2.2 Opening Story: The Gorilla on the Phone

No sooner had Emily sat down to review the logistics team’s five-year technology plan, than she heard an agitated knock at her door. Doug Hassle, Olympus’ North America Marketing VP, stood there—and he wasn’t smiling. Emily smiled and said, “Good morning Doug. Come in.” As Doug sat down, he said, “Deb Gale, GMM (General Merchandising Manager)A retail position equivalent to a senior vice president. over at Gorilla Inc., just called. Your team missed a delivery windowA designated time for deliveries to be made. Some companies require deliveries within a 15-minute “delivery window.” at Gorilla’s Chicago cross dock facilityA warehouse where materials from multiple suppliers are unloaded, sorted, and shipped to different destinations. Materials flow through the facility with little or no storage. Cross docking improves shipping efficiencies, giving the ability to ship in full truckload quantities—both inbound and outbound. . Gorilla is our largest, most important account. I guess that little detail gives Deb license to tee off on me regarding our recent service failures. She was mad as a hornet.”. Gorilla is our largest, most important account. I guess that little detail gives Deb license to tee off on me regarding our recent service failures. She was mad as a hornet.”

“Doug, it sounds like you’re still feeling the sting of her bite,” Emily paused. After a moment of uncomfortable silence, she said, “Let’s find out what happened,” as she picked up her phone. Emily dialed David Amado, a senior transportation manager, to ascertain the truck’s status. David quickly shared the requested information, saying, “The shipment left our DC on time. Our tracking system says the truck should arrive in the next 30 minutes. I’ll text you when it is docked.” David hesitated, then professed disbelief, “I don’t get it. How could Deb be so upset? Our order fulfillment is best in class. On-time delivery and complete orders are better than ever.”

Confident David would handle the crisis, Emily hung up. Doug, however, wasn’t pacified, and growled, “Emily, you guys don’t seem to grasp the situation. You just dropped the ball with our top customer!” Inwardly, Emily fumed. She trusted David—and the rest of her team. “Well, let’s dig a little more deeply.” Emily picked up the phone again, this time calling Paul Osterhaus, VP of Information Technology, to verify Olympus’ delivery performance. Paul pulled up the key stats, saying, “You guys are in the zone. Over the past year, on-time delivery is up from 95 to 99%. Your shipping 97% complete orders. It doesn’t get much better than that!” Paul added, “Service levels like these should help you justify those new IT investments.”

The “good news” seemed to rankle Doug. He responded, “Those stats don’t change the fact that Deb Gale just chewed me out. We’re clearly not delivering to Gorilla’s expectations. The charge backsA penalty or fee a customer charges for supplier non-compliance (e.g., damaged product; late delivery, improper packaging, errors in documentation). for delivery failures hit our margins, but the real point is our poor performance hurts our relationships. We can’t afford for Gorilla to reduce the number of facingsThe space allotted to a product on a retailer’s shelf. they allot us. And if we are dropping the ball with Gorilla, we are likely failing other customers as well. They benchmark against Gorilla’s expectations and want the same service levels, which are rising. Deb warned me that Gorilla will soon tighten its delivery time windows and ask us to take on more value-added services.” As Doug stood to leave, he added, “By the way, Gorilla is lengthening payment terms—effectively paying us less for what we do.” Emily acknowledged Doug’s concern, concluding, “You’re right, we need to get better. Our key accounts are more demanding than ever. I don’t foresee a time when the bar will stop going up.”

Unsettled by Doug’s visit, Emily called David. After a quick greeting, Emily said, “David, you’re right in noting that we’ve improved our logistics customer service over the past 18 months, but we dropped the ball today—and not just any ball. If we are going to drop a ball, it can’t belong to Gorilla. My takeaway from Doug’s visit is simple: We need to rethink our service strategy. Not all customers are created equal; yet, we still measure and manage to averages. Across-the-board excellence is great, but our one-size-fits-all approach is flawed. The real question is: What are we going to do about it? What service experience should we promise? What infrastructure do we need to deliver to promise? This is a big deal. I don’t want Doug knocking angrily at my door again. David, put a team together and get this figured out.”

1. Why should logistics managers worry about customer service?

2. Keeping your answer from Question 1 in mind, what should a world-class logistics customer service system be able to deliver?

3. If you were David, how would you make sure that you don’t disappoint Gorilla in the future?