Cleaning up the back office.

AuthorBielenberg, Christopher A.
PositionCorporate Restructuring

In todayj's slow-growth markets, characterized by a high degree of parity in technology and price among competing products and services, customer service is fast becoming a company's key competitive advantage and point of differentiation. Increasingly, corporate management is focusing on customer service as a cost-effective means of attracting and retaining customers without having to yield on price or product quality.

Yet, delivering superior service can pose a formidable challenge at a time when businesses are expected to cut back on spending and make do with less.

Traditionally, management has counted on the front office to deliver customer service. An almost knee-jerk response to the need for better service has been to expand the sales force, further invest in its training, and equip it with state-of-the-art technology

Through such costl y measures, companies hoped to produce a noticeable improvement in their overall responsiveness to customer demands. But clearly, in this day and age of corporate downsizing, such initiatives can run counter to corporate objectives to lower working capital levels and reduce overhead.

More recently, a growing number of companies in the U.S. and Europe are finding ways to improve customer service right in their own back offices. By improving the quality of their administrative functions, companies can substantially increase their level of service to customers at minimal expense.

At the REL Consultancy Group, our experience in working capital management convicned us of the correlation between administrative quality and customer service. In examining a company's working capital performance, we had to trace inconsistencies and discrepancies in working capital management from cause to effect. In the process, we learned a lot about organizational efficiency.

For one, we found that most problems created by organizational inefficiency, regardless of origin, eventually surfaced in the back office. So when we took a closer look at what was going on in the back office, we weren't too surprised to find that most back office functions were inadeaquately organized to deal with mistakes made upstream. As a result, many of these errors were slipping through the back office net and being passed onto the customer in the form of incorrect invoices and inaccurate delivery of goods.

To make matters worse, the very administrative procedures and practices designed to handle these problems actually added to overall inefficiency. they were the source of additional mistakes which, for the most part, resulted in...

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