ORGANIZATIONS HAVE developed strategies that focus on quality, cost, and customer service — schemes that have been instrumental in growing their firms. High-end retailers would position themselves as having top quality merchandise (subsequently justifying their heavy price tags) and hotels would promise customer service second to none. Meanwhile, local manufacturers would strive to produce at the lowest cost to compete against multinational players.
But there is a fourth element to consider: speed. As consumers place greater value on time, businesses have sought to improve their ability to provide service or deliver products faster than their competitors. Consider the fastfood business, whose customers include people who prefer buying their food on the way home instead of cooking it themselves. There is also the consumer who prefers the instant e-mail over regular mail. And let’s not forget the speedy remittances from overseas Filipino workers; no OFW would employ a remittance service that isn’t able to transmit their money back home in less than a day.
Speed as a factor of competitive advantage is a recent trend, pioneered by the giants in the package delivery business. In the past, FedEx and UPS fought to prove themselves the fastest in next-day delivery in the US, with one claiming it can deliver a package by 10 a.m. and the other by 5 p.m. the next day. Both now compete against each other in providing online printing services: FedEx says it can produce mass copies of company reports and presentations, siphoned straight from the office PCs of its customers to the FedEx Kinko outlets’ high-speed printing machines. UPS fought back by offering the same service via its store outlets.
Companies that have successfully used speed to their advantage have focused on key functional areas or processes. Some examples are:
Customer Development. Some consumer goods firms operating locally bought brands that already have a loyal following in the country. An example is a European firm that acquired a Philippine company similar to itself, but which was already deeply rooted in the local market, enabling the former to take advantage of the latter’s customer base as it introduced its own products to the country. By doing so, the European firm was able to establish a stronghold in the local market in a short period of time.
Product/Service Development. As customers become more discriminating and value-conscious and as the business arena becomes more globally competitive, the need to develop and introduce new products fast has become crucial factor for a firm’s success.
A number of examples come to mind. To avoid long queues at the counters — a big turnoff for customers — supermarkets have installed bar-coding cash registers to speed up grocery check-outs. Apple has made it a point to introduce improved versions of its iPod and iPhone models every year. A letup in this routine causes panic among the company’s investors, who know that competitors are constantly coming up with new products in an attempt to unseat Apple’s edge in the personal gadget arena.
In the auto world, Toyota has developed new cars and trucks for the US market much faster than American manufacturers, causing big companies like GM and Chrysler to fall by the wayside. However, GM and Ford, armed with fresh, attractive models, have begun to make headway in China — a growing market that the Japanese car maker has so far failed to capture.
Operations. In the early 20th century, the breakthrough of Ford’s assembly line ushered the golden age of mass production, when high-speed manufacturing equipment churned out products in vast numbers fast. But times have changed. Speed is no longer measured by how much one makes but by how much one delivers. With firms selling multiple products with varying attributes, operations managershave learned to balance demand and supply.
Hence, supply chain practitioners have begun to shift to demand-based planning models and have strived to improve not only production efficiencies but also logistical ones. Factories today not only adopt high-speed production equipment but also rapid distribution facilities. Radio frequency identification tags have replaced bar codes to make inventory tracking quicker, and vendors integrate mobile and Web technologies in their operations to speed up orders and deliveries. In the near future, supply chain managers will also have to put in place processes that will enable them to introduce new products fast and allow them to predict which products have to be phased out soon.
A popular highway road sign reads ’Speed Kills.’ And indeed, in the fast-paced world of business, ’Speed Kills you or your competitors.’ Given the technologies at their disposal, firms still have a chance at winning a fight against their fiercest competitors, but these days, it pays to know that time is never on their side.
Mr. Jovy Jader is a management consultant and regional speaker on Supply Chain Management. He has directed and implemented Supply Chain Management projects both local and international which have resulted to company-wide improvements in inventory, total cost, customer service, response time, quality, and on-time delivery. Mr. Jader was formerly with Procter & Gamble Philippines and Coopers & Lybrand/PricewaterhouseCoopers. Should you have questions or comments, e-mail to firstname.lastname@example.org.
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