Create Competitive Advantage with Logistics
World Wide Shipping
By THOMAS CRAIG
President LTD Management
Why should your customers do business with you? Why should they want to do business with you?
What makes you special? How do you distinguish yourself from your competitors? How do you
position yourself to be a desired supplier? These are the types of questions businesses must address as
they work to grow.
4P's of Marketing
One of the 4P's, the marketing mix, of marketing management is the base for developing a dynamic
Product. This is very much required. Today's customers want choices, features, options. The days
of Henry Ford and a black model A are long gone. These choices create additional challenges with
being able to forecast demands for the various products and options/features. Then once your product
is established, then you have to look at additional incentives for your customers to want to buy from
Promotion. You have to have a way for others to learn of your products, create awareness.
Advertising is one way. Advertising can be expensive and can be difficult to measure the direct impact
and benefit of this. And customers are often overburdened with sales promotions that yours may be
lost in all the promotional morass. What exactly do you promote and why?
Price. This is to establish a value for your product, and for doing business with you. Price is the way
to create revenues and profits. The danger with price is that if it is emphasized too much, you reduce
your product to being a commodity, where price is the only way to distinguish your product from your
Place. This is logistics. Having your goods in the right place at the right time. And this is the area
that has been underutilized in the marketing mix. Logistics effectiveness can be a way to become a
desired supplier, build market recognition, handle the multiple products and options, create
value-added, and set you apart from your competitors.
Reason for Strategy
Make competitive advantage through logistics excellence your strategy. Exploit logistics service and
performance to set you apart from your competitors. It is a unique approach. Make it a core
competency. Incorporate logistics as a critical element of your marketing and business strategy to
grow your sales. Effective logistics can significantly contribute to positioning yourself as a Preferred
Supplier. Product, promotion and price have been used for years by companies to develop recognition.
Now it's time to exploit and incorporate Place, i.e., Logistics, as the base for a marketing and business
strategy to grow the business and to gain market share. Customers would perceive that you provide a
competitively superior value and service. That is a strong foundation for growth.
Logistics presents a way to market yourself to customers. There is only so much that can be done with
promotion and price. A value-added logistics strategy is a strong way to be a preferred supplier
because your customers are saying you are worth doing business with it. They say, "We want to do
business with you." You will grow, maybe even into portions of the market you had not reached
Looking at it another way, you may have a great product, sound promotion efforts and a good price.
But if you are difficult in doing business with, in fulfilling orders and timely and completely meeting
customer requirements, you may not achieve maximum growth. You could even lose sales and
market share with a poor logistics service.
A marketing strategy based on logistics, and the customer benefits and service it brings, works whether
your customers are domestic or international. You can be a market leader, not a follower. Be
aggressive; be an innovator, not a reactor. When you are only reacting, instead of innovating, you
have put yourself in the catchup mode. As such, you may never quite sure of what you should be
doing and why.
With this strategy, you position yourself as a valued supplier. Price issues, while always important,
can be balanced with the service you provide. This can create opportunities for enhanced price
opportunities. And if you are a preferred supplier, your customers recognize that. They promote you
and what you bring to the table. With this strategy, you demonstrate to customers how important they
are and how much you value them.
To develop the strategy, three assessments must be made--your customers and their requirements, your
competitors and they perform, and your own performance. If you are in different markets with your
products, then assess each market. They may be significant market and customer differences that must
be recognized and understood.
How do you compare? What are the opportunities to be a leader? How do you exploit the
opportunities? Which customers can you work with to develop your strategy? With this assessment,
you can better analyze and see what must be done to be a leader in logistics. At the minimum, you
will have a better understanding of how competitive you are at servicing your customers.
Part of this analysis should be a survey. Do not assume you know and understand what your
customers want and need. That is a surefire recipe for a failed strategy. With learning what they
want, also learn why they want it done that way. That presents a solid method to develop a strategy
that can meet and exceed their requirements. It is directly aligned to them.
Make sure that, once you have concluded the assessments, you go back to discuss your findings and
plans with key customers. The object here is meet their needs; not what you think are their needs.
Review your strategy and action plan with them. Get their feedback. Is your plan excellent? Will it
gain you additional business?
