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Reducing Operational Risk

author headshot Written By: Ben Smith (Premium Member, Athletic Greens)
Category: Operations
Many businesses are facing significant challenges right now with the COVID-19 pandemic, some are having to navigate a rapid decline in demand and others a surge in demand for their products or services. In this article, we’re only going to focus on the latter, as it can also help in preparing for exponential growth.

Managing Customer Experience (and expectation)

 

First things first – no matter what the situation, the ability to communicate with customers and manage expectations is paramount. In a surge of volume, being able to react to this is often challenging. By using the right tools and internal process, you can increase your capacity to handle incoming customer communication quickly and minimize any customer experience disruptions.

My favorite tools for this:

  • Intercom or Gladly – cloud-based customer communication management platforms
  • Aircall – cloud and app-based phone platform
  • Asana – project management and team collaboration tool

These tools are available wherever you are!  They are cloud-based and can be used anywhere, on any device that has a connection to the internet.

However, utilizing tools like the above is only as good as the training process you have in place to deal with any surges. What I have experienced to be successful is to have a number of cross-team members trained in these tools and occasionally rostered across your customer service team (i.e. at least one day per month).  This ensures that if the time comes where a quick reaction is required to manage increased demand, experienced team members with access to the tools are available, ensuring your customer experience is not negatively impacted.

This is also a great onboarding process for any new team member, as seeing and hearing what your customers are communicating is critical to absolutely any role, in every business. Having your business set up with these tools also makes it significantly easier to transfer to a working from home environment. In critical support operations, it is a good idea to ensure your team members have access to a 4G or LTE pocket wi-fi or can connect to their phone for internet access should there be an outage at their home. 

Scale Customer Service by Reducing Traffic

 The easiest way to scale existing customer service operations is to reduce the amount of contact request traffic coming in. Help your customers help themselves, but always be available for them when they need it.

Ensure you have access to, and properly provide actionable insights from your customer service data – what are the most commonly asked questions and how can you address the root cause as to why your customers are frequently asking this.

  • Is your webpage lacking product or delivery information?
  • Is your fulfillment/delivery performing as expected?
  • Are you using tools to proactively update your customers if delays occur?

Compile the feedback from your customer service team and tools to build out your frequently asked question page. Using chat tools that suggest FAQ articles prior to connecting with a team member will free up your customer service associate’s time for more pressing customer needs.

Managing Supply Chain Risk

 

Supply chains are complex, with many moving parts and vendors involved. Your operational risk could come from many different scenarios, from a shortage of component supply to upside risk where you may rapidly outgrow your supplier’s capacity.

We won’t be able to cover all aspects of how you can reduce risk across your supply chain in this article, but we’ll touch on a few points that can certainly help. We will go into more detail on this in upcoming articles.

Invest time in understanding your supply chain

 Supply chains run deep! Do you know who supplies your suppliers? What are your manufacturer and fulfillment center’s capacities? What other factors that may affect these capacities?

Understanding the weakest link in your supply chain is critical to managing risk. You should request that your vendors regularly provide you with production capacity reports. If your vendor relies on other suppliers for components or parts, ensure that the capacity reports and take into account any supply constraints within their own supply chain. Just because your vendor has the capacity to produce a million units a month on their manufacturing lines, does not mean that their suppliers can deliver a million units of components a month. Knowing the weakest link as far down the supply chain helps you to be prepared for any exponential growth.

A production capacity report should include at least the following items:

 

MetricDefinition
Total Capacity #

 

Actual full capacity, assuming 100% productivity. This is unlikely to be achieved

 

Efficiency Factor %

 

Accounting for ramp up/downtime, breaks, sickness, etc. In a well-run but risk-averse environment, a 75% efficiency factor is suggested

 

Current Operating %

 

This should represent the average daily run rate, with the Efficiency Factor applied against the Total Capacity #

 

[Your Business] % of Operating Capacity

 

Assuming that your supplier has less and more complex clients than you, it is important to know how much operating capacity is made up of your business.

 

 

This is by no means an all-inclusive set of metrics. The information obtained from your partners should indicate to you or your provider the parameters of supply capacity limitations. Ideally, this is shared no less frequently than monthly.

There are a number of strategies to protect you against supply shortages and these likely require coordination with supply chain partners. One that I have used in the past is providing manufacturing exclusivity to a partner and in return requiring that they hold 60-90 days of a finished product (at their own cost) on hand (preferably an offsite location). This product is available to be called on in the event of a disaster or a sudden increase in demand. A rotational plan for this inventory may be required if you have a shelf life or season SKU change constraints. If considering this, it is extremely important to ensure that your exclusivity agreement provides a number of clauses to break exclusivity. Examples of these clauses may be in the event that partners are not able to meet demand or experience other issues such as quality.

In summary, preparing a business for operational risk should be multi-faceted and approached from as many angles as possible. These strategies can include but are not limited to cross-training your team; identifying and addressing weaknesses in your supply chain, and ensuring you have adaptive tools at your disposal.


Written by Ben Smith
Premium Member, Athletic Greens
https://athleticgreens.com/us

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