Are you tired of “getting last look” to “be more competitive”? How do you exit the game of customers doing periodic (to daily) reverse auctions to “keep everyone (suppliers) honest” while you try to sneak margins up? Why not, at least, get the lion’s share and last-look plus two points; or, at most, propose a win-win, perpetual, supply-chain partnership?
How do you get last-look plus two points? It’s easily stated. First, define, achieve and sell “best (guaranteed) service value” (not generic “good service”) tuned to at least best customers in a target niche. Then, educate the customers – patiently, persistently and courageously – on how the service reliability lowers total “hidden” costs much more than the incremental price premium.
If the customer is still psychologically upset about paying a “higher price”? Play judo and offer them a lower one, but with conditions. You get all of the (category) volume and together you co-create a re-tuned, semi-custom, buy-sell process that lowers your cost-to-serve (CTS) more than their new contract prices. The results are: even lower total supply-chain costs for them; and a bigger, net-profit total from the account for you.
Switching from price-buying to demand-replenishment partnerships is a 24-year-old trend we should proactively embrace and offer. In 1988, Wal-Mart announced that they would buy as much as possible from suppliers with the best supply-chain solution capabilities. Since then, lots of big buyers and some independent distribution channels (drug, hospital, hardware) have substantially switched from shooting prices for product volume to win-win supply-chain solutions. Why wait for and react to our best (potential) customers switching to supply-chain buying? Why not, instead, win the arms-length, service-value game, AND pitch the win-win partnership option. Tell them: “we’re ready when you are”! But, do be competently qualified (perfect service and supply-chain smarts) to execute.
HOW TO MAKE THIS HAPPEN?
It’s a journey with the following seven, big steps. You can’t negotiate, lower-price, bigger-volume, sustainable, win-win partnership deals without: (1) knowing the current net-profitability and CTS for every customer. (2) A customer net-profit ranking report is only the first step/tool towards (3) identifying target niches of customers to (4) re-define service-value-equation metrics. And, each big customer will have a different (5) value exchange scenario to manage.
Achieving “service excellence” with extra heroics from all associates for target accounts will require (6) corporate culture changes to re-engage everyone. Then can management and both outside and inside sales reps (7) all sell supply-chain economics (Total Procurement Cost; Uptime economics, etc.)?
What if any of these “big steps” seem too overwhelming? Then, fractionate them to baby steps so small and safe that everyone can start moving forward. Many small steps can build momentum and courage. In this case, the baby steps involve skimming through 200+ youtube educational clips (four minutes average length) and experimenting with the ones most useful to you. This growing collection of clips is a prototype for a distributor-specific, turn-key, educational-support solution for the “seven, big steps”. Please go to www.merrifield.com and click on the “Youtube video project” link and give me feedback.
VIDEO CLIPS SPECIFICALLY ABOUT WHAT?
- Clips numbered 10-22 will teach everyone how to be totally capable with supply-chain building block concepts: TPC; uptime; customer’s customer satisfaction economics; etc.
- Demand replenishment systems require a new view that I call “Value exchange management”: clips numbered 23-32.
- How to reassess old belief systems that persistently blind us from seeing the opportunities in being able to also sell supply-chain solutions: #s 33-55.
- Why the outside reps role is shrinking to fewer total, bigger accounts while expanding beyond selling commodities for a price to “service-value solutions”: #s 134-35, 140-42.
- How to crack target accounts (with total team focus): #s 136-39.
- The need for and expanded use of “line item profit analytics” (LIPA): 57-95.
- 50+ additional clips are soon to be posted (about 400 in total planned) on how to turn all employees on to achieving best, total service value. (Sign up for new posting e-alerts at Merrifield.com) .
NEW SOLUTIONS FOR TOUGH TIMES
Striving for “last-look” selling AND proactively embracing the 24-year “supply chain buying” is smart. But, to do so we need our own – CTS math; perfect niche-service; semi-custom service value solutions; and re-engaged employees – to make any win-win partnerships happen. These improved capabilities will require an educational and service-value reinvention journey. The easy first steps I recommend are:
Read past and future “Insights”.
Skim through the youtube video clips and take or repurpose what is most useful for your company.
Attend the Advanced Profit Improvement Conference on Sept. 20 – 21 2012 in Phoenix, AZ with fellow, most-ambitious, progressive distributor executives.
And, be in touch if I can help further!