Jovy Jader // Uncategorized


November 15, 2017  

Customers want their products and services when they say they need them. As much as quality and price are part and parcel of vision and mission statements of firms, timeliness has become the forefront of focus of many companies’ supply chains.

From smart phones to furniture, fast-food to cement, appliance manufacturers to banks, firms from every industry have seen their financial performance determined by how fast they introduce a brand, deliver a product, and execute a service. Firms who decide speed is not a priority have been put on notice by a growingly impatient customer base. Companies who sustain a customer service policy that assures meeting what customers want when they want it have seen remarkable success.

Time has become a much valued attribute. Speed has become a key business differentiator. While large corporations and multi-nationals may be ahead in terms of economy of scale and market dominance, time is a finite resource shared by enterprises, big and small. It is a great equalizer in that everyone has only 24 hours in a day. Versus quality and price, the speed to fulfil customer needs has become a competitive tipping point.

How to make speed a worthwhile advantage requires thorough study and analysis. Some areas are worth discussing:

Speed-to-market.  Firms who are consistently first in product introductions tend to gain market leadership as much as twofold over the nearest competitor. Google, Uber, and Airbnb are examples of firms who have captured sizable share in their respective categories via fast introductions of innovative services. Speed-to-market starts when the product or service is conceptualized to when they are already being sold. The automotive sector has nearly perfected this process as they have drastically reduced their design and development time by more than 50%.

Delivery Lead Time. If introducing products to the market fast is a big challenge, delivering them can even be more challenging. Failure to deliver on-time has caused firms to lose sales especially if customers cancel orders because they no longer need the products.  A large food company lost more than USD$6 million worth of revenue when their order-to-delivery information system crashed during their peak season. Another company lost 20% of its business when their on-time delivery performance dropped to 50%. On the other hand, an export company doubled its production capacity by reducing its manufacturing lead-time by half without significant capital investment and which resulted in faster deliveries, higher customer satisfaction, and thereby gains in market share.

Time-to-Recover. It is logically important that companies normalize operations after an unexpected disaster whether it be natural (floods, earthquakes) or man-made (cyber-security breaches, theft, fire). How fast firms can resume operations can and has spelled the difference between business continuity and bankruptcy. Toyota was able to normalize plant operations only days after a major earthquake and avoided any significant hit in its bottom line. An Asian manufacturer chose to abandon its facility after it was affected by major flooding and decided to set up a new plant which in this case reduced its ability to serve the market in the near- to medium-term.

Decision Making. There is not much study or literature on the speed of decision-making process for most organizations, but one thing is clear: large companies like multinationals usually have a longer decision making process than in smaller local firms. A global food service company took months to react to a new product launched by a local competitor and as a result, lost market share because the decision-making process required approval from its foreign-based headquarters.

Speed as an advantage is not confined to private enterprises. Governments attract investors via short lead times in business registration formalities. Establishing one-stop-shops to streamline business applications has been proven to reduce the time to invest and start operations. Same-day processing of business permits has become the norm in many countries.

Time as a finite resource will continue to drive firms to adapt speed as a strategy. Customers want their products now. The longer the time to introduce products and services, to deliver, to recover from natural and artificial disasters, and to set up a business, the higher the likelihood that customers will cancel orders and stop buying from the firm. Time is a resource shared by all and the ones who win are the ones who are fast.

About the Author

Mr. Jovy Jader is a Management Consultant and Regional Speaker on Supply Chain Management. He has directed and implemented Supply Chain Management projects both local and international which have resulted to company-wide improvements in revenue, working capital, total cost, and service levels. Mr. Jader was formerly with Procter & Gamble Philippines and Coopers & Lybrand/PricewaterhouseCoopers.

Jovy Jader