Sep 25, 2026 | Demand chains, Governance, Sales
To a potential customer, an instant quote delivered on a website sounds wonderfully convenient. Enter a few parameters, click a button, and out pops a price.
Sadly, for the marketer, such a process does not answer a key question marketers should be desperate to answer:
Why.
Different customers want different outcomes, for different reasons from their purchase. Understanding the drivers, differences, and context of that demand gives the marketer the tools for a successful sales conversion and retention program.
A supplier who pauses to ask a few questions adds friction. They also give themselves a chance of gathering information that serves to best meet the needs of the customer, which sometimes means recommending something that does the job required better.
‘Remove friction’ has become one of those marketing instructions we repeat until we stop thinking about it. Usually, it makes sense. Complicated navigation, repeated requests for the same information, and forms that demand your life story before releasing a brochure all deserve the bin.
The trouble starts when we treat every pause as a defect.
Some purchases deserve a bit of thought. Customers need to understand a compromise, test a claim, or explain a problem they have never had to describe before. Skipping that work may accelerate the sale while leaving the misunderstanding intact.
The friction has not disappeared. You have simply moved it to being a complaint, demand for replacement, or an argument about who promised what.
For a small business, that can turn a promising sale into an expensive distraction.
The salesperson gets another order. Operations inherit an awkward job, and then spends the margin trying to make the customer happy.
A few useful questions at an early point can be seen as unnecessary friction. It can also be seen as an investment in a superior delivery of value to a customer.
That is an investment that is worth making. It reduces warranty and service claims, makes for happy customers, so increases the probability of a referral, the very best form of marketing there is.
Sensitive questioning at an early point can ‘qualify a customer’, an increasingly resource hungry activity for most B2B marketers. It can also set the marketer up as an expert in their field, and most would prefer to deal with an expert rather than a generalist, or unproven supplier.
Creating the opportunity to demonstrate your product delivers value greater than any competition is the point of all ‘top of the funnel’ activity or content.
These questions take time and require thought in their construction. It also requires those answering to make a modest ‘investment’ of their time. That is the point. Those who are unlikely to become customers are more likely to be turned off by the questions, while those with a genuine problem to be addressed, are more likely to make that investment. The friction creates an SQL (Sales Qualified Lead)
Do not demand technical specifications from someone who needs your help to work them out. Do not ask for a detailed brief merely to discover whether you serve their suburb. Explain your limits early, and ask for information when you can show how it helps.
The effort should match the decision.
Someone exploring options needs useful information.
Someone asking you to commit people, capacity, and to a price needs a more substantial conversation.
This cuts both ways. If you expect the customer to invest time answering questions, invest some of yours explaining the choices they face. Give them enough information to decide whether you deserve the next conversation.
Then watch what happens beyond the enquiry form.
A shorter form may produce more enquiries while consuming hours of estimating time on work you cannot do profitably. A longer conversation may produce fewer quotes and better jobs. Neither result justifies a victory lap until you examine the selling time, the margin, and whether customers got what they expected.
Watch the people who leave, observing any commonalities that may be a useful filter.
A falling enquiry count does not prove you have filtered out unsuitable buyers. You may have annoyed some viable leads, so care must be taken.
Every extra step should earn its keep by helping the customer make a sound choice and your business keep its promise.
Before you remove the next piece of friction from your sales process, ask what mistake it prevents.
Aug 27, 2025 | Demand chains, Management
Have you ever thought creatively about inventory, beyond how to physically manage it?
Logically inventory is held to ensure smooth process flow, and to ensure you do not run out of finished goods to meet customer demand when it emerges.
However, inventory is a rabid consumer of resources. Cash, time, space, management attention, added complexity, and warehouses full of stuff retained because the ‘Boss’ is reluctant to write it off and take the loss in the accounts.
Tough problem.
Inventory has two dimensions:
- Its legitimate place in a smooth operational chain.
- The purpose for which it is held.
Often, the same item of inventory serves both purposes.
Finished goods. Ready for immediate sale.
Raw materials. Ready to be fed into the production processes.
Work in progress. Part way through transformation.
Buffer stock. Better called ‘Just in case’ stock. Sometimes confused and used interchangeably with the term Safety stock. The former is to enable the peaks and troughs in a production cycle to be smoothed out, the latter is in case of a screw up.
Understanding the volume and purpose of each type of inventory is the first step in addressing the challenge of freeing up the cash. I speculate that the purpose is never to tie up cash, and add to costs, complication, and workload.
Figuring out how to reduce inventory without compromising operational flow and customer service is a huge challenge for many of the manufacturing businesses I see. Getting their hands on the cash to leverage for success, rather than having it tied up in non-productive inventory is a key driver of success.
Inventory is an ‘opportunity killer’ as it consumes the cash that would enable you to chase opportunities for greater profit.
The supreme irony is that in traditional accounting, inventory is an asset, so accountants are often content to leave sleeping dogs asleep.
Jun 4, 2025 | Category, Customers, Demand chains, Marketing, retail
Mass market retailers all use the same, or very similar metric to measure store performance: Dollars revenue and/or margin per square foot, or linear shelf metre. In addition, they track the size and content of the customer ‘basket’ to optimise product range against those key performance measures.
