What You Have To Work On
Hill, Principal - Hadley Associates, Inc.
are confident and focused on what they do day-to-day. Generally
speaking, they excel in understanding their product and manufacturing
capabilities. It is not uncommon, however, to observe they
are so focused that they are isolated. This article is meant
to "push-the-envelope" and shares a very simple
way of getting a reality check. In the process, you will learn
"what you have to work on" to improve.
years ago, a manufacturer held a strategic planning review.
The $15mm, family-owned business was the dominate leader in
their market segment. If you defined the market to include
all channels-of-distribution, they were the leader, but not
by a wide margin.
year, a fire destroyed their primary plant causing them to
rethink their manufacturing strategy. They ended up consolidating
operations from three plants into one. This was an important
strategic move that a disaster forced them to make. With the
newfound cash flow, they acquired a competitor who was well
positioned in an emerging channel-of-distribution.
six-months of integrating operations, the company had learned
some eye-opening revelations:
acquired company's quality was much better than their product's
competitor's short line was positioned as a strength with
fill-rate and on-time delivers were significantly better
processes were streamlined and much simpler because of size
was higher than perceived because of the manufacturing model
perception of category management was superior
lesson-learned was compelling. To their surprise, being the
market leader did not mean they were the best. The smaller
competitor had learned ways of surviving among the dominating
companies by doing simple things very well. They were forced
to think of clever ways of accomplishing results without spending
was that the acquired operation was much better than the parent
company had expected, or even imagined. This was not easy
to accept. In fact, because of pride, it took them some time
to come to this conclusion. The good news is that they saw
the reality, accepted it and integrated the best practices.
This became a good acquisition, well beyond buying entry into
a new business segment.
to Develop Benchmarks
not have to acquire a company to learn the right lessons.
An excellent reality check can come from a market-based performance
review. By doing it over a number of years, you can even observe
patterns of change.
appropriate questions to ask? Each industry will be slightly
different, but an excellent start is with these broad categories
buying factors: i.e.: Selection, support, relationship,
product attributes: i.e.: Product features, specifications,
program features: i.e.: Discount structure, terms of payment,
business practices: i.e.: Order processing, fill rate, handling
support activities: i.e.: Timely responses, attention, aftermarket
the categories, you want respondents to rate factors on some
scale (i.e.: 1-to-10) to establish their relative importance.
There are several benchmarks suggested:
important is the factor to the customer?
is perceived to be the best (name) in this area?
does your company rate on the topics?
more effective, the question should be specific enough that
it leads to corrective action, if needed, or understanding
as to what you do extremely well. You may even want customer
feedback on specific products. Some detail topics are:
or size selection
Quality of fit-and-finish
Ease of product use
Ease of order entry
Placing special orders Receiving shipment of time
Orders shipped complete Correct invoicing
product claims Scheduling field service
Service parts availability
Engineering drawings Application knowledge
Failure analysis data
should be space for write-in remarks. Experience suggests
written comments, while few in number, will often provide
a clue to identifying and solving problems.
are several other thoughts. In formatting the questionnaire,
place the "written attributes" in the center of
the page, "importance of the buying factor" ratings
on the left and "vendor's" rating on the right.
You should leave room to write-in the name of the "best
supplier" on the extreme right side. Also provide space
for the respondent's name, company, position and address so
they can receive a thank you gift for participating.
that is collected and not analyzed is useless. It is essential
that the feedback be analyzed from a variety of perspectives.
A multi-year time series is essential. So are sorted ratings
by major, shared and former/declining customers. The sorting
possibilities are endless, but you need to figure them out
before sending the questionnaire out.
use performance ratings in creative ways. The first use is
to understand company strengths and areas needing improvement;
the raw ratings will tell you this. You should never anticipate
a perfect rating; if you do, you have "stacked the deck"
and will learn very little.
"customer buying factors" in order of importance,
followed by your rating, is essential. This will help you
determine where to put improvement effort. For example, if
"meeting promised date" rates 9.2 in customer importance
(10.0 being the most important) and your rating is 6.8, you
have work to do. This factor is a more important than "correct
and timely invoicing" with a customer rating of 6.8 score
and your rating of 5.7.
your rating with "best in class", you learn whom
to benchmark. You could even discover you are "best in
class", but still are not satisfying customers. Analyzing
the data will pinpoint one or two issues of compelling importance.
By targeting competitors who are relatively weak in important
areas, you improve your ability to gain satisfied customers
and market position.
Associates experienced a situation where a manufacturer did
not understand a multi-location customer's ratings. They invited
ten representatives to a discussion session. Managers were
asked to define the factors, provide examples, discuss what
other suppliers were doing and offer suggestions. The exercise
was life changing. The manufacturer finally understood the
feedback and responded immediately. Sales improved rapidly
situation, a manufacturer benchmarked the market leader. They
then had to decide how to position themselves. The data pinpointed
"must be" performance standards to be considered
a viable vendor. From there, by using emerging quoting, product
specifying and order entry technologies, the smaller manufacturer
was able to "leap-frog" the major supplier. Without
market-based performance standards, they would have developed
"me too" features that would not have been a point
a manufacturer decided to added questions on current and future
purchase patterns. Interestingly enough, they were able to
correlate sales opportunities with declining customer satisfaction
ratings among specific competitors. The results were given
to the sales and marketing team; the customer feedback led
to a bold sales campaign to grow sales.
way to "find out what you have to work on" is to
ask. What you need to address may have nothing to do with
your performance, but rather someone else's. The data will
help you quantify and prioritize the effort. Today when product
differences can be slight, measuring and improving non-product
attributes can be crucial to success.
has shown that market ratings and rankings will benefit every
part of your business, from sales, manufacturing, distribution
and administrative functions. It will make you a better company
and better partner to your customers.
Associates is a consulting firm located in Birdsboro, PA that
focuses on strategic business management, industrial market
development and facilitating management change. Drew Hill
is a certified focus group leader and management consultant.
He can be contacted at 610 370 1991 (www.hadleyassociates.com)