which also means plan B will be activated 20% of the time. Incremental cost of PHP60 will be incurred 20% of the time, so you hide additional PHP12 in your costs and pricing.

Doing it this way is much better than say asking the customer for additional payment of PHP60 since you had to resort to a more expensive courier or raw materials, even if it was not the customer’s fault or express wish. This is bad customer management.

Then look for a new service provider and express your disappointment to the previous one. After all, you’re also a customer to them, a lost customer that is.

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Photos:
Angry Face by  _gee_ 

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About Geri (359 Articles)
Founder and main author. Husband, used-to-be-breadwinner, God-made multi-millionaire, employee, financial planner and adviser, investor, stocks trader, entrepreneur, agri-preneur, book author. Firm believer that all Pinoys deserve a richer life. Not a guru, but a forever student of the investments world, a work-in-progress.

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