Successful firms learn from their mistakes if they're careful not to sweep errors under the rug. "Unfortunately, many customers mistakenly think they do us a favor by not reporting problems," says Diane Hathaway, president of Industrial Traffic Consultants (ITC), a $3-million logistics consulting firm that manages freight payments for customers, located in Longwood, Fla. The customer may not want to seem like a complainer, or may view the error as too small to report.

One way to encourage customers to complain is to show them how serious you are about tracking and reducing mistakes. That's why ITC publishes quarterly error rates, by department, on the front page of the customer newsletter which appears every other month. Explanations are provided for negative trends. For example, one department's increase in errors was attributable to a software upgrade. Customers are also sent error ratios for their accounts on a monthly basis.

The high-visibility error reporting tells customers that ITC is concerned with prevention, and its low error rate promotes the firm's image. Reporting mistakes also creates a good-spirited department rivalry, without discouraging ITC's 35 employees from reporting complaints. Some error reports count toward winning cash prizes in the employee suggestion contest, and a continuous-improvement orientation, backed up by profit sharing, produces committed workers.

ITC's high-visibility error tracking system has paid off. In three years, total department errors have decreased from more than 1% to less than 1%, with three departments showing rates below 0.1% in 1996.

Copyright 1997 G+J USA Publishing