Customization doesn’t bring efficiencies

September 17, 2012

Note: This posting is based on my weekly “Thank God It’s Monday” which is offered to help companies thrive!

This week’s focus: configurable products and services

Being a “customizer” doesn’t create efficiencies. More often than not, customization brings tremendous inefficiencies in sales, order administration, engineering, manufacturing operations, service, etc.

  • Your team is forever chasing experts to answer and resolve normal, routine configurability questions that arise.
  • You require significant human intervention to accommodate complexity and variety simply because information isn’t available–the business isn’t set up properly.
  • Your team is challenged to pull together quotes for products and services that can actually be delivered.
  • Your team is challenged by the fact that nothing is standard; everything is a special.

Companies must evolve their business processes to cost-effectively meet the challenges product and service complexity bring. If customizers don’t take action to improve efficiencies, they will continue to suffer margin and operational challenges that only mount.

Failure to address these challenges will keep you and your company from thriving.

Thought for the week:

“Don’t confuse enthusiasm with commitment.” – Paul J. Silvia

What do you think? I welcome your blog comments!

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Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

© 2012 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.

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Dave Gardner’s “Thank God It’s Monday” 19MAR12

March 19, 2012

“Thank God It’s Monday” is to help companies thrive!

This week’s focus: configurable products and services

Why is it so many companies that offer configurable products and services are so ill-equipped to deal with the customer-facing side of the business? Here are 3 key reasons:
  • When the business started, the focus was on the product, not on how products would be configured, priced and quoted–the processes never caught up
  • The inefficiencies and operational challenges are seen as a “cost of doing business”
  • Your ERP system is optimized for a different business paradigm: mass production

The result is margin leaks–margin leaks amounting to 3% or more of revenues. How much is that costing your company year after year in real dollars?

What if you could add 3% or more to your bottom line? How would that change the valuation of your business? How would more effective processes favorably impact customer relationships and your customer’s experiences?

The cost of correcting these problems is trivial compared to the annualized cost of the problem. Solving this problem will help you and your company thrive.

[Note: Here are self-assessment tools to help you determine where your company stands.]

Thought for the week:

“If everyone is thinking alike, then somebody isn’t thinking.” – George S. Patton

What do you think? I welcome your blog comments!

___

Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

© 2012 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.


Dave Gardner’s “Thank God It’s Monday” 20FEB12

February 20, 2012

“Thank God It’s Monday” is to help companies thrive!

This week’s focus: configurable products and services

Increasingly, customers expect to be able to influence the products and services they buy.

For low-end consumer goods, e.g., food products, items you would tend to find at large retail chains, etc., mass produced products meet the essential consumer need. However, there are niche product areas where the ability to tailor the end product is valued and appreciated.

For higher-end products and services, the provider must offer some degree of choice. The days of a “one-size-fits-all” solution satisfying market need are behind us. And, of course, the challenge for the providers becomes containing costs as variety increases.

Is there an enthusiasm gap between what you offer and what your customers expect and want? If there is an enthusiasm gap, it is incumbent that your organization to close the gap if you expect your organization to thrive.

Thought for the week:

“So innovation has to be appropriate for your business. It must fulfill a need, and it must give you an edge over your competition.”
– Sir Richard Branson, Business Stripped Bare

What do you think? I welcome your blog comments!

___

Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

© 2012 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.


Dave Gardner’s “Thank God It’s Monday” 09JAN12

January 9, 2012

“Thank God It’s Monday” is to help companies thrive!

This week’s focus: configurable products and services

Is it all about your company–the product or service provider–or all about your customer?

If it’s all about your company, watch out! Someone will come along who is better focused on the customer and take market share from you.

How can you tell if it’s all about you?

There’s friction in the marketplace between what your company offers and what your customers really want and expect from your company.

Friction will keep your company from thriving.

Thought for the week:

“Brands exist as a means of communicating what to expect from a product or service–or to highlight the family likeness between different products and services. An established brand on a new product is a guarantee that what you’re getting will be, in its own way, like something you’ve enjoyed before. “ – Sir Richard Branson, Business Stripped Bare

What do you think? I welcome your blog comments!

___

Dave Gardner, Gardner & Associates Consulting

http://www.gardnerandassoc.com

© 2012 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.


Product Configurator, Configure, Price, Quote Top Challenges

August 5, 2011

Based on my experience, a few of the top pains include:

* Not approaching this challenge holistically across the enterprise–the configure-price-quote (CPQ) process is disconnected from back-office processes

* Focusing on CPQ as a back-office process rather than a tool and process to engage customers

* Not establishing a product management function that owns the evolution of products and product lines

* Not creating and engaging cross-functional product teams who own the success and profitability of a product line

* Thinking the product configurator technology is going to solve all the problems

* Selecting inappropriate product configurator technology

* Continuing to “engineer-to-order” rather than pre-engineering around product modularity and offering previously rationalized choices within a coherent system for CPQ

* Not having a sustainable, scalable process for adding new features and options

* Trying to be all things to all people leading to an unprofitable or low margin business that is not sustainable while you hope that things will get better–hope is not a strategy

* Not having and engaging in a strategy to drive down the cost of variety

I write about this in my book: “Mass Customization: An Enterprise-Wide Business Strategy” available at Amazon.com. You can read more about it at www.happyabout.com/mass-customization.php

What do you think?

Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

© 2011 Dave Gardner

Dave Gardner’s “Thank God It’s Monday” 13JUN11

June 13, 2011

“Thank God It’s Monday” is to help companies thrive!

This week’s focus: configurable products and services

Out with the old; in with the new. Acer had to write down $150 million in European inventory just this past week as the inventory had passed its prime.

The mass production paradigm comes with a substantial potential cost penalty: what doesn’t sell must be deeply discounted or written off. Want proof? Look at all the “end of season” sales–40% off, 50% off, 70% off and more.

Why does this happen under mass production? It is nearly impossible to align supply with actual demand. Is there a solution?

Build to order postpones committing inventory until a named customer appears. While it doesn’t totally eliminate risk, it can reduce the risk of finished goods inventory obsolescence dramatically. This paradigm can help a company thrive.

[Read my entire Fast Company Expert Blog post: The High Risk of High Tech Inventory.]

Thought for the week:

“At first dreams seem impossible, then improbable, then inevitable.”  – Christopher Reeve

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What do you think? I welcome your blog comments!

___

Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

© 2011 Gardner & Associates Consulting  All Rights Reserved

Note:  To receive an email version of “Thank God It’s Monday” to start your week, please subscribe here.  I would very much appreciate your suggesting to others that they subscribe.

Privacy Statement:  Our subscriber lists are never rented, sold, or loaned to any other parties for any reason.


Dave Gardner on customization and personalization

May 10, 2011

Dave Gardner was interviewed by Dr. Amy Vanderbilt on her TrendPOV show titled Market of One–Using Individualization For Advantage to discuss customization and personalization, how to use it effectively to dominate your market, and how not to lose your profits by customizing the wrong way.

Here’s the link to the interview.

What do you think?

Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com