Posts Tagged "Fedex"

Seven Reasons to Shorten the Sale to the Customer

Posted by on Apr 12, 2013 in Uncategorized | 0 comments

American Manufacturers must turn the clock back 180 years, before the start of the Industrial Revolution. Consumers purchased their goods and materials directly from the people that made them. There was no question as to the identity of the maker. If a custom was required, it was not a problem. If the the item broke prematurely, it was easy to return for repairs/replacement.

blacksmith

Businesses are returning to their roots.  It is now very easy for businesses to design, market, and sell products directly to consumers. Manufacturing can be internal or contracted out, advertised and sold directly over the internet, and shipped via UPS, FedEx, or the U.S. Post Office. Avoiding traditional sales, marketing, and distribution channels provides several benefits. Many small companies do this, as do the likes of Apple, American Airlines, Proctor & Gamble, Dell, etc.

 

American Manufacturers gain several benefits from the reduction of size and complexity of their supply chain to the end user. Manufacturers historically have been very interested in profitability inside their factory walls. By considering the flow of their goods when they leave the factory walls, they are finding new benefits through the reduction in the size of their supply chain to the end consumer. The structure of the modern Internet has allowed for ease of advertising, contact, communication, and payment. The modern American logistics market allows for fast and inexpensive delivery of goods directly to customers.

delivery truck

Here are seven benefits for OEM manufacturers that shorten their supply chain:

 

  1. Customer Satisfaction

Customers that are able to communicate easily with the manufacturer of their goods tend to have more positive experiences. Consumer preferences can be accommodated when they can be easily voiced by the consumer and fulfilled by the manufacturer.

 

  1. Quality Control

Reduced inventory in the supply chain is easier to control should there be a quality problem. Smaller supply chains result in fewer warehouses holding goods that would require inspection should a quality problem occur. Customers who receive their goods faster help to identify quality control problems sooner. Manufacturing problems that leave the factory are recognized in a faster manner.

 

  1. Market Response

Shorter supply chains allow for the market to interact with the product sooner and provide feedback on its attributes. The introduction of new products to the market is faster and easier with more direct access to end users. Quick feedback can allow for faster adaptation to market conditions.

 

  1. Customization Opportunities

Shorter supply chains coupled with greater interaction with the end users allow for more opportunities to provide customization to the customers. This may include product attributes, quantities, product mix, etc.

 

  1. Faster Payment

Cash flow cycles from the customer back to the manufacturer are shortened along with the supply chain. The reduced number of entities owning the products along the supply chain will translate into a reduced number of entities to buy and sell the item on terms before the cash reaches back to the manufacturer.

 

  1. Competitive Advantages

Lower inventory levels and more efficient distribution networks provide financial advantages as compared to other products/manufacturers in the same market.

 

  1. Product sell price

The ability to keep a stronger hold on the distribution network reduces competition among resellers that can work to drive down product sell prices. Resellers may also offer the same product from multiple manufacturers and compete them against each other.

 

The above are 7 reasons for OEM Manufacturers to work towards closer relationships with their customers.

 

The How:

 

–One piece flow: Allows for fast manufacturing of customizable products. Not waiting on batches of similar goods.

 

–Flexible production: Value Streams that are adaptable and flexible to compensate for the various operations that are required for special features and benefits.

 

–Design for Manufacturing: Designed so products can be manufactured in a cost effective manner.

 

–Disposable Packaging for Direct Delivery: Depending on outside logistics companies doesnt allow for returnable packaging. Packaging needs to be presentable to the customer.

 

–Lean Accounting: Traditional accounting encourages batch production, high inventory levels. Very counterproductive. Instead, consider lean accounting. The important things to measure include Inventory Turns, Machine Downtime, First Pass Quality, Dock-to-Dock times, etc.

 

American manufacturers must turn the clock back 180 years, before the start of the industrial revolution. Consumers purchased their goods and materials directly from the people that made them. There was no question as to the identity of the maker. If a custom item was required, it was not a problem. If the the item broke prematurely, it was easy to return for repairs/replacement.

 

American manufacturers gain several benefits from the reduction of size/complexity of their supply chain to the end user. Manufacturers historically have been very interested in profitability inside their factory walls. By considering the flow of their goods when they leave the factory walls, they are finding new benefits through the reduction in the size of their supply chain to the end consumer. The structure of the modern Internet has allowed for ease of advertising, contact, communication, and payment. The modern American logistics market allows for fast and inexpensive delivery of goods directly to customers.

 

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