Optimization is not the only algorithmic tool that supply chain companies need to solve their planning and decision-making problems.More May 2, 2019
Optimization is all around: Replacing a dishwasher
Author: Alfred den Besten
Every once in a while home appliances break down, if you’re lucky they can be repaired. If not, they need to be replaced. Recently – just my luck – my dishwasher broke down and needed to be replaced. Although my parents until recently had no dishwasher, I’m of the “dishwasher generation” – and thus the need for speed in urgently finding a replacement unit.
The first step, of course, was to go online and conduct a search to find the best dishwasher, at the best price, with installation service (so the machine could be delivered and installed “yesterday”). Silly me, I made the “best price” variable as the most important factor in my decision. One might wonder: Why didn’t you combine all the decision variables and make a balanced, optimized decision? Well, hindsight is 20/20, but in that moment, I made the best possible decision that I could – putting much more weight on one variable (best price) and making my decision on which dishwasher to buy based on that. In retrospect, I should have given the other decision variables (such as quality and service) more weight and made a truly optimized purchasing decision.
Supply chain breakdown
But this blog is not only about my problem with optimized decision making, but also about bigger supply chain issues – namely, sub-par delivery performance and customer service. So what happened next after I placed the order online?
It seemed that the dishwasher I ordered online was, at almost the same time, ordered by at least 10 other customers. Unfortunately, the supply chain solution couldn’t handle a “good marketing action” that resulted in a significant spike in order volumes in a short timeframe, and the logistics process started to collapse.
A nice extra “feature” of the dishwasher I ordered was the fact that I could also order installation service at a reasonable price in the same “shopping basket”. Again, as a result of a surge in demand, the installation agency was fully booked for the next few weeks. Synchronization of sales and installation services was far from optimal.
To make a long story short, here’s a summary of the events that followed:
- I ordered the dishwasher and installation services online, with the expectation that the installation company would call me within one day to agree on an installation date and time.
- After three days of constantly calling, I found out that the dishwasher might not be in stock and a new unit might be on its way to the supplier’s warehouse.
- The next day, the installation company called me and left a message telling me that they already had the dishwasher for the past three days at their office, but were waiting for the green light to go ahead and make an appointment.
- After one week, the installation guy showed up at my house and the dishwasher was finally installed. But after running a test, we realized that the machine seemed to be “dead on arrival” and wasn’t working at all. So the installation guy took the faulty machine away, and promised me that he would exchange it for a new unit and would call me to make a new installation appointment.
- After one week of silence and lots of calls with the supplier, I found out that they seemed to have lost the broken machine that I had returned. Before placing an order for a new machine, they had to locate the broken machine – which they were unable to do. (However, I had already received an email containing a photo of the broken machine with the message “dishwasher returned to warehouse, new dishwasher ordered”.
- For the next two weeks, different messages kept coming in, telling me that the supplier was “Still waiting for the return machine”, or that the “new machine is on its way” and also “this machine is not available”.
- Finally, after more than four weeks of waiting for the new dishwasher, I gave up. I managed to get a refund for the dishwasher I had purchased (but was unable to get a refund for the installation services charges). Then I ordered a new dishwasher with another company – which was successfully delivered and installed the next day.
The bottom line
Looking back on this somewhat painful customer experience, I realize that it was primarily the result of the complete lack of integration and synchronization in the supply chain of the dishwasher supplier – a very well-known German home appliances and technology retailer.
My non-optimized purchasing decisions did perhaps play a part in setting this supply chain disaster in motion – but I am not to blame. What did I do wrong? Nothing, I’m a customer – so I’m always right! And if you as a supplier and/or retailer don’t agree with me and don’t deliver according to my expectations, that’s your problem – as I’ll just take my business elsewhere. You need to fix your supply chain, make it seamless and align your sales, marketing, and services into an “one-stop-shop-delivery-and service” experience for your customers. Only then will you have an optimized supply chain, and be capable of delivering the best products and services for customers and driving the best results for your shareholders.