Volume 3, Number 2 - February 1, 2005

Wal-Mart is requiring its suppliers to be RFID compliant within the next several months. The Department of Defense is making similar demands of many suppliers. Many of you have dealt with larger companies and found that their state-of-the-art supply chain requirements can just about kill your company. Yet, it’s very hard to say “No” to the allure of a large account. So what to do, what to do…..?

The technology requirements of doing business with large firms, whether EDI, bar-coding, RFID, or the next great thing, may be a cost of doing business, an enabler for growth, or an albatross. The real question is: will spending the time and money to meet their requirements make you more competitive in the marketplace? If not, then all the costs must be associated with that one potential large account. If your price to them does not reflect those customer-specific costs, then it’s no different from any other customer who wants to pay less than their account costs you. Turn it down.

But if the investments the large customers require you to make will enable your company to exist and grow profitably in the future, again it’s an easy decision. Do it. If necessary, find the cash and find the talent. Do it.

So the real question is not the demands large corporations make on you, but rather how those demands fit into your overall strategy for customers and operations. If they fit, find a way to master them; if not, walk away from business that isn’t profitable.

Many people with whom I discuss Operations Strategy are surprised to discover that I believe it covers much more than manufacturing.

Operations is responsible for creating, delivering, and servicing the goods and services that customers buy. That means Product Development, Supply Chain, Order Fulfillment, and Customer Service. Marketing and Sales are responsible for identifying markets and market needs and bringing in customers.

If Sales is responsible for customer service, then is it not responsible for making sure the customer gets what they want when they want it? Sales need only worry about that when it can’t trust Operations to make it happen. And it’s our job to make sure they don’t need to worry about it.

By all means, M&S has to know the demands of the market and make them crystal clear to Operations. But if Sales is busy handling yesterday’s order, it cannot properly invest time focusing on customer relationships and on building relationships with non-customers. Marketing and Sales need to work together to bring in the business; Operations needs to deliver it.

Fulcrum ConsultingWorks, Inc. All rights reserved.
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