Jan 4, 2011 | Change, Customers, Personal Rant, Sales, Small business
Australian manufacturing has been decimated over the last few decades, and whilst there is no single reason for this impact, the determination of the major retailers to use the opening of global sourcing options to reduce their costs and compete on price has been a major contributor.
In my patch, the food industry, a whole layer of mid sized Australian owned food manufacturers have simply gone broke, or sold out to multinationals consolidating manufacturing internationally, as FMCG retailers increasingly sourced overseas. The very few that are left are fighting a rear guard action, and will probably lose.
Therefore, when I hear retailers bleating about the competition from international retailers selling into Australia using the same tools the retailers have used on former Australian suppliers, I think “good one” The latest bleating culminating in an advertising campaign, and lots of appearances by Gerry Harvey amongst others, does nothing but encourage me to believe that the short sighted retail sourcing policies which are just about landed price, with no acceptance of the long term benefits of having a vibrant and innovative manufacturing sector are coming back to bite them on the arse.
Retailers have been dishing it out for years, thumbing their noses at any form of regulation of retail, ignoring the potential and growth of e-tail, it is illuminating to see how they are reacting to some of their medicine coming back to them, although the sales loss is currently only very small, and the consumers they want slugged with GST for online purchases are also their customers, unlikely to thank them for the GST led cost increase.
Get over it, and figure out how to compete on other than shelf price, meanwhile, a few of us are enjoying the sight of retailers squirming.
Sep 29, 2010 | Management, Small business, Strategy
All businesses are conflicted, small ones more obviously than larger ones.
On one hand, the immediate urgency to do whatever necessary to generate the cash to pay the bills, and on the other, the necessity to build capability, relationships, and definitive market position, all critical elements for commercial sustainability, but there is rarely enough time to do both as well as you would like.
There is no easy answer to this dilemma, but in my work with small businesses there are a number of strategies, largely borrowed from large businesses that pay dividends:
- Act like a larger organization internally, by doing things such as having a formal monthly management meeting, regular formal performance reviews, an overt strategy generation process that involves employees, and detailed operational planning.
- Delegate both responsibility and authority clearly. Often those who start businesses do so because they want to feel in control, and delegation does not come easily
- Spend 50% of your time (assuming you are the CEO) outside the businesses with customers, and demand chain partners building relationships.
Small businesses benefit hugely from these disciplines, partly because they are so important for the smooth running of any businesses, and partly because it acts as an “insulation” to the unanticipated. Most in small businesses do not see the need, as they are in daily contact with all in and around the businesses, and therefore, some of these things are seen as unnecessary bureaucracy, when in reality they are more like shock absorbers.
Sep 15, 2010 | OE, Operations, Small business
Focusing attention holistically on a whole process, end to end, and the productivity of the process will improve, improving the outcome.
When you focus just on the outcome, all you get is the opportunity to improve the efficiency of the existing process, but it will have no sustainable impact on the productivity of the process itself, and inevitably when you just focus on efficiency of one part, over time the whole process will at the very best, remain at the stable level, because as you make efficiency improvements in one spot, in another, something has gone wrong to reduce the efficiency of that point in the process.
If you want to improve, focus on the whole process, not pieces of it.
Sep 9, 2010 | Management, OE, Operations, Small business
It seems almost all improvement programs I see have as a central objective the reduction of inventories. That is pretty easy to achieve, order less, less often, and in smaller quantities, objective achieved.
However, when you count customer service, and cycle times into the equation, something the financial inventory measures do not do, reduction of inventory can have a catastrophic impact on financial results, as if nothing else changes, you just fail your customers.
Reduction of inventory is usually an outcome of the reduction of waste, but should not be the objective, waste reduction, waste in all its forms, should be the objective.
Sep 8, 2010 | Branding, Marketing, Small business
Many companies face the challenge of commercial sustainability in mature markets, with declining patronage, increasing costs, and often a fatalistic view of the future.
Last year, I went with a couple of my kids to a performance of ‘A midsummer nights dream” in the Sydney Domain. Wonderful!.
This performance recognises there is an untapped market for these wonderful plays amongst people who would be unlikely to be theatre goers in the “normal” sense, i.e., they do not subscribe to a theatre season, or frequent Shakespeare performances, but the less formal, relatively cheap experience of seeing a classic comedy play under the stars, enjoying a picnic on a summer evening is irresistible to some of those missed by traditional theatre marketing.
What a great way to introduce new customers to Sir Bill, and perhaps convert them to regulars, opening new avenues for exploration, a lesson for others in mature markets?.
Aug 19, 2010 | Customers, Marketing, Sales, Small business
Commodity markets have two things in common:
- There is plenty of business to go around, that is why it is a commodity market. In a mature, saturated market, the challenge is to attract some of the business that is around, not build a new market.
- Customers focus aggressively on price, usually because none of the suppliers in the market give them a reason to focus on anything else, and it is an easy common denominator.
Finding a sustainable point of differentiation is never easy, if it was, everyone would be doing it. The starting point is to understand what the commodity you sell is used for, understand how the product adds value to the customer, and restructure the offering around the source of value.
For example, hiring a car is an exercise in price comparison and the convenience of pick-up and drop-off, not much else. A hirer wants a car to give them mobility, flexibility, and economy of time, and money (compared to taxis). Why doesn’t someone charge by the Km after a small base charge to cover insurance and availability. Suddenly, the game is changed! Same with car insurance, we all pay the same differentiated only by the age and location of the driver, and type of car, but cars are about offering mobility, and logically the more you drive, the greater the chance of a claim, so charge by the Km driven after a small base charge to acknowledge the other variables. What about advertising, why not charge by the response, putting some responsibility on the medium to deliver what it promises, even something as basic as printing services, differential pricing based on turnaround times, response rates (even for printed leaflets, brochures, and so on) is possible.
When you charge for the value delivered, as seen by the customer, rather than just the production, the market loses the second of the characteristics noted above, and differentiation has emerged.
