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Sunday, 12 October 2014

Are You Production or Market Orientated? Consumer Orientation is Even Better!

What would you do about a very senior member of the management team who deliberately restricted the amount of business won "because we don't have the capacity to cope with any more"?

In a way that is a reversed version of the type of business that encourages its sales people (if they have any) to sell available capacity in the business.

Many manufacturers or even suppliers of commoditised products look at the business that way. Their only justification for growth comes from a financial analysis of the capital cost and the anticipated return with no consideration of the customer’s needs.

I had thought, naively, that this sort of management was long gone, but no.  Here and there it still exists.

I recall when I was involved in a sports surfaces subsidiary of a large conglomerate (and that dates me) we designed an artificial run up surface fort long jump and triple jump that could be laid by simply rolling it out in place. The weight held it in position.

The spec called for 1 metre wide, soft patterned surface, red brick coloured material and the factory (which made conveyor belting) was not happy. They asked could they make it 3 feet wide, smooth surface and black.

When I pointed out that what they were suggesting was actually conveyor belting which was not exactly what the customer wanted, they said "but it would be easier and cheaper to make it that way".

In the end they made what we wanted but very reluctantly.

I was about to suggest that this reaction was many years ago and times have changed. So they have but here and there you will find remnants of the ancien  regime.

More recently the concept of marketing orientation has gained ground, using lots of market research and analysis and it has certainly been a change for better.

However even that model doesn't get close enough to the point where all the effort really counts; the consumer.

It mat appear pie in the sky to drill down so far especially when you may be in the middle of a long supply chain. Nonetheless the attitude of the consumer is the final arbiter in decisions down the chain that may well affect your business.

Far sighted businesses have recognised this and are spending a great deal of effort in getting as close as possible to the consumer and shortening the supply chain to their advantage.

Many cars these days are made to the customer's specifications and the online purchase of computers, for example, allow the customer to design his/her own specification for just about every facet of the machine, usually at a cost let it be said.

Even a pair of jeans can be specified for style, cut and size.

Whatever model you espouse it is always better than merely selling capacity and will offer a platform for planned and sustained growth.

The question is: what to do about the senior executive with the curious approach to business?  Firstly it cannot be countenanced in this day and age and secondly, some form of commercial training seems to be at least a starting option.

Whatever is decided he must be taken out if the decision making process in the early stage so that the needs of the market and the customer can be properly satisfied with the appropriate resources allocated to ensure that this actually happens.

If we can gain business that satisfies the needs of the consumer at a price that is commercially viable, then the only question to ask is; what resources at what extra cost will be needed and, most importantly, what return will we expect?

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