Assess your customers requirements. Study any and all written specifications that customers have
already given you. Survey your customers. Meet with select customers. What do they expect and
want from their suppliers? How do they want their orders, shipments and invoices handled? Why do
they want it done that way?
How well do you perform, in their eyes and their measurements? Does the service your competitors
provide gain them business, at your expense? Does their performance impact key customers, a large
number of customers, the potential for new customers? Are customers strongly satisfied with your
performance? If so, why? If not, why not? Where are you strong and why? Where are you deficient
and why? Are you consistently failing to meet customer needs? How serious are your failures, as
perceived and defined by customers?
Assess your competitors. You have to understand what you are up against in servicing customers.
What do our competitors do? Gather market intelligence. Make your competitors performance part of
your survey. How do your customers view your competitors? How do their logistics performances
meet the needs of customers? How do their logistics performances compare with yours? Are there
shortcomings in how well they service customers? If so, what are they? Are these shortcomings
serious? Are there strengths in how well they service customers? Is so, what are they? Are these
strengths ones which permit customers to overlook other problems with these competitors?
Assess your internal capabilities. Self-assessment can be very difficult and awkward. Understand
what makes a world-class logistics program. Look at the elements needed. Develop an audit checklist
then evaluate your operation. Assess and measure your product flows and information flows across
the entire organization. Look at teamwork, systems, costs, relationships with suppliers, carriers,
customers and others. The purpose is not negative; the purpose is to know how well you perform,
throughout and across the organization. It will also help you determine what investments are needed
to upgrade and improve your service to customers.
It may also be valid to search for best logistics practices, regardless of industry served. Do not
overlook them. Leading-edge practices have basis and application in any industry. Benchmark your
performance, capabilities and limitations. It can be very useful in understanding your operation and to
developing a market leader strategy.
A marketing strategy based on logistics effectiveness should have two parts. First you must have a
solid logistics program, leading-edge. Then you must be able to tailor to meet the requirements of
individual customers. You cannot offer a vanilla approach. It is not enough to do logistics well. You
must do what each of your customer's demands. Standardized approaches to individual requirements
is not satisfactory to customers. It must be based on a sound approach, then customized, aligned and
responsive to the specific needs of each customer.
Through your success in meeting customer needs, you may opportunities to improve their logistics
operation. This is a very good position for a supplier. In such instances, if you become truly good at
your logistics performance, it is not inconceivable that customers may want you to manage some part
of their logistics management. It would be like a category management of the customer's logistics.
Recognize that organizations are built from the inside-out. They are designed to handle internal tasks
and needs, purchasing, manufacturing, sales, accounting, logistics, and others. Some organization
internal practices may work at cross-purposes or counter to the needs of its outside customers. As
such, company departments may feel attacked by customer comments or internal analysis. They may
rationalize what customers say are problems or shortcomings in dealing with you. You must get past
these if you are to progress.
Organizations are not built from the outside-in. They were not designed by and for customers and
satisfying their needs. This origin then creates the opportunities to better service customers by
realigning the intent and purpose of the organization, across functional lines. If this organization
genesis is not recognized, then the potential of this strategy will not be exploited to its fullest.
Remember too, organizations, especially in certain corporate cultures, resist change. Shifting the focus
to the outside, your customers, from inside, internal task, can be a significant organization change.
This must be dealt with in the design and implementation of a market-leader logistics service
capability. Designing the strategy is not enough. You must be able to implement it, put it into action.
Everyone in the organization must participate in and clearly understand the strategy and plans.
Results are the goal here, not just strategy.
Position yourself as a preferred supplier. Use logistics as a cornerstone of your marketing strategy for
growth. Understand what customers expect, how well your competitors perform and how well you
operate. Find the ways to develop a strong logistics program which meets and exceeds customer
requirements. Reengineering your operation and developing a strong logistics capability is not an
overnight fix. It takes time and commitment. Do not delay and miss the opportunity to grow customer
satisfaction, sales and market share. And once you have begun this strategy and process, it does not
stop. Market and customer needs are constantly changing. Your ability to change, and lead the
change, as a market leader is ongoing. You must constantly work to improve service, reduce time and
reduce costs as your customers require.
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