Capitalizing on exceptions

-- Industrial Distribution, 4/1/2001

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Draw your e-business roadmap
Profile: Business savvy at Updike Supply
How search engines can help your firm
  
By Larry Cinpinski

Larry Cinpinski, shown at left, is the president and COO of irista, Inc., a subsidiary of HK Systems.

Capitalizing on exceptions.

Sounds interesting, but what does it mean?

Most businesses regularly run into events that could have or should have been done in the line of their serving a customer. Often times, however, because these exceptions fall outside the realm of the current business processes they create a perception of failure in the eyes of the customer. It may not take a genius to recognize that customer complaints may indicate a missed or poorly understood process somewhere in your supply chain, but what do you do about it?

Most businesses discover their missed opportunities for meeting a real or perceived need when a client reports a failure of service or product. This irritates clients and their customers and consumes valuable resources to correct a problem. Exceptions can be managed with significantly less cost if a business examines them as part of the business process and looks for ways to address them profitably while servicing the customer.

In the end, many businesses find that the 80/20 rule applies to exceptions (twenty percent of problems will consume eighty percent of your time). Exception management, as part of the ongoing business process, is an opportunity to find new revenue opportunities while addressing customer needs.

Exceptions are only a problem until you figure out a method to capitalize on them. The difficulty lies in finding them before your customers do! If you can define exactly what it is you want or need to accomplish to service your customers, create an achievable plan, and then execute that plan you’ll create a sustainable and self -improving business process. This doesn’t suggest that all exceptions are profitable, but it does suggest that managing exceptions provides a revenue opportunity that your customers perceive as exceptional service.

Admittedly, this is easier said than done, but there are many software tools designed to facilitate this by allowing businesses to track and measure the movement of goods and information through their internal processes.

Exceptions are only a problem until you figure out a method to capitalize on them.

Exception management in a business process is not new. The efforts of the past two decades to reconcile the often inflexible logic of many early computerized business systems with the customer service driven expansion of the marketplace has created serious conflicts of purpose and abilities in many firms. Software systems that record exceptions allow savvy users to recognize the failures in service or processes and fix them. The result is exceptions that become revenue opportunities instead of being cost center burdens by reducing the cost of rework and providing more fully defined business procedures, which, in turn, provides a competitive edge.

No one likes to hear what went wrong, let alone keep track of it. That is why this idea of capitalizing on exceptions is somewhat counter-intuitive. It is easy to think that knowing why a certain process failure occurs is too difficult to capture without excessively expensive or intrusive discipline. There’s a valid concern that capturing this information may interfere with the existing business flow. Recording the data is not enough; the people involved still have to address the client need that exposed the exception in the first place and it may seem easier to tell a customer you can’t do something than it is to address to exception. In today’s market, however, it’s rapidly becoming unavoidable as customers become more sophisticated and demanding in their expectations. Choosing a correct software tool to facilitate exception management allows you to gain additional revenue while meeting customer requirements. Best of all, your customers will be delighted with the service you provide.