The best practices for selling and producing customized, configurable products are:
- producing a customized product on demand,
- for a specific, named customer,
- based on the order attributes specified by the customer (or their representative) within an online tool offered for that express purpose,
- after receipt of an actual order, and,
- a customized product is produced with the same efficiency as one would expect from a non-customized (or mass-produced) product.
Most manufacturers of customized products produce them under sub-optimal business processes. We often find that the sales, dealer and customer side of the business are not well aligned with the back office creating tremendous inefficiencies, errors, rework and order delays. We work with clients on the front end of the process and, when indicated, on the back office processes as well.
The inefficiencies come with a considerable cost. Industry experts estimate a customizer’s inefficiencies nominally cost 1.5-3.5% of gross revenues year after year and sometimes much more.
Many customizers experience low single-digit profits that they are constantly challenged to attain or even maintain as the cost of variety increases which further erodes profits. There is nothing worse than working your tail off to make almost no profit quarter after quarter, year after year.
To realize enterprise-wide efficiencies, I have long advocated that manufacturers offering configurable products look at this business challenge holistically. I apply a holistic approach with my clients.
If you are a customizer, isn’t it time you implemented a solution that improves efficiency and profits and delights your customers as well?
© 2010 Gardner & Associates Consulting