This leads to a mindset of short term profit maximisation in the buying office, at the expense of everything else. Only senior levels talk about strategy, and then in most cases, they fail to grasp the qualitative reality of ‘strategy’ and fall back on the numbers.
Shoppers do not care about your margins/sq metre, irrespective of how you generate it (price, stock turn, or supplier ‘shelf rentals’) they care about range convenience, on shelf availability, and of course, price.
But price is only one of the considerations, an important one, but only one.
Ignoring the others is asking for trouble in the medium term
Trouble is what the Australian gorillas now have.
Their domestic supplier base has been brutalised, and the leverage they can exert on international suppliers is way more limited, simply because they do not have the scale to apply the pressure. Now in the absence of a high $A, they are suffering, and that suffering is unlikely to ease any time soon as the economy is likely to flatten in the wake of the ‘stupidity blanket’ being thrown over world trade by the US administration.
In addition, they now have become populist targets for a body politic that has no idea of the economics and dynamics of the ‘paddock to plate’ supply chain.
The marketing default has become loyalty cards, an added incentive to shop at the same chain, as they will give you something in return. Trouble is you cannot buy loyalty, you can only earn it. How many do you know with a wallet stuffed with ‘loyalty cards’ who are not in the slightest ‘Loyal’?
Jul 5, 2023 | Change, Demand chains, Innovation, Strategy
All the recent focus of industry development, Control of IP, and sovereign manufacturing, has been on High tech.
Should we, or perhaps why don’t we, look to areas where we have dropped the ball in the past, but still have the opportunity to shape world markets, built capability, and diversify our economy.
Should we be looking at some of the obvious, but perhaps boring stuff that can make a significant difference, and where we already have a huge head start.
This race towards the newest shiny thing is fun, generates a lot of press releases, is exciting, attracts attention, as well as capital and competition, but is it the whole game?
In years gone past, Australia supplied a huge percentage of the world’s wool.
We grew it, and processed it through the many stages to the production of yarn, and exported the highly value added product to the world.
No more.
We have been supplanted as the number 1 producer by, you guessed it, China. We proudly, for now, occupy second place in the production stakes. China also is the biggest importer of Australian greasy wool, which they then process and gain the huge value add that the processing stages contribute.
I do not have all the numbers, but the current mean fibre diameter of the Australian clip is 20.8 microns, (AWPFC numbers) which is significantly less that the average of other major producers. At the extreme, production of wool at 13-15 microns is very small, requiring very considerable skill, animal husbandry, and investment in genetics. However, that investment is returned with huge price premiums paid by high end fashion manufacturers. That fine wool sells at auction for up to and sometimes more than $150/kilo, 15 times the average.
Australia’s share of world fine wool production is upward of 80%.
Why is it beyond our capability to capitalise on such a premium position, based as it is on 150 years of experience, a continuing production advantage in the preferred raw product, and many millions of dollars on R&D?
Australian Wool Innovation has been pissing around for the 30 years I have been watching, and from time to time dipping a toe into the water. They have wasted growers money and matched funding from the public purse, while failing to build a sustainable industry value chain that builds Australia’s competitive position. Making excuses, and generally having a fine old time has been the outcome of their efforts.
Having just read the latest strategic plan I can find, that sorry situation is not going to change.
As part of the National Reconstruction Fund, should we revisit old friends like wool that despite the best efforts of the last 40 years, we have failed to kill off? Surely that level of resilience requires some examination and consideration for rebuilding the supply chains that delivered many of the foundations of the prosperity we still enjoy. Such an effort would tick 5 of the 8 priority areas nominated in the reconstruction fund legislation.
13 years ago in a post I asked ‘Where next for wool‘. The question needs to be asked again, and this time we should be expecting some sensible answers.
The header graph is the average price of greasy wool over time. You can see the impact of the wool industry pricing model that ended in tears in July 1995, leaving a huge inventory of unsold wool that screwed the market for a decade. As with all averages, the graph hides the huge opportunity that has been facing us for years, which we continue to ignore.
Feb 3, 2023 | Branding, Demand chains, Marketing, Small business, Strategy
Woolworths last week announced they would close 250 of their current 300 in store butcher shops. Clearly, centralisation and opacity of the supply chain that serves customers via Woolworths is geared to the lowest common denominator, price.
At the other end of the scale is Wolki farm in Albury. This is an integrated farm to retail supply chain that innovates at every point. Rather than just trying to do the same job as always for a lesser cost, they re-engineered the whole chain. From their website: ‘We are the connector between the conscientious consumer and quality produce’
Their 24/7 retail outlet in Albury is just the end of the chain, but full of innovation. I do not normally inhabit TikTok, but this video of owner Jake Wolki’s view of the future was referred to me by a (younger) friend, who knows my views about agricultural supply chains.
The challenge both retailers are setting out to address is the core challenge of marketing: how to create and communicate value that motivates customers to a transaction facilitating longer term engagement.
