Remember Back In the 70’s…
When Japanese products surpassed the quality of US goods. Then, zero-defect methods jumped to the US in the ‘80’s. (Phil Crosby’s book, “Quality is Free” was published on 1/1/80.) And, “Do It Right The First Time” became the high service-value, low cost, high morale way to go.
In November of ‘88, the US government established the Baldridge Award for quality excellence. The Wallace Company – a pipe, valve, and fitting distributor in Houston – won the award in ’90 along with three other unknowns: IBM, Cadillac and Federal Express. But, after spending big to win the award, Wallace went bankrupt in ’92.
Lesson #1: Efficiency at doing all things right is not the same as effectiveness at doing the right things; things that are best for your targeted, most-net-profitable customers and prospects.
In ’85, Motorola dubbed their manufacturing quality regimen: “Six Sigma”. This brand soared to new heights when Jack Welch at GE began a $1 billion investment in Six Sigma training in ’95. But, Google searches for “Six Sigma’ peaked in ’04 and have declined since.
Lesson #2: A lemon only has so much juice. When all surviving companies have equally excellent commodities, the quality advantage becomes table stakes. What new “best practices” have emerged to create new, competitive advantages? (But, don’t get soft on zero-errors!)
Enter Customer-Centric, Digital-Buying Empowerment
As Six Sigma faded, Amazon ascended as: “the most customer-centric” company on the planet”. They’ve spent 24+ years inventing a unique all-digital, service-value channel. It starts with our fingertips (and increasingly our voice to Alexa) and goes back to producers. Amazon sells the same stuff, but the goods are wrapped in a better total service-value experience.
How will factories and distributors reweave their one-size-fits all, product-push channels to be end-customer, digital-pull capable? We all want the AMZ experience for B2B buys too. Channel-loading incentive programs have hit a wall.
Too many distributors have chased every size and type of customer with product promotions to win incremental margin dollars. Most now have too many unprofitable small-orders. They need customer net-profitability analytics to fix losing picks, orders, and customers, to free people-slack to reinvest into digitally-enabled service value for their most profitable and growing customers.
FINAL LESSON
Best practices improve efficiencies, but not best-for-you, customer-centric effectiveness. Wouldn’t your most net-profitable customers be a good first target for digital-value innovation?
More? Contact me at bruce@merrifield.com