Order errors: 3 hidden costs that will erode manufacturing margins.

In manufacturing costs are associated with product development, production, and distribution with any number of sub categories and product specific cost categories within all of these.

Each and all of these costs are a core part of the manufacturing process and are known and forecastable.

What is less apparent and often hidden is the cost implications of supplying the wrong goods to customers and associated rectification.

Tying up distribution channels to send erroneous orders out is inefficient and represents a controllable and preventable cost. These distribution channels will also have sub categories of costs including transport, haulage, fuel and staffing - all of which will be consumed by errors in customer orders.

It is a hard number to quantify however it is clear that sending customers orders that contain errors will cost in terms of their satisfaction and your reputation. The more this happens this can lead to the worst possible outcomes for a business - loss of a customer.

Bear in mind that this isn't quantified as last quarter or even last financial year costs, but rather customer Lifetime Value - the sales revenue anticipated to originate and be sourced from the going forward. When this is taken into consideration against the knowledge that there are simple and easy to implement methods to insure against this kind of customer loss impact, perhaps manufacturers should do all and everything possible to protect the relationship with their active and profitable customers.

Another highly probable cost that will be experienced by a manufacturer dispatching goods in error will be the putting right and rectification of the error and impact to the requesting customer. This cost will essentially be in the form of some kind of discount or compensatory element to trade off financial saving against customer dissatisfaction. In addition, rectification includes absorbing all logistical costs in retrieving erroneous orders and replacing the product with what the customer truly needs or requested.

Visual configuration presents a real control to avoidable order errors by allowing for fully visual assembly of complex goods combinations by end customers taking into account visual recognition, colour, shape and even size representations together with order compatibility controls, ensuring the resulting orders are accurate, viable and as expected.

Providing Total Configurator’s visual configuration and guided selling for your end customers provides a true eCommerce feel for B2B businesses engaging with your products, safe in the knowledge that the product order lines will be accurately assembled and will result in actionable requests for quotation that can be followed up and processed by Sales Delivery Teams and sales distribution agents.

For more information on Total Configurator and how it can help prevent hidden costs in your manufacturing business, we invite you to book a demo of our platform.