Woolworths (and Coles, Aldi, et al) do it by price and convenience. They might mumble about quality, but it is at best a second order priority. As long as it is edible, legal, and delivers the category target margin, it is OK. By absolute contrast, Wolki’s (I do not know them at all, had not heard of them until last week) are clearly focussed on quality, product provenance, and integrity. The price they charge for their produce will reflect all that, but no consumer who is looking for the cheapest cut of meat is likely to find it at Wolki’s. What they do get in detail is supply chain transparency that delivers the provenance and guarantee of quality of the product they are about to buy.
That may interest only a small proportion of the market, but that proportion is significantly larger than it was just a couple of years ago, and will continue to compound.
It seems to me that Woolies are repeating the mistake they made with Thomas Dux 6 years ago. They are ignoring the messages being sent by consumers from the ‘edges’ of their customer base that ‘Mass’ was not acceptable. More probably, they are choosing to ignore those consumers in favour of low cost supply chain control, and reluctance to rock the competitive ship by innovation. Perhaps they will prove me wrong, and use the remaining few in store butchers to experiment?
Photo credit: Wolki Farm from the website
Aug 15, 2018 | Demand chains, Operations
Recently I found myself in a group conversation about marketing ‘channels’, and almost had to scream.
Like most conversations of this nature, they were just about logistics. Pity the poor old customer, barely got a mention apart from being noted as being on the end of a supply chain.
The whole conversation sounded like the ones I had in the 70’s, prior to any of the development that has gone into the thinking about the nature of the chains delivering product to customers, or the systems that drive them that has occurred in the interim.
A chain does not kick into operation until someone decides to buy something, it is activated by demand, not supply. Therefore, we would be better served to think about it as a demand chain. This is more than a semantic difference, it acknowledges that the chain is a ‘Pull’ model, activated by demand, not a ‘Push’ model, activated by supply with no reference to how that available supply will be sold.
Everything that comes after the decision to buy something is just seeking ways to split up the revenue from that sale.
Looking at it from the customers view, the only things that are important are those that add value for them, the details of the shipping from A to B, and manufacturing processes are supremely irrelevant.
Everyone in the chain is competing for a slice of that dollar.
A chain is a complex system, or it can be. The simple definition of a complex system is that the whole is greater than the sum of its parts. You can view a chain as a number of sequential but essentially separate activities, or as a number of interdependent activities.
In the first, we are fighting for a slice of the pie, in the second, we are collaborating to make the pie bigger before slicing it up and sharing it around.
They are profoundly different.
The latter is way harder to build and maintain, but delivers significantly better financial and strategic outcomes in the long term, as the price on the day of a product becomes almost irrelevant.
Following are the descriptions I use to make the key distinctions.
Supply chain.
Supply chain arrangements are basically, grow/make it and chuck it over the fence and hope somebody buys it, and eventually pays you, something, which is most often not reflecting what the producer thinks it is worth. Most of agriculture works on this model, and it has failed us.
Characteristics: Short term price, adversarial negotiations, multiple supplier competition of undifferentiated product, buyers who hold the negotiation power deriving from scale, or the anonymity via auction.
Value Chains.
A value chain seeks to control at least some of the value-add that occurs between the production and customer, and thereby capture some of the added value by margin. Mostly however, the value add is calculated as the ‘cost add’ as the consumers view of value plays no role in the calculation. The classic case is bread, where millers have become bakers to capture the value added margin that results from bread being baked from their milled grain. You often see this type of vertical integration evolving as one link seeks to control what happens on either side. However, it is still an essentially sequential and disconnected process, of grower, miller, baker, and distributor.
Characteristics: price is important but not the only factor, specifications and specification maintenance become important, the amount and type of value added is taken into account, very aggressive negotiation occurs, but it is no longer ‘take it or leave it’ as it is in a supply chain. Calculation of the value add is usually the marginal cost of the manufactured goods sold, minus the input commodity price. As in a supply chain, this is usually just a calculation based on competitive pressures. Often in recent times, marketing has got hold of the end product, (as in bread) differentiated it a bit, added some advertising and benefit claims, and tried to sell the product for a premium.
Demand chains.
These are rare beasts indeed, and do not usually carry the name ‘demand chain’. It is activated by pressure applied to the chain from the end buyer, the opposite direction of both supply and value chain arrangements. It is pressure delivered to the chain by real demand, and has proven to be the key to success. For example, Toyota apply demand chain disciplines on their suppliers, by having the parts procurement process activated by a ‘Kanban’ card on the production line. This is the genesis of the TPS which has revolutionised modern manufacturing.
Characteristics: Driven by demand, collaborative relationships for mutual benefit drives activity, specifications and DIFOT performance are crucial, prices are negotiated on the basis of best outcome for the whole chain, as well as the individual, and there is information transparency throughout the chain which these days requires IT integration.
The spread of digital technology has given us the tools to make the transformation to demand chains easier, but they require power to be devolved, and the status quo in most cases to be altered, so rarely do they evolve to their full potential. Increasingly we will see an evolution towards demand chains as enterprises seek sources of differentiation, enhanced customer service, and cost reduction, all at the same time.
