In Part I, we talked about the customers who are costing you more than they’re worth. This week, we’ll talk about a completely different area of your business. Your next opportunity is to get the sludge out. Remember how the Tin Man rusted in the Wizard of Oz? It’s time to Oil your Tin Man! Every business, no matter how well managed, attracts sludge over time.

Two sure signs of sludge in your system:

1. Your customer service people are busier than ever… even though you produce good products and you’ve invested in quality initiatives such as Lean.
2. Customer service issues keep landing on your desk after being escalated up through the system.

The 5 Categories of Sludge in Your Systems

Just 5 categories of issues account for 80% of your unnecessary costs to serve, and when you strip those costs out of your business, you’re likely to see a significant impact on your bottom line. You can find out more about how to identify and resolve each of the categories below in this complimentary 3-part video learning series.

____ Reliability
____ Assurance
____ Tangibles
____ Empathy
____ Responsiveness

The Key Cause of Sludge

In two words: good intentions. We’ve all been trained to measure customer service staff on the basis of efficiency – time on call and so on. Unfortunately, that often means that in our haste to “get rid of” the problem, we actually perpetuate the problem. We bandaid it with a quick fix, we soothe the customer with (often costly) “make it right” incentives or discounts, and we move on to the next call.

A client of mine had huge costs due to unsightly scratches in his finished product. Often, the product was scrapped or re-worked internally – huge costs! Often, it slipped through and angry customers called the CEO, looking for an immediate fix and compensation – huge costs! When we went through a process of identifying the true cause of all this mayhem, it turned out to be worn padding on the metal shelves the product was being transported on from one stage of the manufacturing process to the next. Yes, a few bucks of worn-out padding had put over a million dollars of cost into his system!

Your shortcut to results: Solve it once and for good.

For now, take a shortcut. Simply ask your customer service team what problem is landing on their desks over and over again… then take the time to get to the bottom of it and solve it for good. Your unnecessary costs will go down, your bottom line will go up. There are unnecessary costs to serve all over your operation – you need a systematic process to root them out and solve them for good. Let me know if I can help.

In the meantime – what’s the craziest equivalent to the ‘worn padding’ example you’ve ever found in your own business that cost you a fortune you need never have spent?