Order management is where the profit margin lies.
As companies continue to explore the possibility of personalized production and product customization, they inevitably spend an inordinate amount of time assessing the pretty front-end, consumer-facing software. And let’s face it: all those rotating 3D renderings of your product are really cool to look at. But that’s not where leaders should be investing their time. It’s the order management system in the back-end, and the integration with the sexy front-end, that makes a personalization program successful. . . or dooms it to failure.
Let’s look at online food delivery from a restaurant in New York as a way to demonstrate how these two systems have to operate for success, and the frustrations many brands face after they invest in 3D digitization. After all, restaurants are very much in the product personalization business—they have a standard menu, of course, but you can always swap out carrots for broccoli in your Triple Buddha Delight, or make your mapo tofu extra spicy.
The restaurant has invested heavily in the front-end software. Its online menu has beautiful, mouth-watering close-up photos of the food.
Now, let’s imagine what an order would look like without the right kind of order management system to support the customer requests:
- A customer orders Kung Pao chicken, and requests asparagus instead of green bell peppers.
- The order gets printed out in the front of the restaurant. The manager doesn’t bring the order back to the kitchen—after all, why should she walk back there with only one order for $12? Instead, she holds onto it until she can collect a few more orders.
- After 15 minutes, she has a stack of orders that she brings back to the kitchen.
- The kitchen sorts through the pile of orders. Unfortunately, there’s only one order for Kung Pao chicken. All the other orders are for the restaurant’s specialty, Triple Buddha Delight.
- The chef decides that it doesn’t make sense to make only one chicken dish (different ingredients, different woks, different sauces), so he starts work on the orders for Triple Buddha Delight. The Kung Pao chicken goes to the back of the pile, even though it was first in the queue. It another 30 minutes until the chef gets a few more chicken orders before he starts cooking.
- It takes the chef 20 minutes to cook all the chicken dishes. Even though our customer’s Kung Pao order was first, it doesn’t get brought out of the kitchen until all the other chicken dishes are done.
- The manager sees that the order is for an area of the city where they don’t have a lot of customers. She wants to keep delivery costs down, so she waits until she has more orders for that neighborhood.
- After 30 minutes, she has enough orders for that area. She summons a bike messenger. Due to geography, the Kung Pao chicken will be the last delivery on the route. It takes the delivery guy 30 minutes to drop it off.
- The customer finally receives the Kung Pao chicken more than two hours after ordering.
Obviously, this process is absurd—a restaurant would go out of business if it operated this way. Instead, restaurants produce in one-piece flow: as soon as the order arrives, it’s brought to the kitchen, it’s cooked in the order it arrived, and it goes out the door as soon as it’s ready.
And yet, this is the situation for the customization programs at many brands. There’s a beautiful online menu, but the order management software and back-end processes can’t handle single-piece orders. These legacy systems are just not built for a batch size of one—they’re built for mass production runs, with manual entry for thousands of orders. They can’t automate an order size of one, forcing heavily manual intervention for customer requests. As a result, a customer’s order gets pushed to the back of the production queue; or has to wait for a batch of other custom orders; or is stockpiled until the factory has a full pallet of product; or forced to wait for countless other reasons. One footwear company we worked with had a production time of 13 minutes, but the lead time—time from customer order to delivery—was six weeks. Needless to say, the program was a flop.
There’s no question that a product personalization program must be an integral part of any brand’s business going forward. Customers increasingly demand rare or unique products, not the mass produced goods of the past. As you explore the opportunities, don’t get seduced by the sexy 3D renderings. The back-end order management is where the money is.
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