Dear Members and Friends:
Welcome back from the summer season. I hope you are well rested and ready for our 2010 program year and the start of MHSNJ’s 7th decade. I have been traveling a lot this summer and spending a fair amount of idle time in planes, trains, and automobiles that has allowed me to ponder a lot of things including the changes to the names of the leaders in our industry.
Well known brand names in our industry have transformed and/or disappeared. Brands such as Kingway, Interlake, Rapistan, Buschman, Jervis Webb, Litton, Matthews. There are also a fair amount of local company names that have disappeared. Certainly some of this is due to inevitable consolidation. But I think it is also due to business changing and not all companies adapting to those new conditions. First of all, I am not singling any of the companies above as not adapting. Some of them did not but some of them have just changed names. I have some thoughts on how and why companies in general do not continue to thrive over longer periods of time.
Most of my travel this summer has taken me to Europe. It has been a great cultural experience, but I have also been able to see many different types of distribution operations as well. The Europeans have a very different way to look at how they plan their distribution centers. They look for the best possible solution before they look at the bottom line. Obviously they have the same financial responsibilities to their companies as we do here in the US, but they address the best solution first.
Spending my career as a solutions provider, I have seen too many situations where companies on both sides of the aisle race to a price and feel successful when they think they have reached it. I am not really talking about individual facilities and systems, I am talking about how they run their business. Sometimes we think if we offer the lowest price to our customer we have done a good job. As competition in global markets heat up, it is not usually the low price provider who achieves long term viability.
We all need to connect with our customers well enough to learn their specific needs. Then we have to figure out how to best fulfill those needs (no pun intended). We must keep learning and rethinking how we approach our customers and our businesses accordingly. You may say that if it worked for our parents it will work today and to keep things. I agree with that theory as long as we keep reexamining our processes and solutions.
Take something as basic as t-shirts. Several years ago in Baltimore, someone figured out that people will pay $40 for a t-shirt that dries quickly and doesn’t stay soggy. I sweat and I wear Under Armour because it is worth it to me. That was a great idea and now they are a publicly traded company worth hundreds of millions of dollars. Under Armour was obviously asking people if there was anything that would make their exercising more comfortable.
Solutions providers must think how they can separate themselves from the pack. Just bidding to someone else’s specification will not guarantee your long term survival. Supply Chain managers should not throw out vague specifications to potential vendors and see can offer the lowest price. There are several solutions providers in Europe that many of us may not have heard of who have built $200-$300 million business. They supply 4-6 solutions per year and support their customers for a life time. In most cases they have technical personnel on the customer’s site full time. These companies do not manufacture very much of the equipment they supply, and they work with their customers from the ground up to develop the right solution and are responsible for the performance of an entire facility when they are done. These European facilities I visited are a fraction of the size of comparable operations in the US. They are also much more efficient from a labor standpoint. They also have a return on investment of 3-4 years, but they add millions of Euros to the company’s bottom line in year 4 or 5. If you do not look past a 12- 24 month return on investment period, you may be costing your company a lot of money over the long term.
We need to rethink how we are getting the best value out of our businesses and what the changing market place will throw at us. This month we will have a special program when our guest speaker will be Jerrold Zaro, Chief of the Office of Economic Growth for New Jersey. He will tell us how he has plans to change the way business is done in New Jersey. This is a great program for anyone interested in business in general in the state. Please take the opportunity to invite your friends and come out for a great dinner and enjoyable speaker.
Welcome back from the summer season. I hope you are well rested and ready for our 2010 program year and the start of MHSNJ’s 7th decade. I have been traveling a lot this summer and spending a fair amount of idle time in planes, trains, and automobiles that has allowed me to ponder a lot of things including the changes to the names of the leaders in our industry.
Well known brand names in our industry have transformed and/or disappeared. Brands such as Kingway, Interlake, Rapistan, Buschman, Jervis Webb, Litton, Matthews. There are also a fair amount of local company names that have disappeared. Certainly some of this is due to inevitable consolidation. But I think it is also due to business changing and not all companies adapting to those new conditions. First of all, I am not singling any of the companies above as not adapting. Some of them did not but some of them have just changed names. I have some thoughts on how and why companies in general do not continue to thrive over longer periods of time.
Most of my travel this summer has taken me to Europe. It has been a great cultural experience, but I have also been able to see many different types of distribution operations as well. The Europeans have a very different way to look at how they plan their distribution centers. They look for the best possible solution before they look at the bottom line. Obviously they have the same financial responsibilities to their companies as we do here in the US, but they address the best solution first.
Spending my career as a solutions provider, I have seen too many situations where companies on both sides of the aisle race to a price and feel successful when they think they have reached it. I am not really talking about individual facilities and systems, I am talking about how they run their business. Sometimes we think if we offer the lowest price to our customer we have done a good job. As competition in global markets heat up, it is not usually the low price provider who achieves long term viability.
We all need to connect with our customers well enough to learn their specific needs. Then we have to figure out how to best fulfill those needs (no pun intended). We must keep learning and rethinking how we approach our customers and our businesses accordingly. You may say that if it worked for our parents it will work today and to keep things. I agree with that theory as long as we keep reexamining our processes and solutions.
Take something as basic as t-shirts. Several years ago in Baltimore, someone figured out that people will pay $40 for a t-shirt that dries quickly and doesn’t stay soggy. I sweat and I wear Under Armour because it is worth it to me. That was a great idea and now they are a publicly traded company worth hundreds of millions of dollars. Under Armour was obviously asking people if there was anything that would make their exercising more comfortable.
Solutions providers must think how they can separate themselves from the pack. Just bidding to someone else’s specification will not guarantee your long term survival. Supply Chain managers should not throw out vague specifications to potential vendors and see can offer the lowest price. There are several solutions providers in Europe that many of us may not have heard of who have built $200-$300 million business. They supply 4-6 solutions per year and support their customers for a life time. In most cases they have technical personnel on the customer’s site full time. These companies do not manufacture very much of the equipment they supply, and they work with their customers from the ground up to develop the right solution and are responsible for the performance of an entire facility when they are done. These European facilities I visited are a fraction of the size of comparable operations in the US. They are also much more efficient from a labor standpoint. They also have a return on investment of 3-4 years, but they add millions of Euros to the company’s bottom line in year 4 or 5. If you do not look past a 12- 24 month return on investment period, you may be costing your company a lot of money over the long term.
We need to rethink how we are getting the best value out of our businesses and what the changing market place will throw at us. This month we will have a special program when our guest speaker will be Jerrold Zaro, Chief of the Office of Economic Growth for New Jersey. He will tell us how he has plans to change the way business is done in New Jersey. This is a great program for anyone interested in business in general in the state. Please take the opportunity to invite your friends and come out for a great dinner and enjoyable speaker.
Dave Lodwig
MHSNJ President
MHSNJ President
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