The Perfect Order: Right Quantity

The second of Dr. Marien’s 8Rs of his Customer’s Bill of Rights is the Right Quantity. Per his original article, the Right Quantity was described as:

Quantity can have several meanings related to the right number of items per line, the right volume per item (such as pounds or gallons), and the Right Quantity per case or unit of shipment (such as two-quart items per SKU, six SKUs per case and 60 cases per pallet). Some customers are demanding "rainbow" pallets of mixed items with the correct counts for each item so that customers can crossdock these items to their trucks for delivery to a store pallet location for sale.

The right amount of goods delivered for each individual SKU, items per case pack, cases per pallet, pallets per conveyance (trailer or container) all must be negotiated.

It’s not enough to get the product itself right, we have to get the quantity right too. Like getting the product right, getting the quantity right starts before we even have a product.

First, when a product is in development, there needs to be some analysis of the expectation of market demand in terms of how much product will the market require or sustain, at least at the get-go. Are there similar products that your company has that can be used for this analysis? Are there competitive products that can be used as benchmarks? Are there trustworthy industry reports that can be leveraged?

Explainer: Understanding the Right Quantity

Understanding product launch expectations can help to avoid market over-saturation as well as shortages, the latter of which can be the result of intense consumer demand, which can further lead to consumer disappointment backlash if not handled well. I know, we all want to be popular, but it can have its downside too.

Depending upon the business model(s) the seller is engaged in (B2B, B2C, D2C), the Right Quantity needs to be viewed from possibly multiple perspectives: what the consumer is likely to purchase and what the customer (e.g., the retailer) is likely to buy. For example, whether six or eight snack bars per box is the “Right Quantity” will probably depend upon the price point of the sellable unit. Since the physical size of the shipping carton will likely be therefore affected, how many sellable units—whether individual items or inner packs—will fit inside? Minimizing the variability of carton sizes keeps costs down and confusion controlled.

So, first, the Right Quantity needs to be the Right Quantity for the market, the Right Quantity for the customer, and the Right Quantity for the consumer.

Second, like the Right Product, the Right Quantity needs to be the correct quantity throughout the transactional (electronic and physical) supply chain. It’s not enough to get the product correct, you have to get the quantity of the product correct too.

As with the Right Product, getting the quantity correct is an exercise in master data management, more precisely with the item quantity and unit of measure (UOM) data fields and the conversion as the two relate to each other and how the customer orders. Customers must submit their purchase orders in defined measurements associated with the products being ordered and in established measure codes. (For example, if the products are only available in multiples of 12, the customer cannot order 13 items.) If the customer orders “12 EA” or “1 DZN” or “1 CS” the seller’s ERP system must be able to understand if the customer means 12 individual items or that one dozen really means 12 items (likely one case) or one case of 12 items. It may be a nuanced difference for some, but for other companies, the difference can be significant.

Ensuring that the quantity is correct is reinforced by the use of technology such as automatic identification (barcode labeling and scanning, RFID), counting machines, and scale weights. The Right Product and the Right Quantity—notably when fulfilling the order—go together.

Third, the Right Quantity requires ongoing consideration to ensure that the initial quantity expectations assumed for the market at the time of product development are now based upon the analysis of hard data of shipments, customer sales, and returns. Just because you—the vendor—shipped something, that doesn’t necessarily mean that your customer (the retailer) sold it. Retailers generously offer sales data, but I find that not enough vendor companies accept it and put it to practical use. Sales data plus forecast data are very useful in determining whether the retailer is sitting on too much unsold merchandise which could mean reduced future orders and shipments of an item, which in turn should translate to adjusting down raw material purchases and manufacturing commitments. Or, conversely, whether product sales are exceeding expectations and more resources need to be put into manufacturing, and if extra inventory should be readily available.

With an understanding of the second customer right, the Right Quantity, we can move on to the third customer right. Up next: The Right Source.

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