Customer Service is a deceiving job title.  Many buyers and Customer Service people do their jobs on the premise that the ‘customer is always right’ when in fact the customer is rarely right. 

Most customers work on the assumption that their job at the supplier’s is the most important one in the world.  Ideally customers want perfect parts at unreasonably low prices with the supplier maintaining a high level of finished goods inventory that the customer is not held liable to purchase.  But in the real world quality is only ‘sufficient’.  Unless there is a specific clause in the purchase order the molder keeps a minimum of authorized inventory because this is only a bet (not a guarantee) that the customer will purchase it.

The problem here is the conflict between a reasonable request, profit, and how to ‘service’ a customer.

Let’s look at some examples:  The molder has quoted parts at $/1000 pieces based on a pre-negotiated retained in-house finished goods inventory that is built up to some maximum level and shipments are made until it reaches some minimum that triggers a rebuild.

Scenario #1 – The BIG order: a huge order arrives at the customer.  He calls his supplier’s customer service and orders (for immediate shipment) more parts than are in the retained furnished goods inventory. He wants the parts ASAP and not a split shipment with some being shipped immediately and the balance shipped when the job can be scheduled into production.

The expectation: The customer expects a Heaven and Earth move from the molder to juggle schedules, expedite production, and meet his requirements (all this at no increased in cost).

What happens: Unfortunately Customer Service usually complies.  The net result being a thoroughly scrambled production schedule, parts produced on an overtime basis with no profit to show for it.

What should happen: The entire retained inventory will be shipped at the negotiated pricing.  However the balance will be produced (if possible) and shipped at an expedited cost if it is truly needed ASAP or shipped at the original pricing when it comes out as a scheduled production run.  It’s the customer’s choice.
Scenario #2 The KanBan revision The negotiated price was in $/1000 in boxes of 250 units/box.  The customer wants to implement a better KanBan :program and wants 750 parts shipped every other day.

The expectation Since this all works out to a $/1000 deal anyway, there should be no increase in pricing.

What happens Usually there is no increase in the costing.

What should happen Each shipment requires paperwork.  It doesn’t matter if it is one part or a million; the administrative costs are the same to generate the shipper, the invoice as well as the record keeping for each shipment.  Also, the deal was $/1000 pieces not fractional $/1000 pieces.  A request like this scrambles the lot shipping system for the molder.  In this light the cost should be renegotiated to accommodate both the split shipment mentality and the increased administrative costs.

Scenario #3  The work balancing revision: Some bookie at the customer decided under his KanBan analysis it would be better if they ordered and received products in unit measures of 100 and not 250 pieces per box.

The expectation Parts is parts! It shouldn’t make no difference no-how!
What happens:  Usually the request is sent to the warehouse where they break open the packaging, re-package in the desired amount and new jobs are put into different sized boxes.

What should happen: Boxes/containers aren’t cheap.  Cutting the part count down increases the cost per part per box.  It also scrambles the boxes per skid count, the stack pattern on a skid, and how the parts are stored in the warehouse.  Not to mention the boxes (you buy by the bundle of 25 or 50) that you no longer have any use for and the new boxes you’ll have to order.  This also accompanies the mess that has been caused in the production control system whose unit count of final inventory is boxes and not pieces.  A simple request like this has a major administrative cost as well as an ongoing cost-of-packaging cost.

Scenario #4  The ‘Obsolete’ part trick: An engineering change is processed, invalidating all the parts in the JIT warehouse inventory.

The expectation: Since the parts were never truly ordered, the customer isn’t liable to pay for them.  They should be scrapped and replaced.

What happens: Usually the request is honored with a little screaming and whining. If whining doesn’t work it is a common trick for the customer to pull a ‘quality audit’ and scrap everything on the grounds of poor quality.

What should happen: Somebody didn’t do their homework.  In the initial agreement this should have been anticipated so that if the standing unpurchased inventory is declared invalid because of a customer caused engineering change, the molder will be compensated for his loss.

Scenario #5  Busting your chops:
5.1 Customer service is called into the customer for a meeting to ‘review all the pricing’ in anticipation of renewing the next year’s master purchase orders.
5.2 Customer service is called into for a face-to-face meeting to explain the cost increases due to resin prices
5.3 Customer service is called into for a face-to-face meeting for an ‘annual performance review’ or to receive (have inflicted on them) a ‘cost reduction’ program.

The expectation: The customer expects Customer Service to drop everything, pack up a toothbrush etc. and hop on an airplane at a moment’s notice to attend a meeting and ‘explain their actions.

What happens: In most cases the expectation is not only met, but the customer service folks take the buyer and anyone else within hearing distance out to dinner!

What should happen.
5.1  There is NO REVIEW of pricing.  You were the low bidder those are your current (non-negotiable) prices. If you are going to be cross-quoted it will happen whether you show up or not.
5.2  Resin price increases are pass-through costs.  The pricing on materials is public data found in trade magazines or on the Internet.  Since the customer specified the material, if anybody is going to negotiate a new price it should be them, not you.
5.3  Performance reviews can be mailed.  If it’s poor you can’t explain their data any differently regardless of the truth.  Having a TASK or COST REDUCTION program shoved down your throat without the customer funding the productivity improvements is arrogant and shows poor manners and a bad upbringing on their part.

All of these actions are merely a rookie-sandbox-power-game to see if you’ll spend your money and time to ‘dance to his tune’.  Do you do these things to your local grocer, the owner of your favorite restaurant; the phone/utility company or the credit card companies?  If you did, you’d be less than politely asked to no longer to do business with them, and laughed out of their offices.

Customer service is a profession like anything else.  Its purpose on the supplier’s side of the equation is to be the interface between the customer and the suppliers, to ‘play’ according to a set of pre-agreed rules and make sure things go smoothly.  Any time the customer changes the rules, he cannot selectively change one side of this equation without the consequence of having the other side change to balance it.

Customer Service is not in the business of Freebies.  Both the customer and supplier have to set a system in place that is flexible enough to adapt to the inevitable changes that are market driven.  If they don’t, it must be understood that everything has to be renegotiated on a case by case basis.

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This article is virtual. You can read it and stop doing some very expensive money losing favors asked by your customer.  Or you can read it and ‘soldier on’ continuing to be your customer’s lap dog.  OR you can send it up the food chain to management with a few notes penciled in the margins on how much each of these stunts is costing you and hope the Ivory Tower Troops will have a quiet chat with the customer’s director of purchasing.  If the quite chat doesn’t work, they might instruct Customer Service to say “NO!” like a parent would do to a petulant child and back them up when the customer complains.  OR you can read it, figure you can’t do anything about it, shred it and use the shavings to line the cages of the Office Gerbils (middle management).

Your choice.

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