Topic $-$ The Perfect Order $($Background from Bowersox$)$

The ultimate in logistics service is to do everything right and to do it right the first time. It is not sufficient to deliver a complete order but to deliver it late. Nor is it sufficient to deliver a complete order on time but to have an incorrect invoice or to incur product damage during handling and transportation. In the past, most logistics managers evaluated customer service performance in terms of several independent measures: Fill rates were evaluated against a standard for fill; on$-$time delivery was evaluated in terms of a percentage of deliveries made on time relative to a standard; damage rates were evaluated relative to a standard for damage; etc. When each of these separate measures was acceptable relative to standard, overall service performance was considered acceptable.

Recently, however, logistics and supply chain executives have begun to focus attention on zero$-$defect or six$-$sigma performance. As an extension of total quality management $($TQM$)$ efforts within organizations, logistics processes have been subjected to the same scrutiny as manufacturing and other processes in the firm. It was realized that if standards are established independently for customer service components, even if performance met standard on each independent measure, a substantial number of customers may have order$-$related failures. For example, if orders shipped complete, average on$-$time delivery, average damage$-$free delivery, and average correct documentation are each $97$ percent, the probability that any order will be delivered with no defects is approximately $88\mathrm{.}5$ percent. This is so because the potential occurrence of any one failure combined with any other failure is $\mathrm{.}97\mathrm{.}97\mathrm{.}97\mathrm{.}97.$ The converse of this, of course, is that some type of problem will exist on as much as $11\mathrm{.}5$ percent of all orders.