What do small manufacturers do when customers have a change request, one that occurs after the order is placed. It’s these changes that immediately put a “halt” on the progress of the order, and no system is perfect enough to do away with delays caused by customer change requests. Most small manufacturers are familiar with the delays caused by customers who’ve placed an order for a custom-made part, allowed the design to move forward, only to make changes to the design afterwards. Now, these changes could come during the design phase, review phase or right in the middle of production. When confronted with these instances, small manufacturers must stand their ground, account for the added time and charge the customer accordingly. Unfortunately, most don’t!
Managing Customer Change Requests
Most small manufactures are intimidated by these requests. Sometimes it’s because of the urgency of the request, the size of the order and or the fear that the customer will move their business to competitors if they feel the service hasn't been adequate. However, to service a customer doesn’t mean to absorb the costs of these customer change requests. It doesn’t mean to allow these requests to impact production schedules or the order’s gross profit, or even the company’s bottom line. Nor does it mean that small manufacturers should adopt the worst customer service fallacy of all time – the infamous “the customer is always right” approach.
When a customer makes a change request, your company must explain the consequences and costs. If you don’t, then your company is not servicing this customer or any other customer for that matter. In fact, you’re adopting the worst customer service approach and reducing your company’s profit in the process. Granted, changes are sometimes needed, but they come from the customer and must therefore be covered by the customer. In order to address these requests, your company must accept the following three points.
- A Customer’s Change Request is Their Request
As a small manufacturer, your success relies upon your ability to identify and eliminate down time in all its forms. You understand that to reduce cycle times means to increase production throughput. So why would you allow a customer change request to increase down time, increase cycle times and reduce your production throughput without charging the customer? If you can’t get past this, then don’t bother trying to reduce cycle times or improve productivity in manufacturing. In order to understand the impact of these changes, it's best to define your inventory carrying costs on custom-made products.
- Customer Change Requests Impact All Customers
You must accept that a customer change request doesn’t just impact that customer’s order, it impacts all customer orders. Simply put, you can not allow one customer to make these requests at the expense of other customers who don’t. Bottom line, it’s about properly managing the customer’s expectations. Properly managing those expectations is one of the most important aspects of proper customer service. However, the impetus must be on understanding how to manage your customer’s expectations. Managing B2B (business to business) customers is entirely different from managing B2C (business to consumer) expectations. Understand this difference.
- There is No Secret to Handling Change Requests
What does it take to charge customers for their change requests? Well, if you’re looking for a strategy, or a magic approach, there really isn’t one. The difference between those small manufacturers who charge for change requests, and those who don’t, is that those who charge simply make a decision to do so. It’s that simple! They know how important it is to remain competitive and not allow their production to be fractured by poor customer planning. Most importantly, they know that proper customer service doesn’t mean the customer is always right or that they should be allowed to put other customer orders at risk.
Gate Keepers Protect Your Company, Empower Them!
When my small manufacturing customers are confronted with the issue of how to handle change requests, I immediately start with looking at their sales & customer service team. Your company’s sales & customer service team are the gate keepers to keeping your company profitable and to properly handling these customer requests. It is their job to explain the consequences and costs of these requests to the customer. There are two possible outcomes. One is the customer understands the costs and delays but still proceeds and the other is that the customer weighs the costs and impact of the delays and chooses not to change their order.
- Customer understands costs & delays and changes order anyways.
- Customer decides costs & delays are too expensive.
Now, this doesn’t mean your sales team should adopt strong-armed tactics and refuse to accommodate the customer’s needs. Nor does it mean your sales team should try to dissuade their requests. Instead, it means that once your company decides that it won’t cover the costs of these customer change requests, the only logical outcome is that the customer has to pay for them. It is not your responsibility to cover these costs! Your responsibility is to provide your customer with all the information they need to make a decision. Leave it to your customers to weigh the pros & cons and costs of their decision and force them to come back to you.
If you're looking for additional insight into how to manage customer expectations, you can read the following posts.
Customer Management: Dealing With Unrealistic Customer Expectations
The Importance of Managing Your Customer's Expecations
B2B Customer Management: Manage or Exceed Customer Expectations?
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